Retail consultant Adil Raïhani is well known for his work at Nuance as Director of Sales and Operations, Europe and for his vision and accomplishments as Commercial Director at Vienna International Airport. This interview, by filmmaker and publisher well known in the retail travel industry, Peter Marshall from trunblocked.comand first published on this platform, explores what Raïhani thinks he can predict for the COVID-19 airport retail station. Above all, it also defines the criteria which, according to him, should be adopted to allow a new business model to thrive in a transformed landscape.
Peter Marshall: Adil, a few weeks ago, the blog trunblocked.com asked the question of whether, for travel retail, it was RIP, Renaissance or Revolution which was going to follow the death of COVID-19. I understand that you would say that these are not the only descriptors that could cover the new era unfolding before us.
Adil Raïhani: The era of “The Unknownsance” broke out, the vortex of the unknown, a global test of the global ecosystem. Every learned habit and behavior has changed, freedom has been suppressed – societal exchanges / behaviors have changed significantly, and all of this practically overnight.
Let’s be honest, three months after the COVID-19 epidemic, we understand (finally) that it cannot be compared to any past event. Recovery will take longer, will be very crude and will differ significantly by region and will have mixed impacts on the aviation value chain and its stakeholders.
Mother nature has spoken badly worldwide. She sent the world into an economic and social tsunami as she recovered at the same time. Three billion people stranded, traffic disrupted, entire fleets stranded, the global closure of shopping factories, shopping malls, commerce, banks and airports turned into ghost ports. All daily habits have changed, preferences and priorities have changed, behaviors as well as consumption – everything has changed. This will have a serious impact on consumer confidence and consumption for travel retail.
So Maslov’s theory[[[[a motivation theory including a five-level hierarchical model of human needs. The needs lower in the hierarchy must be met before individuals can meet the needs higher. From the bottom of the hierarchy to the top, the needs are: physiological, security, love and belonging, self-esteem and self-actualization. Source: Psychology simply] was actually completely ransacked by COVID-19. Whichever way we cut it, the future is not what the travel industry may want it to be. There can be no turning back. How do you think the new behaviors will impact passengers while traveling?
After visiting my local supermarket, I realized that change was coming. The boxes are framed with plexiglass to avoid contact. At the service counters for cheese and meat, long lines and crosses marked on the ground indicate the minimum distance. Crowd control at the entrance, maximum allowances for disinfectants such as wipes and hand sanitizers. Not to mention that shopping takes a lot longer because we queue for each race you have to do.
So how does the above turn into a “new customer experience reality” while traveling? Do you remember the last time you traveled? How do you get to the airport, shake hands with your friendly taxi driver, check in and start your airside journey? Well, now imagine your next trip, what purpose you decide to travel to, how you are going to travel, what precautions you take in your planning process, what products you buy and what you will do to stay safe – to mention just some things.
For the time being, customer journeys will be redesigned by new regulations, stricter sanitation standards, longer waiting times as processes will slow down and residence time will inevitably be severely affected – impacting financial performance. In addition, regaining travelers’ confidence will in itself be a major challenge.
Let’s break it down into different sectors. What do you think will be the fundamental differences between airports? What new services do you think will be mandatory for them?
Much will depend on the state of the local situation, how governments have coped with the COVID-19 epidemic and on their preparedness. Stakeholders, where care has played an important role in their designed customer experience, will suffer less compared to those who have chosen an income greater than customer satisfaction or quality standards. Those who have invested in smooth travel and an excellent customer experience will separate from those who have not.
Needless to say, any stakeholder who is digitally mature and who has adopted omnichannel will adapt better to customer expectations. E-commerce has protected the world from a global crisis in recent months, and I hope that by now the importance of omnichannel will resonate much more with the industry than before.
Do you think airport management will keep pace with the kind of changes that will be asked of them by their traveling passengers?
In general, airports quickly implement reliable measures and security is of course an essential value and activity at airports. The nuclear question for me is what impact social distance will have on airport capacity in general, particularly for check-in counters, public seats, security and related space required to process travelers, airport gates boarding and boarding procedures.
Many airports will have serious problems with the changes required due to lack of space and the cost of adapting to make airports more contactless.
MAG was never intended to become the main source of revenue for many airports, although it has become too expensive, and it has done so in far too many airports.
Turning to the commercial side, do you think that the Annual Minimum Guarantee (MAG) is finally an exhausted force? In the short term, this looks like a scenario without change. But you’ve been the spearhead of Vienna International Airport through very hectic times, so you’ll know what is doable. What is the best advice you can give and how agile should any new contract be?
The model is broken. Nothing is going well anymore. He has been suffering for a long time. However, despite Trinity’s endless efforts, the model has hardly changed. COVID-19 simply put an end to all the blows in the bush!
COVID-19 struck at a time when cash reserves are generally low. P&L are often negative during this period – another blow to today’s problems as it limits the possibilities of adjusting financial arrangements.
The MAG concept is outdated and a thing of the past as much as the dinosaurs. I consider MAG to be a security tool to protect airports against bad operators. MAG was never intended to become the main source of revenue for many airports, although by escalating it unfortunately became, and it has done so in far too many airports.
Since we do not yet know at all how things will develop, even with state funding, airlines, airports and a large part of travel and affiliated industries are likely to run out of money if the mentality continues ‘be affected by COVID-19 and’ The Unknownsance ‘.
The solution is simple, but it requires bold actions and a clear and common understanding that:
- The value chain has only 100% to share if a sustainable solution is sought.
- Airports must commit to rebalancing risk and benefit with their partners. In other words, earn proportionally less in the future in most cases.
- The minimum and maximum bid levels are predefined for calls for tenders in order to avoid unrealistic offers.
- The offers of hostile offers move to the room of shame.
- All stakeholders must embrace collaboration. The pie will be larger, but the pieces will be smaller.
- Prices must be adjusted to reflect the new model.
Let’s see if the industry is ready for the real truth or dare a full discussion?
Regarding retailers, what do you think they should do now in terms of passenger offerings? How should the rather one-dimensional mix of product categories change?
Long before COVID-19, there was a need for new, refreshing and innovative concepts as we see in High Street and online. Many airports and retailers simply fail to offer a convincing and tailor-made offer to their travelers, because supporting margins and investments seems to mean more than satisfied customers.
We know very little about the traveler of tomorrow, his state of mind and its effects on the industry. I imagine that the traveler of tomorrow will certainly look for disinfection products which should become a widely available category at fair prices. This category could have a positive impact on attendance due to the expected high demand. The increased awareness of current health will also lead to an increased demand for personal health, hygiene and wellness products, both in retail and in food and drink.
Customer satisfaction and expectations are constantly changing. Operators will need to expand their omnichannel capabilities to meet these demands and ultimately mitigate risk and generate revenue.
I guess it is still unclear to what extent the hangover that increased online usage will bring to the retail industry. We all recognize that its use has grown exponentially in the past three months and there are no visible signs of stopping. What accelerator should it now be for retailers to seriously push their online offer. With few exceptions, airports are likely lacking in this area. They and many retailers must follow the example, not just speak.
Why ignore the obvious? Those who still view electronic commerce as a threat have carved their destiny, especially after COVID-19.
Yes, many retailers need to improve their online offer and their user experience. Online shopping habits at airports are very different from offline shopping habits, which is why most fail because they want to sell only duty free. Most retail platforms are just a catalog of what you can find in the duty free shop, have poor content and lack user experience.
Avant-garde airports have already started to become a market and are using omnichannel to provide a unique and personalized experience throughout the journey.
Unfortunately, most airports are unable to identify endless means of communication through omnichannel. Omnichannel is an essential tool for improving the customer experience.
What about brands? In general, brands are way ahead of airports in terms of online connectivity. Do you see a different approach coming from brands, Where retail travel sales will be increasingly cannibalized from both the Hhigh street and travel retail trade with more concentration by brand players on adopting one online, direct sale to the consumer approach?
Brands have always been ahead and will continue to be ahead in my opinion. I can well imagine a model that allows agreements based on commissions for sales that are made outside the airport, like in Auckland. Why not add digital brands to your offline brand portfolio to generate additional revenue and improve the user and customer experience?
With regard to airlines, what mechanism do you think can be introduced to integrate them further into the mix in order to provide a real focal point for quaternity (airlines, airports, retailers and brands). Is this still just an unrealistic proposition?
It is not unrealistic. Airlines are an essential player, if not the most important in the context of quaternity. If everyone involved doesn’t recognize it, it won’t work. COVID-19 may have changed the perspective of stakeholders and will finally start a constructive dialogue together, let’s see. It is high time to do it!
If there is one thing you want to tell the industry in terms of preparing for the new retail environment, what would it be?
AR: If the industry continues to do what it has always done, it will get what it has always done!