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Mondelēz World Travel Retail (WTR), the travel arm of global confectionery and snacking giant Mondelēz International, is calling for more collaboration across categories to help offset the declines that are being seen in average transaction values (ATVs) in the channel.

During a webinar last week called ‘Destination: Value’ – described as “a call to rethink what value means” in travel retail – Mondelēz WTR’s Vice President and Managing Director, Joost Rosmuller, said: “The traveller has changed and so must we. We’re in a new era where growth won’t come from doing more of the same, but understanding traveller behaviour more deeply.”

He told the 240 global travel retail delegates listening in that in this new phase, the aim was not to compete harder but to collaborate more deeply. “Penetration in airport shopping is eroding, and travellers now spend twice as much time on their devices than five years ago. Average transaction values (ATVs) are -15% below pre-crisis levels, and old levers like footfall and price promotions aren’t delivering the uplift they once did,” said Rosmuller.

Mondelēz puts research at the heart of its growth strategy

Based on a lot of detailed research lasting more than a year (covering 32 airports and 7,000 interviews), Mondelēz WTR thinks these changes are not signs of mere disruption but of a more structural transformation. Traveller mindsets have shifted from transactional to experiential, and from passive to purposeful, based on behavioural studies.

Speakers at the Destination: Value webinar.

Mondelēz WTR has come up with evidence-based strategies for total industry growth by 2030, despite the harsher conditions. Rosmuller said: “We can grow the entire travel retail ecosystem, whether it’s beauty, spirits, souvenirs and more.” Director of Category, Customer & Shopper Marketing, Anna Somogyi, added: “Today we know that 28% of travellers buy something in duty-free, but if we collaborate (across categories) we can increase this to over 50% conversion. Confectionery and the industry together have the potential to boost both penetration and transaction value.”

On the topic of rethinking value and consumer behaviour, Richard Shotton, the author of The Choice Factory and founder of Astroten, a consultancy specialising in applying behavioural science to solve marketing problems, also offered plenty of interesting insights.

The science behind the practice

In essence, he put forward the hypothesis that consumers would rather not think too much when shopping, something borne out by numerous studies. “Thinking is energy-intensive, and it is rationed, so most decisions are made in a quick, snap, reflexive way. This is relevant when it comes to shopping and value,” Shotton said.

He said that people tend to make intuitive/emotional buying decisions and that there are predictable ways to influence them without resorting to discounts. In a 2015 academic study, a product was offered at two prices: the first was a set price with a one-in-three chance of getting it for free, and the second was a one-third reduction on the set price. The two options sold 120 and 84 items respectively, showing how gamification – now increasing in travel retail – appeals more to shoppers. “Yet most brands in travel retail default to straight discounts, in effect leaving cash on the table,” said Shotton.

Another study also highlighted how a consumer’s idea of value can change when the product is scarce or has a purchase limit. “People want what they can’t have,” the author said. This favours travel retail exclusives, but a fixed purchase limit on the items makes them even more desirable.

Armed with these and newer science-based insights, Mondelēz is taking its ‘Destination: Value’ vision to the industry in the form of 10 strategic, data-driven actions that could help to unlock consumer behaviour in partnerships with landlords, retailers and other brands.

Mondelēz WTR is looking at the whole travel journey for value growth.

Four ambitions outlined

The main growth will come from four areas:

– Driving consideration by encouraging more travellers to plan purchases during their time across the total travel retail journey

– Increasing penetration so that more travellers are turned into shoppers

– Driving volume by increasing the number of products sold along the journey – either in one store, or across a number of stores, and

– Improving value perception by persuading travellers to spend more on an item or items.

Through these actions, the Mondelēz WTR team has set out what it believes is a transformational ambition. In partnership with the industry, the snacking giant said that it “seeks to break down the single store, silo thinking, and shift mindsets to extending the passenger journey”. Back in 2012, the company unveiled its ‘Delighting Travellers’ strategy that helped put the confectionery category in the spotlight and make it a key pillar. The WTR team hopes to achieve equally significant shifts with ‘Destination: Value’.

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