If rail operators want to maximize their onboard retail offer and generate greater ancillary revenues beyond traditional food and beverage sales, omni-channel retail is the route forwards, so says business intelligence technology provider GuestLogix.

 

The company, best known for its payment and merchandising systems, has outlined its mandate for rejuvenating the rail travel retail sector, which has historically lagged behind airlines and airports in terms of onboard profitability.

 

Still one of the most efficient and popular means of passenger travel, according to research, by September 2014 rail journeys had increased 3.67% compared to the same time one year prior – a percentage equivalent to more than 140,000 additional trips a day.

 

Additional research reports 52% of passengers are choosing a high-speed international train journey over flying or driving, as it typically offers more comfort and convenience for long distance travel.

 

However, says GuestLogix, despite the world rail industry’s strong record of operational efficiency and reliability, it is lacking in its ability to enhance the overall passenger experience, both on and off board and, as a result, drive ancillary revenues beyond food, drink and news.

 

Connectivity and self-service opportunities highly valued

Analyzing its findings, GuestLogix claims that 46% of passengers expect to be able to pre-book onboard entertainment or Wi-Fi, and 60% hope for the chance to reserve connecting rail travel and other methods of transportation before their trip even begins.

 

A statement from the company says, ‘The preferences of today’s always connected traveller have given rise to a wealth of retailing opportunities for rail operators. By taking an omni-channel approach to their onboard retail strategy, rail operators can fuse technology and convenience to drive better customer and passenger experiences, as well as ancillary revenues.’

 

Thomas Drohan, SVP & GM, Global Rail Division, explained further the potential for omni-channel retailing in the rail industry and how the technology behind it is already within reach of most operators:

 

“We can provide the technology that makes the traditional retailing model profitable and efficient through managing all the normal stuff that a store does: managing the stock, making sure there’s no shrinkage, helping with wastage and all that stuff.

 

“But what we’re seeing, which is why GuestLogix is interested in this, is there seems to be quite big changes happening. We’re seeing rail operators, from a practical perspective, wanting to differentiate their service on board. They want to start competing against low-cost carriers, and they’re also seeing increased competition in Europe as lots of markets open up their borders to more than just the national rail operation.”

 

Rail ahead of airlines in the world of Wi-Fi

Drohan continues, “Then there’s the two technology changes that I think are enabling this omni-channel retail environment but also changing the whole face of rail: one of them is this smart revolution that enables them to do a lot more than they ever were previously, and the other is an increased level of connectivity and this is one area where rail is quite a lot ahead of airlines.

 

“We have the technology that can cope with a moving vehicle, so that where we supply customers with the Wi-Fi portal when you log on you can start to navigate through products and services that are onboard prior to getting on the internet; it could be through a traditional model such as the bar buffet or in-seat service via an attendant with a tablet, or it could be via a kiosk at the station or at the ticket purchase, enabling you to buy a meal for when you get on the train.”

 

Virtual sales will take rail travel retail beyond

In terms of travel retail as we know it, there has been limited exploitation of onboard product category sales in the past for a variety of reasons, though GuestLogix points out it has enjoyed success with tourism rail operators such as Rocky Mountaineer, based out of Vancouver, who run leisure rail journeys into the Rockies.

 

“We sell huge amounts of merchandise and souvenirs through catalogues that are provided onboard, so depending on the operation it might be that we do other travel retail related products, but in the main when we think about high speed rail the consumption of physical products that aren’t food and beverage or ‘virtual’, if you like, is minimal,” says Drohan.

 

“Where we’re seeing the significant growth is in the consumption or purchase of products and services for the destination cities.”

 

He lists tickets for onward journeys, tours, visitor attractions and theme parks, theatre trips or entertainment shows as examples of destination orientated products that could be sold onboard trains.

 

“Our destination merchandising offers can be accessed via smartphones and tablets, making it possible to pre-order items within business lounges or via kiosks within the station,” says Drohan.

 

“The great thing about it is that there’s no inventory overhead, so you haven’t got to get the product to the train and all the logistics associated with that. You’re selling it either via a printed-out ticket or via an e-ticket delivered to your smartphone.

 

“That’s the area beyond travel retail that’s really exciting for rail – along with the sheer number of people being transported to one place – meaning operators can really focus on providing an environment that is tailored to the passengers, so they can have a much more targeted and relevant experience from a retail perspective.”