The need for digitalisation and its effectiveness at upselling to consumers was a key takeaway from last week’s TR Consumer Forum Future Growth Channels session, with the rise of lounges and demand for sustainability also major discussion points.
Held in Vienna from 21-23 June, the TR Consumer Forum brought together travel retail and duty free thought leaders and other stakeholders for two-and-a-half days of high-level discussions.
The Future Growth Channel session saw a panel explore the potential for food and beverage (F&B), lounges, digitalisation and adjacencies such as sleep provision and gaming to drive sales and engagement.
Peter Mohn, CEO & Owner at m1nd-set, opened the session, with delegates also hearing from Mirko Fechner, Retail and Property Director at Budapest Airport; Errol McGlothan President EMEA & APAC at Airport Dimensions; Andreas Reichert, Managing Director at Allresto Flughafen München Hotel und Gaststätten; Johan Schölvinck, Founder and Managing Director at Market Square Consult; and Martijn Steur, Founder and Managing Director at Kinetic Consultancy.
Mohn opened by sharing some m1nd-set insights from the airport F&B space, which showed a wide choice and convenience were highly prized by consumers.
He also stressed that passengers wanted to try local flavours when travelling, but cautioned that price and lengthy queue times were off-putting.
‘Ever-increasing’ demand for lounges
Next to speak was Airport Dimensions’ McGlothan, who shared some insights on the growing popularity of airport lounges.
“Demand for using lounge spaces is at the highest level ever,” he shared, adding that their appeal is “ever-increasing”.
“They want things that are more convenient to them,” he added. Personalisation, and how digitalisation enables that, were also important.
“Millennials and Gen Z will start their journeys on the phones,” he detailed, adding that increasingly that’s how customers access lounge services.
McGlothan also touched on the increasingly blended nature of travel. One day a business traveller will need Wi-Fi, the next, when travelling with family, it will be different. But it’s the same traveller.
“There’s a real demand for customers to have a range of experiences,” he confirmed. “We’ve invested in using space to deliver those experience needs.”
Examples include sleep propositions, and even gaming. “What’s quite interesting for me is we start getting into merchandising and sales,” he confirmed, nodding to the future growth of the channel.
Budapest Airport’s Fechner then took the mic to share how in his experience coffee shops were offering enormous potential.
“Coffee is really, really important,” he began. “They cover all segments.” Essentially they appeal to everyone from business travellers, those visiting friends and relatives, leisure travellers, and millennials and Gen Zs.
“Of course coffee shops take up a lot of space, but on the other hand, it is the one that has the highest margin as well,” he added.
He explained that up to 70% of travellers at Budapest airport are travelling with low-cost carriers, and that the airport had recovered to 91% of 2019 passenger volumes.
“Traditional” F&B is driving that recovery, he continued, with convenience stores also performing well.
Fechner also talked about the need for focus spots to be built into the airport passenger flow to capitalise on spend and make sure passenger needs were being met.
He also shared a remarkable piece of data which showed growth at convenient fast food chains KFC and Burger King was being predominantly driven by self-service ordering screens.
Sales are “skyrocketing” since their introduction, he said, adding that “spend had doubled”.
“A person behind a counter will never achieve the upselling a machine can,” he said of the AI in-built in the ordering systems.
Do customers want sustainability in F&B?
Munich Airport’s Reichert spoke next and brought an interesting perspective to the sustainability conversation.
He shared a number of initiatives run by the airport to make operations greener, from locally sourced ingredients to offering a 20% coffee discount if customers had a reusable cup.
Yet when consumers were given the option to pay a small amount more to offset some of the carbon impact of a less sustainable food choice, barely anyone did.
“We need to see if the customer is actually willing to participate,” he said. He went on to detail other sustainability initiatives at the airport, including the use of solar power in the airport.
Kinetic’s Steur then identified the blending of digital and physical as a real growth opportunity for travel retail.
He gave Google as an example of a business that exists at the intersection of attraction, interaction and transaction, and a model that duty free can follow.
‘Having the eyeballs is one thing, but the interaction is the business model,” he added, giving an example of having a music and headphone proposition in an airport lounge.
Last to speak was Schölvinck from Market Square, who gave an ‘irresistibility’-themed presentation.
He spoke about consumer psychology, and how augmented reality, digital and cutting-edge solutions can drive conversion, but it’s not the only way.
“It can be simple and analogue and old-fashioned, but very, very irresistible,” he stressed. One such example was music in airports.
“It’s fundamental to our wellbeing and our brain,” he said, adding that it creates a feel-good atmosphere and drives sales.
Coverage of the TR Consumer Forum continues online.