Travel retail has come a long way from its basic duty-free shopping days, with international airports having evolved into premium shopping destinations in their own right. While this creates great opportunities for brand owners, the fast-paced nature of this one-of-a-kind retail environment also poses a fundamental test: how to engage a time-pressed and increasingly savvy customer?
Now part of a bigger group, Altavia.odg will persist with this crucial design philosophy, while continuing to provide the same value and scale that it has always done. And with 11 industry awards under its belt, projects in 40 airports, railway stations and ferries around the world, and over 350,000m2 of commercial space created, Altavia.odg is genuinely excited about the future of the retail industry in all of its facets, – including Travel, F&B, Beauty and Fresh – and how it can provide its broad portfolio of services to support the unstoppable progress and myriad breath-taking developments currently underway in the Kingdom of Saudi Arabia in line with Vision 2030.
Hugo Vanderschaegh, Managing partner at Altavia.odg and head of Altavia travel retail, admits this is a challenge for the industry, explaining that there is a need to drive more footfall by providing real experiences and added value: “Back in the years 2010 to 2019, travel was booming, but in some airports, travelers had begun to spend less. So while there was an amazing growth in traffic, which was fueling the travel retail industry, some of the KPIs were quite negative, with spending, if not falling, at least plateauing.
“Covid has actually fuelled a lot of the trends, one of them being digital commerce in travel retail”
“It was at this time that many of the big players started to rethink the way they designed stores, looking to make them more experiential in order to drive footfall and, in doing so, drive conversion. These kinds of shifts happened before Covid, but as in many industries, then pandemic has actually fuelled a lot of the trends, one of them being e-digital commerce in travel retail.”
As a result of Covid, a lot of the investment is going into Customer Relationship Management (CRM), loyalty programs, ecommerce, and everything digital that can help brands and retailers engage with travelers before they reach the terminal, encouraging them to continue the conversation in the physical store when they get there.
“There is certainly acceleration on that front,” Hugo says. “Even pre-Covid, we were trying to provide more than just product on the shelves, and I have to say for the last couple of years the brands have done an awful lot, such as amazing pop-ups for luxury brands in the leading airports – experiences where you can interact with the brands are becoming more and more important.
“But now I would say it’s not only about the brands. The travel retailers are themselves creating their own concepts and their own kind of engagement areas. So it doesn’t just rely on the brand; the retailer is also differentiating itself.”
“The next level is to offer the chocolate in a way that will please a particular individual, and this will be achieved because we will know who he or she is and what their personal taste/interests are”
Creating a Sense of Place
Sensitive to the ever-evolving expectations of customers, the major travel retail operators are investing significantly to offer uniquely different shopping experiences. They are challenging themselves to be increasingly imaginative and engaging, placing particular stress on experiential experiences that have a lot to do with a ‘sense of place’, a concept that explains how people define and categorize locations in their minds.
“The next level is to offer the chocolate in a way that will please a particular individual, and this will be achieved because we will know who he or she is and what their personal taste/interests are”
“This means designing airports that are unique to where they are, with airport stores bringing a sense of place into the store as an experience,” Hugo says. But how do you create a truly ‘personal’ experience for travelers? Hugo takes up the story: “The first thing you need to do is create different experiences based on the airport’s location and USP, and then it’s about personal experiences, which I would say is the next stage. And to do that, you really need to know your customers, not only from demographic and volume point of views , – you need to understand who they are individually and what they want, and this calls for good data. This is a big thing right now in the industry, from the airport to the airlines to the duty-free, and how they can collaborate in a beneficial way to ensure that data are being shared for the benefit of passengers to create a more personalized experience. And that is a very difficult task, but that’s what the industry is looking for.”
This approach is more than creating unique experiences, as Hugo explains: “If you walk into a terminal, for instance, in Geneva, and there is a tasting station where you can try chocolate – because they have amazing chocolate in Switzerland – and there is an incredible chocolate fountain with a chocolatier doing live cooking, then marvelous, passengers get hooked and they are going to buy. It’s locally relevant and you have a sense of theatre where the space is really screaming out its message. The next level, though, is to offer the chocolate in a way that will please a particular individual, and this will be achieved because we will know who he or she is and what he purchased in the past and we’ll engage him before he travels using digital tools. That’s the next stage.”
LEEDing the Way
The travel industry is, of course, often criticized, powered by what is a global commitment to achieve a more sustainable life by paying attention more to the impact our activities have on the planet. Indeed, the travel industry, and especially the airline and transportation sectors, need to do a lot better than what they do right now. At altavia.odg, they understand that as travel retail designers, designing stores in airports, they need to constantly push back boundaries to create stores that have a lower impact on the planet. There are various ways to achieve this, and one of the paths altavia.odg decided to take was to train its designers in the LEED program.
“LEED rating system is the most common and widely used green building and interior certification in the world. The LEED certification is based on a wide set of technical criteria that evaluate the sustainability of a project.
One of the paths altavia.odg decided to take was to train its designers in the LEED program
At Altavia.odg we train our staff to be able to provide our clients with concrete recommendations based on the LEED principles.” Hugo says. “For example, we worked on a concept in Bali airport, Indonesia, and of course Bali is an amazing tourist destination. However, one of the threats to the island is the plastic that keeps washing up onto the beach. So we worked on finding materials that are made of recycled plastic that washed up and used this as a raw material for the design of the stores – sustainability with a sense of place.”
Good Design Sells More
The travel retail industry is evolving very, very quickly, with one of the drivers being Generation Z, shoppers with values, although as Hugo points out this can be tricky because not all of their values are the same. “Some members of Generation Z will want to purchase items that have a social impact, while others, for instance, will home in on bio-diversity. So it’s really difficult because there is a very broad portfolio of values that need addressing, but retailers and brands need to choose their values – which values do they really want to push in their stores because you simply can’t push every single value in one go, that would be extremely challenging and difficult financially. Consequently, they have to see what the most important values are for the traveler, as well as the most important values for where the product is located in a geographical sense.”
altavia.odg has numerous case studies in airports around the world that demonstrate ‘good design sells more’ and many clients have seen a huge uplift in sales and awareness after working with the company. Moreover, its presence in the Middle East, where it works with brands, duty free and F&B retailers, and airport operators (the only firm in the region to be covering all three) continues to thrive and develop. It has, for example, completed 17 retail and F&B units at Dubai International Airport and is currently working on a number of very large projects at airports in Riyadh and Jeddah in Saudi Arabia. But whatever the airport operators, retailers, and brand partners have all emphasized the ever-growing importance of retail design for the wider travel retail channel. Indeed, with the emergence of the online sales channel, store design will be vital to attracting customers back to brick-and-mortar outlets and engaging the five senses.
But what are the major trends that will drive the industry forward over the next five years? Hugo has no doubt, responding: “If you compare what travel retail does when it comes to the use of CRM, it’s stone age compared to some of the big retailers in domestic markets. So it’s a huge transformation at a very fast pace, catching up with the best practices when it comes to the use of data and how the industry can better communicate with its customers.
altavia.odg is currently working on a number of very large projects at airports in Riyadh and Jeddah
That is the first trend. And I think number two revolves around the individual stores, which are becoming super experiential because, at the end of the day, people are not there to shop, they are there to travel, so how you get them to shop is to provide something different. Low prices are no longer enough to get people to visit duty-free stores. You can expect super strong digitalization as well as much better and much more immersive experiences.”
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