Inflight retail market returns to growth; shows potential

By Andrew Pentol |

TFWA-Inflight-John-Rimmer

TFWA Managing Director John Rimmer reveals inflight sales rose +4.2% to over $2.5bn in 2017. Photo: Nathaile Oundjian.

Data presented by TFWA Managing Director John Rimmer at the recent Inflight Workshop in Cannes presented a healthier picture for the sector than in recent years.

Citing Generation Research figures, Rimmer revealed the inflight market had returned to growth in 2017 after four years in decline. Sales rose +4.2% to over $2.5bn, but are still below what they were a decade ago.

He said: “This is at a time when sales in airports and downtown duty free have risen sharply. There is little doubt that the inflight sector has stagnated somewhat.”

Taking into account inflight sales by category, perfumes and cosmetics account for 40% of total sales, which is above the global duty free average for that segment. “It seems we are selling less confectionery inflight than we were in 2005 and less tobacco. In respect of confectionery, it is important as a driver of footfall and penetration so it is much higher than those figures suggest.”

POSITIVE LANDSCAPE

While the 2018 inflight landscape is more positive than recent years, Rimmer added: “I think we would all agree that the sector can do with some creative thinking. We at TFWA believe strongly in the inflight sector and its potential. With this in mind, in the past year we commissioned our first ever dedicated study of the inflight business.”

The study was undertaken by UK research company Counter Intelligence Retail (CiR). Its aim was to explore and understand the barriers and motivations to purchasing on board. Rimmer explained: “It looked at what we provide and why and what we would make non-buyers purchase in the future.”

Findings of the study were presented by CiR Research Director Stephen Hillam, who suggested conversion remains an issue with only a third of travellers browsing inflight and just 36% going on to purchase.

Counter-Intelligence-Research-Director-Stpehen-Hillam

Counter Intelligence Retail Research Director Stephen Hillam suggests conversion remains an issue, with only a third of travellers browsing inflight and just 36% going on to purchase.

The study also suggests the inflight shopper is becoming older. In 2015, 56% of shoppers were over 35 years old, but today, 70% of inflight consumers are over 40 years of age which is a potential threat.

On the positive side, the study highlights several perceived advantages associated with the inflight retail industry. These include the convenience factor, with 46% of shoppers saying it is convenient. In addition, 31% say it offers better promotions, while 28% cite the advantage of not having to queue. Hillam stated that enhancing service, optimising the range and offering a pre-order option were key to developing the channel.

He added: “Even though we are facing a turbulent financial position, this is a channel that offers significant benefits to its users and significant potential to its stakeholders. It is also a channel that faces inherent difficulties in certain areas.”

MISSING INGREDIENT

Next up was Joe Harvey, Senior Manager Global Boutique Development at Retail inMotion, who said excitement was the most important element the inflight channel had been missing. He also suggested the inflight segment has finally returned to growth because we have forgotten about the product.

Harvey then questioned whether the inflight sector was providing value for money. “Are we not giving value for money, or is the segment having difficulties because people have already purchased at the airport?”

RetailinMotion

Joe Harvey, Senior Manager Global Boutique Development at Retail inMotion is adamant the inflight channel has been missing some much needed excitement.

In terms of assortment, he added: “We need to optimise the ranges. You have to have those hero products. These are what have changed our industry. The suppliers are the ones who have been applauded.

“We are moving away from those established brands which everyone thinks they have to have to new ones.”

INFLIGHT IMPORTANCE

Thabet Musleh, Vice President at Qatar Duty Free, stressed the importance of inflight and said that in his business (Qatar Airways) inflight sales were up 19% year to date at a time when passenger numbers had increased by 9%.

Musleh said staff members were an important part of the mix and that QDF was investing heavily to ensure inflight was an important part of the service and not an ‘extra.’

Offering his own take on the current state of the inflight duty free market Musleh commented: “Brands are pulling away from inflight and I don’t know why. It is the same passenger being served on the ground.

“The inflight sector has an amazing captive audience, but how we tap into this is key. There is only so much a traveller can eat or so much time he/she can watch television inflight.”

Thabet-Musleh

Qatar Duty Free Vice President Thabet Musleh (centre) was part of a three-strong speaker line-up at the recent TFWA Inflight Workshop.

 

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