Melvin Broekaart, Managing Director – AirCommerce

Travel retail beware. ‘Showrooming’ is coming to a store near you with the potential to seriously damage the health of your business so it’s time to take action

If there was one single factor that used to play to travel-retail’s advantage it was price. The discount on luxury goods of anything between 10% and 30% was enough to prompt travellers to flex their buying muscles at the airport, relatively safe in the knowledge they had bagged a bargain over purchasing on the domestic marketplace or online. But since smartphones came on the scene it has been a different story. ‘Showrooming’– when consumers browse items in store to see and touch merchandise only to buy it online – has already hit the books-, consumer-electronics-, beauty- and fashion accessories segments, forcing some chains to close.

The disruptive effect that the internet has had on downtown retail will become inevitable for travel retail too as showrooming gains more momentum. The consumer’s ability to make virtually instant price checks using smartphones to benchmark duty-free pricing is making it increasingly more difficult to fend off competition. What starts with a relatively innocent smartphone-driven price comparison at the airport’s point of sale, can end in travelers shifting their purchases to e-commerce stores (such as Amazon) both during and after their airport visit. The allure of low price-points, cost-friendly global delivery options and the convenience of not carrying purchases along the journey offered by e-commerce outlets can be particular appealing to shoppers.

Dynamics in airport retail are even more extreme than on local markets, as retailers only have one shot to score a ‘sale’ before passengers board and will, in the best case scenario, return after a number of weeks (or in the worst cases, never again).

Showrooming is particularly pertinent to Western travelers for whom availability and authenticity of luxury brands is not an issue. For many Asian shoppers, who are core buyers of luxury brands, the authenticity of luxury goods is still a key reason to buy in travel retail, combined with the fact that prices are significantly higher in Asia.

The axe has already fallen in the inflight world. The bankruptcy of inflight catalogue brand SkyMall, for example, at the beginning of the year was largely attributed to passengers discovering that their goods were more affordable elsewhere by using smartphones inflight, following the relaxation of rules on electronic devices. Happily the catalogue retailer may be given a new lease of life after it was bought by New Jersey company C&A Marketing earlier this month but its demise is a stark wake-up call for travel retail to take action.

There are many types of ‘mobile-assisted shoppers’ to address though, according to a report by Columbia Business School (see chart) and methods can be explored to ensure that travellers actually part with their cash at the travel retail store. Travel retail exclusives, for example, offer a point of difference as clearly there is no need for price checking as they are not available in other channels. Also offering home delivery options, price matching and unique retail experiences can all help to safeguard sales from slipping through the fingers of travel retailers into the hands of e-commerce merchants.

 

Five types of mobile assisted shoppers

“Showrooming and the Rise of the Mobile-Assisted Shopper”: Matthew Quint and David Rogers, Columbia Business School.

Methods to offset showrooming in local markets have even led to the rise of ‘webrooming’ (when consumers research products online before going into the store for a final evaluation and purchase). The most important reason for consumers to webroom is wanting to touch and feel the product before purchase, something that captive travelers may well spend their time on at travel-retail outlets. So let’s turn the showrooming & benchmarking threats into opportunities and start developing counter attacking strategies to motivate travelers to webroom at the airport and spend their money within the realms of travel retail.