I attended the 2016 Trinity Forum conference in Mumbai, India from 12-14 September, 2016. Run jointly by the Moodie Davitt Report and the Airports Council International, this annual conference has been going since 2003 and still maintains its relevance to the travel retail trinity of airports, retailers and suppliers and remains the best conference in our (sometimes) over-conferenced industry.
Best presentation of the conference, hands down, was right at the end of day three – sometimes it pays to resist the urge to skip off early and hang around – by Kai Schmidhuber, Executive Vice President Multi-Channel with Fraport, operators of Frankfurt Airport in Germany.
Kai is leading some ground breaking work in developing a multi-retailer shopping platform for consumers that allows them to order from any retailer on the airport and get their goods delivered to them from the gate.
But that’s not the best part. Not by a long shot. The fascinating part was the work they (Fraport) are doing with the retailers and the national carrier, Lufthansa. In travel retail, we keep talking about the Trinity being airports, retailers and suppliers. Airlines have long been the poor cousins with on-board duty free plagued by a range of difficulties including limited range and logistical nightmares to name but two.
Anyone who’s been in travel retail for more than a few years will – at some point – have thought that the next step for our industry is to allow consumers to shop from an airport’s entire assortment (which could extend beyond 50,000 SKUs) on-board when they have time to kill with the order being fulfilled on the ground and handed to the passenger as they walk off the plane.
But very few have cracked how to make this work commercially.
Typically, retail operators pay a concession fee to an airport for the right to make sales at that airport and (usually) a different operator pays a concession fee to an airline for the right to make sales on-board that airline. Airport and on-board duty free have always been seen as competitors. From an airport perspective, every on-board sale cannibalises from the on-airport offer. And from an airline perspective, every on-airport sales cannibalises from the on-board offer and is just more weight (and hence more fuel burn) for the airline to bear.
Airports and airlines are typically unwilling to “share” concession fees in order to grow the pie because of this competing interest – seemingly until now. Fraport and Lufthansa appear to have agreed to a trial – suspending their individual commercial interests – to see if cooperating rather than competing can grow combined sales. Kai was naturally unwilling to share too many details about how this would work, but the fact that he has got to a trial at such a big airport is no mean feat. I dips me lid to you Kai. I hope it works and serves as a model to the entire industry as to how travel retail can grow beyond the traditional means.
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