INTERNATIONAL. In a wide-ranging interview, Spark Group of Companies Founder and President Heidi Van Roon tackles the big issues which are changing the face of airport retail.
She shares her views on the changes we might see in physical airport retail activations, the complementary opportunities brought forward by digitalisation, pandemic staffing challenges, improving conversion rates and spend per passenger, plus much more.
Van Roon concludes by explaining her own solution for brands and retailers to meet the challenges of the new airport shopping environment – the Brand Partner Program.
The Moodie Davitt Report’s Senior Business Editor Mark Lane asks the questions.
The COVID-19 pandemic brought airport shopping to a virtual standstill in many locations for a long period. Has that signalled a profound change in airport retail as we know it?
The standstill we have witnessed for international travel was hopefully the death of everything that needed to die for the new era of travel retail to emerge and succeed. Much like the dormancy in winter supports the vibrancy in spring, so the standstill has made way for a new season in travel retail.
During the period of dormancy, we still witnessed tremendous commitment, innovation and major investment across the industry, with the conversation on the future of travel retail kept going on social media by thousands of interested parties and influencers particularly around a better integration of digital and physical channels.
This commitment has also been evidenced by some superb online industry events discussing the way forward for travel retail such as those already staged and planned for the future by The Moodie Davitt Report, and other event expert stakeholders in the industry. No doubt, the heartbeat of travel retail still beats strong and it is here to stay.
Attempts to restart international travel have so far been stuttering and in many parts of the world we are still to see any significant revival in levels international traffic, but I feel the industry is ready to come back stronger and more capable when opportunity allows.
Will we see big change in the traditional style of airport retail activation, where shoppers could taste, touch, smell and try things on?
Traditional retail activations and promotions will most definitely play a vital role in the future of travel retail. In the interim this model will be adapted to the applicable safety measures and consumer comfort levels.
We may not see a tray filled with cups for wine tastings in the near future. But we can still offer a tasting to a customer by putting on clean gloves and offering a single cup to the customer on a tray. Single wrapped confectionary can also be sampled this way. This, of course, all depends on the health and safety regulations that apply at any particular time, while we learn to adapt retail to the new era that includes waves and variants of COVID.
The promotional plan must be sensory, safe, clean and flawlessly delivered. Intangibles such as the building of rapport, development of trust, confidence in the product and authentic brand stories – these are the virtues of ethical selling that can shine in this new era for travel retail. It is an exciting time to be in sales.
Can you envisage a new approach to airport shopping activations and promotions? What might that look like?
I really can envision a new approach that will align with brand and retailer priorities. In-store sales and promotions will be centred around human interactions such as storytelling; retail theatre; theme parks; social media hot spots; compelling offers; travel exclusives; well-trained staff; excellent retailer support; and creative product presentations.
“Great staff and good sales plans will support better conversion rates. We know customers do not just shop price; they also shop brand experiences. Effectively designing this brand experience is tantamount – it needs to complement digital and stand out experientially”
We will also see complementary brands partner such as for example spirits and confectionery, or fragrance and skin care, or sunglasses and handbags. The combinations are endless. Collaborations build economies of scale and a wow experience for the traveller.
At Spark, we had the privilege of supporting such a collaborative promotion in October 2019, on this occasion involving spirits and confectionery. This particular promotion achieved a new high watermark in terms of average sales per hour. I expect to see much more of this in the future.
How do you think the deployment of technology in general and digital specifically will play out in airport retail in-store going forward?
COVID-19 has fast-tracked technological adoption. Operators, airports and brands have invested heavily into their digital channels. Digital as part of the in-store experience will only grow. From digital signage to tablets that are part of the sales process, technology is transforming retail operations into a new era.
Sales teams will need training and ongoing support. For example: What if out of stock items could be fulfilled by scanning the QR code and having the product shipped to the destination? Can airports, airlines and retailers agree how data is used? This thought alone is powerful because integrating technology will make the customer experience more personalised and more globalised.
I envision retail counters turning into livestreaming stages, KOL hotspots, and social media events that go viral. Are we ready for this? Every customer is holding a marketing device and can feed video to their network around the world instantaneously. Will retailers encourage this?
The Beauty Tech Live Virtual Expo hosted earlier this year by BW Confidential and The Moodie Davitt Report featured staggering opportunities for travel retail propelled by technology. Any new retail strategy must be both digital and physical.
What are the main challenges facing airport retailers now?
The main challenge will be how to emerge from chaos with every part of the value chain disrupted; the pandemic has not left a stone unturned and continues mercilessly. A reopen plan is urgent along with a global health and safety standard for air travel. Somewhat like flying by instruments through a thick fog, so leadership needs to urgently plan a practical yet flexible approach.
Retailers are asking brands for partnership, relationship and collaboration. Brands, in turn, need to focus on the need to drive conversion through an adapted customer experience.
Now is the time to decide on the strategic supports between brands and retailers that will underpin the recovery and which will line up the right decisions.
Tens of thousands of people involved in airport retail have lost their jobs due to the crisis. As the airport retail industry rebuilds, will the sector be able to attract back the talent that has been lost?
Keeping in mind that every role is different, HR needs to do much more than attract the talent that was lost – HR needs to inspire new hires. The current labour market dynamics require a solid HR agenda, yet retailer budgets are drastically cut. As difficult as this season is, there are viable options and much good will come to those who prepare well.
The value of using recruitment firms is well demonstrated. Brands will be more involved in deciding who works for their brand. Having a better hire on the front line will be the gift that keeps on giving. Third party employment providers will become more prevalent especially if retailers move to a 100% brand paid employment model.
That business model is well developed and makes sense if the agency is airport-specific and understands the industry. From the standpoint of Labor and Industries in the US and for Employment Standards in Canada, the pandemic has brought scrutiny to agencies that dispatch independent contractors. This is a good thing because the nature of promotional shifts does not pass the test in most cases. Retailers and brands have a responsibility to seek out agencies that provide full employment and workplace insurance.
“Over the past years, the outcomes of the sales and promotional model as we’ve known it, were inconsistent. I had a vision for applying the typical promotional budgets that brands have into a more resourceful and effective programme”
With so much disruption of labour, this is an opportunity to turn the page, if you will. I am anticipating updated employment contracts and modernised collective agreements. Our experience has been that a conducive work culture positively correlates with KPI’s.
Employment is now about inspiring and motivating the best of the best. I see a tremendous opportunity to elevate the airport retail profession. The HR focus will be about more equity, equality, transparency and accountability. This era is about walking the talk because a crisis calls out more ethical and moral standards.
How can the industry generate higher conversion rates and what role can personal engagement play?
Great staff and good sales plans will support better conversion rates. We know customers do not just shop price; they also shop brand experiences. Effectively designing this brand experience is tantamount – it needs to complement digital and stand out experientially.
The new retail era will focus on the last link in the value chain, namely the place where the customer meets the brand in a one-on-one conversation. This starts by elevating the sales profession and by investing into a high conversion formula that prioritises the human connection.
A high performing sales culture starts with how we hire, how we support, how we measure, how we celebrate and how we promote our front-line team. The more we support our staff, the more they will support the customer.
It has been proven that staffing optimisation will add another 15%-25% to daily sales, it really is that simple. The presence of skilled staff encourages footfall, dwell time and therefore conversion rates.
You have devised an airport retail staffing solution, named the Brand Partner Program, which aims to optimise sales in airport stores. What is it, and what are its key benefits?
With the entire industry in store opening mode, the timing seems perfect for designing a turn-key sales and promotional framework. Rather than offering a consultation service, it made sense to introduce a plug and play programme that tackles the issues facing the airport retail industry head on.
The Brand Partner Program (BPP) meets at the intersection of creativity and commerce. It takes a 360 degree approach and considers the customer, the brand, the retailer and the staff.
Over the past years, the outcomes of the sales and promotional model as we’ve known it, were inconsistent. I had a vision for applying the typical promotional budgets that brands have into a more resourceful and effective programme.
The Brand Partner Program (BPP) is a one-year travel retail certificate programme and substantially upgrades the former brand ambassador and beauty demo positions. Various pricing options are available and include recruitment, a dedicated staff for the entire term, ongoing HR, adapted brand promotions, bespoke customer service, training, regular reporting, a digital workflow app, wages, employer obligations, sales celebrations and a location manager.
At no cost to retailers other than shop floor permission, badging approval or authorisation and basic supports, the BPP has the makings of a shared success story because it requires full collaboration. The whole programme is thought out in every detail for supporting the recovery and beyond.
I believe that the key to a successful recovery will be a positive customer experience combined with the best possible sales programme. It is open to retailer and brand input and aligns well with the travel retail USP.
In summary, the BPP bundles the successes that have most significantly built the Spark brand so far and it aligns these successes to the new era of travel retail in a way that is scalable, conscientious and mutually-beneficial.
You talk about the Brand Partner Program being ROI positive. How can you be confident about this, given what has happened to airport retail in the COVID-19 era?
Our business model aims to manage expectations even during a pandemic. It is our habit to define the measurables from recruitment to staffing, including ROI. Our guarantees are established on a case-by-case basis.
I am surprised how many times we quote on projects that are awarded to the lowest bidder with little regard to overall outcomes. We like to challenge this logic by taking the conversation to the place where shared outcomes are best supported.
The BPP also rests on economies of scale, with a benchmark of 10,000 labour hours per location (equivalent to five full-time staff over 12 months); the business model hits a comfortable break-even point that allows us to offer so much more at a competitive price. We want to demonstrate that with a little bit of planning and commitment, we can deliver an exponentially more valuable programme.
With all the recent announcements that are building out the digital channels, we are shining the spotlight on the human element that needs to happen in-store. Because the future of retail requires a coordinated digital and physical strategy, these two approaches work in tandem. Like two pedals on a bicycle, a two-pronged approach will best support continuity and momentum for the customer.
We know our numbers well across the categories and I want to stand behind what we do for retailers, for brands and for staff. Sometimes this ROI is measured daily, weekly, monthly or quarterly – but it is measured.
As an owner/operator I am also hugely committed to being resourceful and an in-store model that does not include a solid plan will not be sustainable; in fact it will cause the digital strategy to short-circuit. The customer will quickly switch to another brand or another channel. We want to be held accountable as we hold our staff accountable. This accountability supports our brand purpose and gives our work meaning.
Heidi Van Roon will have a close involvement in this year’s Virtual Travel Retail Expo as an exhibitor and engagement session speaker. She is also on the judging panel for the event’s Travel Retail Superstars Awards, which recognises and celebrates the role of front line and backroom staff in travel retail as the industry grapples with COVID-19 challenges.
