DFNI live coverage of ACI Commercial & Retail Conference 2019 – DFNIonline.com

Tuesday 19 March

4.30pm: The opening day of the conference concluded by looking at disruption to car parking revenues at airports.

Delegates heard from Avinor Group Commercial Director Per Rune Lunderby, Cardiff University Professor Peter Wells, Swedavia Head of Parking, Entry & Mobility Vita Andrews, Fraport Senior Vice President Parking Management and Landside Traffic Operations Gerald Krebs, Finavia Direcor of Commercial Services Jukka Isomaki and Marco Polo Park CEO Gaetano Trapanese, who each offered their take on the future of cars and car parking at airport.

3.45pm: In the Q&A session, Isavia Commercial Manger Gunnhildur Erla Vilbergsdóttir discussed upcoming retail expansion at Keflavik Airport

She said: “We are now moving towards our master plan. The first phase will be in 2023 with lots of new commercial opportunities in the near future in the current area and the expanded one.

“In the last five years, we have tripled passenger numbers and need to have increased flexibility. We have been very successful with our current business partners, but we need partners that have the ability to make it happen.”

Isavia’s Commerical Director of Keflavik Airport Hlynur Sigurðsson will be discussing upcoming retail tenders and expansion at the airport more at the conference tomorrow, she added.

3.20pm: Blynk Managing Director Neil Muir shared insights into digital activations his company has created. He said that successful instore digital strategies are technically deliverable, have meaningful content, are aesthetically suitable and have pre-defined targets.

Muir focussed on the audio side of instore activation. “We often put so much thought into how our spaces look, but very little into sound. We can use targeted voiceovers, soundscapes and acoustically manipulate the space.”

On personalisation, Muir said brands and retailers in Europe see greater engagement through personalisation campaigns that use instore devices, rather than passengers’ personal devices. “Personalisation can be seen as invasive, but we don’t think it needs to be – it is just about making things relevant for an individual,” he added.

3.05pm: Keflavik Airport is developing its offer for Chinese consumers, thanks to its introduction of Alipay. This has been possible thanks to the airport partnering with ePassi, whose Marketing Director Danielle Neben showed delegates how the platform can help Chinese travellers overcome the language barrier.

Isavia Commercial Manger Gunnhildur Erla Vilbergsdóttir said that since the introduction of the platform in September 2018, there have been “significant numbers” and that 80% of the stores now accept Alipay through the platform. Indeed, two of these stores are seeing an average spend with Alipay that is twice as high as average spend through other payment methods, she added. She concluded that accepting Alipay is a “no brainer” for airports.

2.50pm: AOE CEO Kian Gould discussed his company’s recent foray into the downtown tax-free market in Auckland.

Gould argued that the current tax refund market is synonymous with long queues and can be confusing so his company looked to introduce true tax-free shopping downtown in Auckland.

He said this benefits passengers, airports and retailers. For passengers, they save time and are guaranteed 100% of tax refunded. The airports can see increased dwell time, benefit from the income stream and gain additional customer insight. Retailers, meanwhile, can extend their tax-free offer to downtown.

After a year in Auckland, Gould said the airport collection point is handling 20,000 packages every month.

2.40pm: Aircommerce Managing Director Melvin Broekaart relayed research from Google, which suggests that 69% of luxury shoppers want to physically see and touch an item before buying it. “At the airport, we have these people for a full hour,” he added.

2.15pm: The afternoon session began with a session on how physical airport stores can harness digital disrupters. Budapest Airport Head of Retail & Advertising Patrick Bohl opened by saying that “we [airports] are not going to die but we need to open our eyes”.

Bohl argued that airports will remain the king of bricks-and-mortar retailers as those flying will always need to pass through airports – a luxury not afforded to high street retailers – but airport retailers must also continue offering a “total journey experience” to maximise retail revenues.

Bohl spoke about the Hungarian airport’s second BARTA campaign, which ran from December 2018 until February 2019 and once again saw the airport partner with Heinemann Duty Free and Wizz Air. He said that despite the decline of inflight retail, airports are vital to this successful partnership.

12.45pm: The final presentation before lunch was delivered by Nestlé International Travel Retail (NITR) General Manager Stewart Dryburgh.

Dryburgh looked at how NITR has effectively communicated with consumers, reinvented itself as consumers evolve and will look to capitalise on travel retail growth opportunities.

Dryburgh said NITR was looking to buck the trend and keep up with the estimated passenger growth of 7.1% every year for the next 10 years. This will be achieved by “listening to what the consumers want”, utilising the 10 growth drivers outlined above and by presenting confectionery brands with SOUL (story, occasion, unique and local).

He concluded: “We will get that by focussing on the 10 category growth drivers and doing it with soul by bringing stories to life.”

12.30pm: The third presentation of the session saw Moodie Insights General Manager Craig Mackie deliver research from a case study done at Singapore Changi Airport, which shows varying purchase drivers and opportunities for retailers depending on time of day and nationality.

He added that “you can manage these opportunities in real time” through the use of artificial intelligence.

12.15pm: Behavioural Science Lab Director of Consulting Gregory Phillips delivered research from the US. He looked at how duty free sales in the country’s 25 busiest airports are not keeping up with the passenger growth at these sites.

Behavioural Science Lab’s research suggests that three times as many passengers can be converted into duty free purchasers by better understanding consumer behaviour, Phillips argued.

11.55am: m1nd-set CEO Peter Mohn delivered new research on European traveller behaviour.

Mohn opened by saying that the initial estimate of total European travel retail sales in 2018 was $21bn, with sales in the first nine months of the year growing 7% on 2017.

The m1nd-set research suggests that almost equal numbers shop in the travel retail channel for themselves (43%) as for a gift (42%), which Mohn billed as a “very important” trend.

He added that a “huge opportunity” exists in that only 20% of European travellers currently notice touch points before arriving in the duty free shop, and that stakeholders need to utilise digital platforms more, in order to capitalise on this opportunity.

Furthermore, just over three-quarters (76%) of European travellers would like to see improvements in the overall travel retail experience, with two-thirds of these saying they would prefer to see creative store design that surprises them, according to the m1nd-set research.

Mohn concluded: “People want to have something more experiential, a different experience to downtown and they it want to have a local feel.”

11.40am: The first working session of the day looked at evidence that airport retail is under threat and was moderated by Lagardère Travel Retail COO of Europe, the Middle East & Africa Frédéric Chevalier.

He warned delegates that even though airport sales are growing, declining duty free spend per passenger in airports is a challenge that needs to be overcome.

Chevalier concluded by calling for increased collaboration between airports, retailers, brands and airlines to revert this trend.

10.30am: The morning’s keynote address was delivered by retail analyst and author, Natalie Berg, the Founder of NBK Retail.

“The most important rule of retail is being relevant to your customers. If you can’t stand out and offer something relevant to customers, you don’t stand a chance in today’s climate,” she told delegates. However, citing a figure showing that 90% of retail sales still take place in a store, Berg added: “[Physical] stores are not going anywhere.”

Berg argued that the future of retail is blended between online and physical stores, which is in part, why online stores are moving offline.

She added: “If Amazon Go is coming to Europe this year and skipping the checkout becomes accepted, that will change our expectations for an airport, so we need to continue thinking about how consumer expectations will be super charged in an airport setting.”

10.15am: The morning’s next presentation was delivered by DutyFree Iceland’s Former Minister of Industry and Commerce & Chairman of the Board Ragnheiður Elín Árnadóttir. She looked at how Iceland took the ashes of a financial crisis and volcano eruption to make the country a hot tourism destination.

“Iceland now has a thriving tourism sector. It has grown into the largest revenue-generating export in Iceland, superseding fisheries, so it has become a fundamentally important industry in Iceland,” Árnadóttir said.

10am: European Travel Retail Confederation (ETRC) Secretary General Julie Lassaigne delivered a welcome address on behalf of the industry body where she discussed the ETRC’s work in combatting legislation challenges.

Discussing the confederation’s pilot of an off-label solution, Lassaigne said the ETRC would be looking to “roll out the system on a larger scale in the near future”.

Moving on to the World Health Organisation (WHO) delaying its study into the illicit trade of tobacco in duty free, Lassaigne commented: “We hope to delay that study even longer and to be able to count on all the industry to continue that fight.”

Lassaigne said the ETRC and other industry bodies were being pro-active with legislation challenges, as shown by the One Too Many campaign in UK airports. “Only by working together will we be able to continue to defend our business,” she concluded.

9.30am: ACI Europe Director General Olivier Jankovec gave his state of the industry address. He said that there were 2.34 billion passengers in Europe’s airports in 2018, which means European passenger traffic has grown 36% over last five years.

Despite this growth in passenger traffic, there are short-term and long-term challenges for airport revenues, Jankovec warned. In the short term, there is fading momentum because of economic deceleration from volatile oil prices and geo-political risks. While in the long term, the market is reaching maturity and penetration is getting more difficult on a per passenger basis.

Jankovec said: “We are facing a business evolution imperative where we need to put sustainability at the heart of our businesses. At ACI Europe, our board is developing a comprehensive sustainability strategy that will be delivered at our annual congress in Cyprus in June.” He added that this sustainable strategy will put consumers and customer experience at its core.

Jankovec was followed by Elias Liolios of ACI Europe’s Commercial Forum. He reiterated that evolving non-aeronautical revenues showed the importance of looking at the current airport revenue model over the coming days.

9.20am: Iceland’s Minister of Tourism, Industry & Innovation Þórdís Kolbrún R. Gylfadóttir was next to welcome delegates. Iceland is a fitting setting for a conference themed around the concept ‘adapt or die’, she argued.

“Our self identity was wounded [by the financial crisis] then two years later [in 2010] Eyjafjallajökull erupted. This was an adapt or die situation. How could Iceland turn these developments to its favour? The eruption had raised awareness of Iceland as a country of natural wonders [and] we adapted pretty well with a record 2.3 million tourists last year,” she said.

9.05am: The conference kicked off with a welcome from Isavia CEO Björn Óli Hauksson. Introducing the Darwinian conference theme ‘adapt or die’, he said: “it’s something we have to keep in mind at any given time in the airport business. Anyone in this business knows that customer behaviour is changing at a rapid pace.”

Outlining the growing importance of commercial and retail revenues to airports, he added: “[There is] a pressure to ensure non-aviation activities are strong [as] airlines will in future not be able to pay high charges. We hope that in this period of turbulence that this particular segment [commercial and retail] will continue to develop.

Monday 18 March

10pm: Tonight’s Opening Cocktail from hosts Isavia, took place in the remarkable Whales of Iceland venue. The unique location was the setting for guests to network with contacts new and old, while surrounded by the giants of the ocean.