Charter urges inflight ‘to make big retail statement’

By Luke Barras-hill |

Main-Ethos-Farm-Gatwick

TRBusiness was the sole travel retail media in attendance at the ‘Taking Inflight Retail to New Heights’ workshop, which took place in January.

A voluntary ‘best practice charter’ aimed at airlines and concessionaires will tackle onboard retail’s ‘unsustainable situation’ and encourage brands and suppliers to invest in sales crew, according to Ethos Farm.

The customer and employee experience experts believe the charter, which relates to the recently launched role of onboard Category Specialists’ [see below video], can help arrest the malaise of inflight retail and its loss of market share in global travel retail by delivering an industry-wide ‘statement of intent’.

The charter covers a number of elements, including (but not limited to) ensuring a robust procedure for recruiting category specialists; providing them with the necessary category, brand and product information; introducing standard operating procedures; setting unit sales targets; and embedding the role into the airline’s long-term retail strategy.

Ethos Farm has issued interested parties with a draft copy of the charter. They have been given until 14 February to suggest amendments/changes.

CONCESSIONAIRES INTERESTED

As reported, Ethos Farm unveiled its ‘Category Specialists’ initiative earlier this month at the ‘Taking Inflight Retail to New Heights’ boutique workshop at Virgin Atlantic’s head office and ‘Base’ facility for cabin crew near Gatwick Airport.

3Sixty Duty Free & More says it is signing up and Retail inMotion has also expressed interest in the initiative. Several other concessionaires and suppliers that TRBusiness has approached directly are keen to understand in more detail if/how it could work in practice.

Utilising product/brand and category e-learning training courses, the new fleet of specialist inflight sales ambassadors are tasked with fostering more collaborative approaches to crew training and development to champion greater customer engagement and retail revenue.

Ethos Farm is recommending that the Category Specialists earn a 10% bonus on total incremental retail sales generated per category, provided they hit their targets.

During the workshop, Business Development Director Christine Martin illustrated the potential sell-through using the fictitious ‘Ethos Airways’.

Drawing on category sales data supplied by a number of airlines, Ethos Farm has devised average forecast estimates for the product segments.

As an example, if one fragrance is sold every 1.8 flights, the airline would sell 1,020 based on 1,800 flights per month.

Virgin-Category-Specialists-1

Ethos Farm is aiming to demonstrate proof of concept to Virgin Atlantic by May. Source: Virgin Atlantic.

At an average cost per unit of £45/US$57, this would generate monthly fragrance category sales of £46,000/US$60,000.

Applying a 10% commission to the total, 1,400 sales crew would each receive £3.28 in monthly commission.

However, Ethos Farm suggests that by appointing 50 category specialists, each selling one fragrance on nine flights per month, the fragrance category could generate an estimated £20,250 in incremental category sales per month and £243,000 per year.

A 10% bonus on incremental monthly sales of £20,250 would mean the 50 Category Specialists each receive £40.50. Decided by the airline/concessionaire – and not impacting suppliers’ existing margin agreements agreed with their partners – this bonus would be payable only if the crew hit their targets.

Ethos Farm says that by achieving a sales target of one unit per flight, per category specialist, an airline could improve its sales by up to a factor of 1.44.

Ethos-Farm-Category-Specialists-maths

Left column: Average fragrance category sales based on information supplied by a number of airlines; right column: An example of projected incremental sales based on the assumption that 50 category specialists sell one fragrance at £45 on nine flights per month. Source: Ethos Farm.

Following feedback since the workshop was held, Ethos Farm has made several refinements to the initiative [click here to see the original proposals].

It will be up to the airline/concessionaire to approach suppliers to secure participation. There may also be a cost attached to category training modules of no more than £500 per airline, per year, dependent on whether sponsorship is secured.

Supplier/brand investment concerns are being addressed via five proposed ‘story telling’ options, with prices ranging from £299 (plus VAT) up to £2,500 (plus VAT) depending on the requirements of the supplier and the complexity of the information received.

IDEA TO CONCEPT

As the set-up phase commences, TRBusiness asks Ethos Farm Business Development Director Christine Martin to explain what the Category Specialists idea is all about.

Christine-Martin-TRBusiness

Christine Martin, Business Development Director, Ethos Farm.

Why did you decide to launch the role of ‘Category Specialists’ and when was the idea first conceived?

The idea was first conceived many years ago. Airlines around the world have tried the role of retail ‘ambassadors’ and ‘specialists’ or have a group of the top 100 sales people who they give extra training to and/or additional rewards. This is great and I applaud it, but it is the 80% of crew who aren’t engaged in retail we need to focus on.

It was part of a content discovery piece with Virgin Atlantic last summer, looking at all the various touchpoints we could use to drive home the retail message. This came out of that conversation. It has taken from last June to now to come up with a cunning plan. We think all stakeholders stand to win.

In our world, you need to give the crew the tools to be more proactive and ‘category confident’ and make people feel special within that large community and not just another number so they stand out among colleagues, customers and airlines. We are using resources available to us now to really make a difference.

Where is the initiative at in terms of interest and rollout following the boutique event?

We have been talking to Retail inMotion (Etihad), Inflight Sales Group (French Bee) and 3Sixty Duty Free & More (Virgin Atlantic) and that is why we wanted to put the workshop together to test the water. We were delighted with the number of airlines that turned up from the UK. The next meeting will be for airlines, hopefully in February, where we will work out their standard operating procedures for the role and a code of practice. The timeline we are looking at for Virgin is May with their range change and we want to have something to go to the airline with by then.

What the airlines absolutely understand is they need to get the communication, proof of concept and reward and recognition right if they expect the suppliers to invest. We are going to be facilitating a meeting with airlines to work all of that through and to work with suppliers, per category. We will invite (not in any order) fragrance, skincare & cosmetics and liquor companies to work out what the category training, ‘must-knows’ and e-learning actually looks like. The brands and suppliers are helping to shape that communication.

Why do you think this ‘Category Specialists’ approach will succeed where other programmes haven’t?

I don’t think the technology was available to us before. The e-learning offers 24-7 accessibility and that is the key. We want a combination of blended online and offline learning , but the lion’s share of the information can be delivered in an engaging way online in the crew’s own time. This is an industry-wide initiative. If the concessionaire is doing it, they aren’t going to pass it on to another concessionaire or airline, they will do it themselves or expect the suppliers to pay for it.

Is there a limit on the number of category specialists an airline can elect and is it possible to have one person representing one or even multiple categories?

It is entirely up to the airline which categories they wish to focus on [dependent on] the size of their crew, whether its short- or long-haul flights, one or two people or everyone who gets involved in the sales service… there is an awful lot of ‘what ifs’ to consider before you say you want [for example] 10, 50 or 300 fragrance categories specialists. It really depends on the airline.

Does the supplier or concessionaire decide on whether the former joins the initiative?

It’s up to the concessionaire or airlines to have those conversations with the suppliers. If they say yes, they are pushed towards us. The commercial relationship is between us and the supplier. We want to keep it simple.

For suppliers, there is an argument to say the ‘big guns’ have bigger budgets and therefore investing won’t be expensive, but smaller brands, particularly those coming to market for the first time, will be more cost sensitive…

It’s interesting as on first impression, it’s the other way round. The smaller ones look at it as a way in and that means a lot. The bigger brands may have 20, 30 or 40 products already online, so it’s a bigger investment. We need to make sure we look after the smaller suppliers as well as the larger ones.

What are the main challenges now in getting this off the ground in the coming months?

It’s great everyone wants to talk, but it’s about getting this over the line and connecting all the dots; the airlines and suppliers can’t do this in isolation. That is why we are planning the category and airline meetings to keep everyone engaged. We are only going to get one chance at this as far as the crew is concerned, so we have to get it right first time.

I noticed a subtle reference to ‘awards’ during the roadshow. Is this initiative a way of reviving ISPY?

I can’t see we will do another ISPY for at least two years. My focus is getting this role embedded into the psyches of airlines and suppliers and ensuring all stakeholders benefit. My mission is everybody comes together to make a real difference to inflight, we’re not just waiting for technology and connectivity, and we can start grabbing back that market share.

For industry reaction to the new initiative, watch out for the February edition of TRBusiness.

 

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