Covid-19 is placing unprecedented stress on the travel retail sector. This might just be the catalyst needed for retailers, brands and operators to fundamentally shift the way they work together and face into some of the challenges that have historically been limiting the sector’s potential. Here, Tom Charlick, Partner at OC&C Strategy Consultants tries to outline the core principles of a potential new model for travel retail…
As the world gradually raises its head above the parapet of lockdown, we can start to predict the shape of things to come for the world of travel. International travel volumes will remain depressed for months if not years. We can bank on a significant shift in passenger mix towards leisure trips to less exotic short-haul destinations, and those that are travelling will have to plot their way through an extended set of biosecurity checks that are likely to test their physical and mental energy to the extreme.
All of this is bad news for travel retail… or at least for the traditional model of travel retail that has relied on driving ever-more value from the ever-growing number of passengers that have been squeezed through our ports.
The good news is that there could be another way forward. One that shares risk and reward, embraces digital channels and fundamentally re-sets the industry for the mid-term rebound.
PRINCIPLE 1: “THINK CUSTOMER NOT CHANNEL”
Airport dwell time will likely increase post-Covid – but this is likely to be fully absorbed by a broad range of pretravel health screening activities. At the same time, physical space will have to be re-platformed in a way that respects key principles of social distancing – the walk-through store may be no more and airport lounges may need to significantly increase in size, all stealing space away from retail.
In a world with much less time and space to sell in the traditional way, brands, retailers and airports will therefore need to re-imagine how they can interact with travellers commercially.
This will need to happen days, weeks, and months before the trip takes place with the “inspire” and “browse” stages in the purchase journey shifting to digital channels. To do this effectively, it will require integrated data feeds that enable customer identification and management across brands, airlines, airports and retailers..
PRINCIPLE 2: “LOCAL POINTS OF DIFFERENCE”
The customer proposition itself will also need to feel very different.
We expect that many consumer brands will shift their marketing and product development budgets away from the travel channel, and travel retailers will therefore have to work much harder to create and maintain a reason to purchase in a channel with less ‘unique’ product and a compromised physical environment.
Individual travel locations will therefore have to focus on curating localised propositions – this will be about crafting your digital and physical ‘storefront’ to stand-out, competing with travel and non-travel retailers alike, and tailoring offers to individual traveller profiles.
Brands should participate actively and have a seat at the table with operators, retailers and airlines to define, curate and develop truly unique propositions.
PRINCIPLE 3: “FROM STORES TO PICK UP POINTS”
Over the last twenty years online retail has stripped the ‘functional’ elements of retail from many high street stores. Offline retailers have had to try and re-invent themselves as a place for entertainment and excitement. Covid-19 may well reverse this trend.
We have already seen this play out in the high street – for instance in Tesco, they now operate holding pens for queuing inside the stores and heavily merchandise key products in these queue management systems. Click & Collect volumes have soared through the pandemic.
In a travel retail world with reduced ‘available’ dwell time, we could see a shift towards the creation of dedicated fulfilment or collection points for digital orders with more modular inspiration through the extended customer journey.
PRINCIPLE 4: “TAKING A FAIR SHARE OF THE SPOILS”
This new approach will not work under a traditional concessionaire agreement.
There will be no more minimum guarantee, and it will require a fundamental re-balancing of risk and reward, with landlords coordinating a specific solution that pulls in the best partners to optimise its offer. Retailers will create digital and physical operating platforms that they may lease to operators or brands.
Operators will also embrace a shift towards alternative monetisation streams. Media and advertising revenue streams will be prioritised, and importantly, we expect a shift in mentality towards maximising customer lifetime value and then distributing this more evenly across participants within the value chain.
We all hope that the impact of Covid-19 on the travel retail sector will be less severe and disruptive than currently forecast. But, if it isn’t, we believe that the principles outlined above will help direct the travel sector towards a productive pathway forward.

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