The digital transformation of airports
Digital has not invaded or revolutionized airports. They cannot be considered as actors of their transformation.
Some "e-services" are appearing but they are just a showcase for services which do not constitute a recast of long-term issues.
But global dynamics of innovative business models is expressed through various movements that tend to be structured: Ouishare, The Family, etc.
In terms of travel retail, which is the heart of economic airport model, the digital transformation of airports is not achieved because other leaders have not yet made decisions regarding the digital mutation:
- The firm of luxury develop showcase sites and e-commerce concepts do not exist;
- The travel retail operators are implementing pre-order solutions that turn out to be failures.
Revenue per passenger and the fees of airports are historically leveraged through the travel retail operators thanks to the "arrogant" margins of luxury brands.
The globalization of travel retail operators is inevitable but it will only reinforce the impossibility of maintaining these economic parameters for airports, considering the reduced competition.
The weak condition of airport economy for processing to digital is related to multiple features. Key points:
• Inhibition of incumbent firms in their innovation efforts due to the regulation: customs, security, airline regulations, etc.
• The existence of extensive growth and profitability in more intensive growth: turnover per passenger increases when creating more shops that traffic grows. But equal traffic, turnover per passenger decreases!
Digital makes price differences in the visible world for consumers. For example, Chanel decides to lower its prices in China to bring them to the same level as Europe. Which results directly by a margin decline.
75% of luxury products are "made in Europe" and their weight in the travel retail market is over 40%!
It is wise to anticipate the end margins of luxury brands which are essential to maintain the fee levels charged by airports.
Finally, the digital and internet simply reduces the "intrinsic value" commercial property which makes it mandatory in the near future, the decreasing trend of airport shops royalty rates.
The development of collaborative economy provides new business models opportunities and Hi Duty Free is one of this kind of service.
But beware, the digital transformation is not the "digitalization" of business.
Digital transformation is redefining the entire value chain and empower users.
That's why the platform of Hi Duty Free is completely UGC "User Generated Content".
Hi Duty Free is a retail travel marketplace that connects air travelers who post their flights with buyers in the country of their destination who post a shopping mission of a luxury product available in airside area of airports. HDF provides the marketing environment (price, product, availability), legal, logistical and financial support to this relationship. There is no commercial relationship because the traveler is rewarded with miles while the buyer pays the airport dutyfree prices and service fees to HDF.
Registration is free for all parties. The traveler commits its own credit card for the purchase, thereby being permitted under the control of customs officer "personal effects".
The frequent travelers go to duty-free shops in airport to achieve a mission. The service boosts attendance of airport outlets.
All the necessary ingredients to "time and emotion" are so dear to luxury brands, and they are united by Hi Duty Free because any purchase is associated with the world of travel.
Service users know the most "viewed" products and also most requested!
Flight plans of frequent flyers are registered on the platform, which allows the community to solicit buyers for the flights which are still available for a shopping mission.
In case of absence of matching, any frequent flyer earn miles with a "shooting mission" which guarantees access to pricing information in the departure area of airports!
The success of registrations and the use of the service prove that consumers expect new services.
The gratification of price lists for a shopping mission were established based on the value of products: 2000 miles for inferior products to € 4k, 5000 miles from 4 to € 10k, 10,000 miles for products sup € 10k.
The platform also develops partnerships. The airport VTC Service Wingz is a partner with Hi Duty Free for US airports.
We can therefore expect structural changes in the business model of commercial royalties:
• Integration of online sales as Hi Duty Free,
• Opening of outlets in destination cities for orders At Home,
• New spaces for sharing economy where pre routing airports to hubs receive a commission of redistribution via Hi Duty Free,
• Integration of the Hi Duty Free function in digitizing operations: suitcase connected, i-beacon etc
International Duty Free (IDF) & Hi Duty Free have teamed up to allow passengers to spend Award Miles directly for duty free shopping
Never short of great ideas, execution & business model
A new acquisition strategy in Travel Retail : The Air Miles