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Can duty-free develop a killer app?
Published:  26 April, 2017

It is one of the most pressing issues facing the travel retail business today.

Strip away all the other political, economic and financial concerns impacting the industry – from passengers’ fears of terrorism and annoying airline baggage rules to currency fluctuations and the airport retail business model – and you are left with this dilemma: how does travel retail engage with the millennial generation?

The views and habits of the enormous 18 to 35-year-old demographic, which numbers 1.8bn worldwide, simply cannot be overlooked if duty free is to survive. They don’t think and behave in the same way, of course. Yet from Adelaide to Zurich, this generation does have one thing in common – their familiarity with and love of digital technology.

Recently, the Tax Free World Association interviewed 4,000 international travellers and discovered that only one in 10 left their smartphones at home when travelling. Nowadays the typical traveller takes two or three digital devices with them to catch up on emails, social media and the news. Their online activity peaks while at the airport. Quite rightly, digital distractions have been viewed as a threat to airport retail, but they are also an opportunity.

According to TFWA’s survey results, 65% of travellers would more likely visit a duty free store if they were sent marketing messages, offers and coupons directly to their phones while at the airport. Retailers are also realising they need to make their stores as much of a tourist experience as a retail destination to hook the interest of millennials.

At the March TFWA China’s Century Conference in Guangzhou, Philippe Schaus, speaker and CEO of DFS Group, Asia’s largest duty free retailer, talked of his company’s drive to create “Instagrammable experiences”. He said: “The way of the store is now about pop-up stores, where we use local artists, where we have a rooftop terrace – in Venice, for instance, where we have the Long Bar from Raffles brought to the airport in Changi, where we work with local craftsmen creating unique collections as you see in Siem Reap.”

On a much simpler level, I would also say retailers need to be more relaxed about shoppers using their mobiles in-store. Millennials love to take selfies and, yes, check prices too, but many store owners still view mobile phone use as some sort of crime. Airport security regulations may play a role here, but this phone-phobia must go if we are to get younger travellers shopping in duty free again.

The other half of the digital dilemma facing the travel retail business is the need for decent online support in the form of services such as pre-order, click-and-collect, home delivery and access to offers and loyalty schemes. A few airport retailers, most notably Gebr Heinemann, have created decent smartphone apps, offering many of these services, as have some forward-thinking airports such as Singapore Changi.

What’s needed is a reliable third-party aggregator that can develop a ‘killer app’ so users can safely browse and buy duty free from any airport around the world. Several promising players already exist, such as dutyfree.buzz and dutyfreehunter, but to succeed in the long term, these sites need the buy-in of the airports, retailers and brand owners.

The commercial, technical and logistical challenges involved in establishing an industry-changing aggregator are not to be underestimated, but it is vital. TFWA’s decision to launch a Digital Village at this year’s Cannes show where tech businesses will showcase a range of digital solutions for the trade is a step in the right direction.