3Sixty lifts the lid on inflight and ground store plans; US airports shops to open

By Luke Barras-hill |

3Sixty Duty Free extended its partnership with Virgin Atlantic earlier this year. Source: Virgin Atlantic.

3Sixty Duty Free has shed more light on its ambition to develop Virgin’s Atlantic’s e-commerce platform, while revealing a plan to open several new shops in 2022 across its US airports network.

As reported, 3Sixty Duty Free inked an extended partnership with UK-headquartered Virgin Atlantic in July and pledged a ‘next-generation omnichannel travel retail solution’ supported by partner Omnevo (formerly AOE).

Speaking to TRBusiness recently, Alexander Anson, Chief Operating Officer, 3Sixty Duty Free said: “For Virgin specifically, this platform allows a much richer set of solutions. You’ve got to invest in a really qualitative platform to be able to have a good enough offer, so this will allow us to bring a richer portfolio of brands, but also because it’s a web-based solution, a much richer range within the brands.

“If you think inflight is typically restricted to a couple of hundred skus, we’ve got plans of how we are going to explode our ranges to 4,000 – 5,000 skus and being able to then provide really good fulfilment solutions – not only pre-order, collect in the seat, but also home delivery, or in some cases to destination.”

Alexander Anson, Chief Operating Officer, 3Sixty Duty Free.

‘VERY AGGRESSIVE BUSINESS PLAN’

Contactless payment options, akin to what 3Sixty already offers with its partner Omnevo and AOE, and accessibility for customers to trade-up purchases through the inflight entertainment systems are just two examples of elevating the passenger experience on Virgin Atlantic, explains Anson.

3Sixty has been the inflight retail concessionaire for the carrier since 2014 and partners with a number of other airlines across the world, including with Singapore Airlines/SATS and Avianca (pictured below).

Anson says 3Sixty has a ‘very aggressive’ business plan in store for long-standing partner Virgin Atlantic.

Accordingly, this is designed to drive ‘some phenomenal growth and return’ for both parties by leveraging a number of core components, from the quality of the platform to the offer, range within that offer, and service proposition.

But while a sharpening of the digital proposition remains a key focus, Anson still believes the traditional boutique (trolley) has a role to play inflight.

“I think there always will be a last-minute purchase need,” he responded. “We have a phenomenal business on last-minute purchases of tobacco.

“There will always be a need for last-minute where [customers] didn’t get to the shop, didn’t have time […] or there isn’t an arrivals duty free service. There is a role for inflight sales, either through the inflight entertainment system or even the catalogue.”

Though making a success of the trolley requires a tailored and efficient approach to curating a lean and interesting assortment matched with efficient service, continues Anson.

In a year of reset, first quarter 2021 ‘disappointment’ for 3Sixty Duty Free gave way to the restart in Q2 but a flattening of that growth occurred in Q3.

“As a business, we have had to do everything necessary to make sure we continue to navigate our way through the crisis to be in the shape that we need to be for the future; how we manage our cash flows, investments, workforce and projects,” outlined Anson.

3Sixty Duty Free (formerly DFASS Group) secured a 10-year contract extension for its duty free/duty paid concession at Orlando International Airport in 2018 and is anticipating a new shop opening in 2022.

While the industry will take encouragement from developments in recent months, including the lifting of the US’s travel ban and Australia re-opening its borders – important for transiting Singapore traffic – like all businesses, 3Sixty Duty Free’s eyes remain firmly on the performance in Q4 [NB: it is important to point out that these comments were shared prior to the emergence and escalation of the new Omicron variant in recent weeks – Ed].

With conversation turning more broadly to 3Sixty’s inflight concessions, a business it knows incredibly well, Anson sounds an upbeat chord despite the significant hit to the airline sector in the past few 18 or so months.

“We’ve taken the time to really develop a new partnership model with some of our key airline partners, like we have with Singapore Airlines which is a joint venture,” he explained.

“With the new extended agreement with Virgin, we’re bringing the same platform that we have with Singapore Airlines to Virgin, so that’s really exciting and is going to create a full omni-channel platform to be able to do a lot more than we’ve been able to do in the past.”

‘DOUBLING’ OF BORDER RETAIL ESTATE

While Anson declined to talk 2020 revenue figures, he stated that the business ‘suffered’ like most.

“We’ll have growth on last year, but you’ve got to remember that last year Q1 was almost a normal quarter. So 2020 numbers were skewed by that because it wasn’t a disaster throughout. And obviously our Q1 2021 versus Q1 2020 won’t look good at all, but our overall business will be in growth this year versus 2020. More importantly, it’s how we’re finishing the year.”

The company’s acquisition of defunct US wholesaler, retailer and distributor Fairn & Swanson (which operated under the Baja Duty Free fascia) last year has unlocked a substantial store network on the US-Mexico border, which received a boost following the relaxation of travel restrictions in November.

“That retail estate is going to double in the next nine months,” revealed Anson. “Travel retail really has just been scratching the surface on that business. Border duty free has really not achieved anywhere near its potential and we think we’ve got some really exciting plans to tap into that.”

Taking the time to nurture partnerships with key airline partners has occupied 3Sixty Duty Free. Source: Avianca.

While a number of important changes made by countries to relax travel restrictions has helped to turn the tide on traffic fallouts across the industry, the emergence of the Omicron variant is casting more uncertainty on international travel and travel retail.

Indeed, the picture with regards to re-tightened rules around travelling, testing and quarantining is changing every day in view of the above.

NEW SHOP OPENINGS IN US

Looking ahead, 3Sixty is eyeing the opening of a new flagship duty free store at Orlando International Airport spanning around 600sq m in the first half of 2022, plus others in the pipeline.

“We’ve got two new stores coming in to Fort Lauderdale International Airport, so we’re investing there again,” confirmed Anson. “That’s an airport that saw phenomenal growth before Covid. We hope that will recover quickly now. That’s servicing mainly departing US residents, but also some regional tourism, so we’re really looking forward to those new stores as well.”

In addition, there are plans to refurbish the main flagship store at Dallas Fort/Worth International Airport where 3Sixty also plans to open a new Chanel standalone boutique. Accompanying this is a plan for some new shop openings in Philadelphia.

“What we need to make sure, is that the supply chain, which is the issue that we’re all facing, is also ready for overall passenger growth and sales growth and for us specifically aligned to a lot of our new projects,” cautioned Anson.

He highlights that in some instances, wait times of as much as 60 days has hit the supply chain. Naturally, this has led to trepidation in view of future passenger developments and 3Sixty’s anticipated new projects and investments.

“I’m concerned how all of these things will come together in the first half of next year, so that we’re not opening great shops and suppliers can’t supply us,” Anson made clear.

3Sixty Duty Free, of which Hotel Shilla is a 44% shareholder, is eyeing new shop openings and refurbishments across several of its US airport locations.

Supply chain challenges aside, the importance of pairing with airport partners to understand the pace of the international traffic recovery moving forward cannot be overstated.

“I think for us it’s really critical that we continue to partner with our airport partners to look at the recovery of international traffic and have the right rental agreements aligned to those,” concluded Anson.

“The industry talks to anything between 80% and 90% for 2019 traffic before we go back to whatever previous rental agreements people had and I think that needs to be a key criteria.”

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