Increasingly low-cost carriers are adopting retail management strategies to drive revenues and cost efficiencies. Keith Mwanalushi looks at some recent onboard retail programmes.
Technology is rapidly changing the face of onboard retail. In fact, several carriers are introducing major changes to crew operations through the smart devices used by flight attendants. The flight crew members increasingly have the tools that can enable them to sell smarter.
However, in a recent report by onboard retail specialist Guestlogix, flight attendants are (rightly) preoccupied with fully booked flights and safety obligations – they have limited time to ‘wait tables’ on passengers.
Therefore, airlines are actually missing out on ancillary revenue due to inefficient inventory management, lack of personalisation in what they offer, and the limitation of flight crews.
But some airlines are catching on, by using one form of technology or the other. For just over a year now, low-cost airline WOW air has deployed an end-to-end onboard retail solution developed by Retail inMotion (RiM).
During the first few weeks after going live, WOW air reported that it sold over half a million euros worth of products on its flights between Europe and the US, representing a significant increase on our previous sales methods.
Jan Blanchard, chief commercial officer at Retail inMotion (RiM) tells this publication that the partnership with WOW air has been strong since the inflight solution was implemented in February in 2017.
“We enabled the airline to run their programme independently and, therefore, reduce costs,” says Blanchard. He explains that RiM supported WOW with its point of sale solution (vPOS) to process multiple types of credit card payments and multiple currencies on board.
The carrier also implemented a packing solution, vPACK, that ensured the right products made it onto the flights every time.
“We are now implementing some predictive analytic tools to further enhance the programme. What is most interesting with WOW is that both companies think alike, we are growing fast and set to make travelling simpler, cheaper and more fun.”
Both companies are relative start-ups which have grown incredibly quickly.
José Lirio Silva, head of Onboard Retail Europe at Retail inMotion agrees that airlines should be rethinking their retail management strategies considering changing passenger expectations.
He says travellers are expecting the same speed of transaction and very much the same level of choice and service that they find on the ground. “Naturally, there are some obvious space constraints with providing the complete breadth of choice that you can find in your local supermarket,” Lirio Silva explains.
So clearly, finding the right mix of products and pairing them with well-functioning software support is key.
“That’s exactly where we come in. Our team are experts in consulting airlines on the right product mix to underscore their brand values. With our proprietary onboard retail management suite Vector, we can ensure that airlines are able to increase their customer touchpoints and provide passengers with seamless, easy payments onboard and on the ground.”
Lirio Silva adds that Vector has also the functionality of supporting various back-office functions, like warehouse and supply chain management, tax reconciliation and crew commission, that ensure an entire onboard retail programme runs flawlessly.
In January this year, Guestlogix – the airline commerce technology specialists officially released a new airline commerce platform that it said will help carriers monetise the passenger experience and generate their highest ancillary revenues throughout the day of travel – before, during and after the flight.
Its new airline commerce platform has three major components: flight attendant point of sale app, management console and passenger mobile app.
The company claims its ability to gather, analyse and use passenger data for retail sales and marketing is entirely new to the airline industry, where only 7.5 per cent of passengers make onboard purchases – a conversion rate that has not improved in years, despite higher ancillary revenues overall (largely from fare unbundling).
“Guestlogix’s airline commerce platform is the easiest to use and easiest to implement the solution on the market for onboard retail,” said Mike Abramsky, CEO of Guestlogix. “Airlines can quickly and cost-effectively transform how they generate revenue through onboard sales and other ancillary merchandising and achieve the same level of personalisation and profitability as on the ground retailers such as Amazon and Starbucks.”
Key to its feature is mobile accessibility allowing the traveller to browse through ancillary merchandise.
Abramsky highlighted that airlines were sitting on a goldmine of customer data but were missing the front line technology needed to translate data into business intelligence and put it to use throughout the day of travel for more selling opportunities and higher revenues.
The passenger mobile app acts as a ‘digital concierge’ for them to conveniently browse inventory, place orders and make payments. Airlines can add any kind of inventory to the catalogue (not just food and beverage) and passengers can make purchases before, during or after the flight, including pre-orders. Order tracking makes it easy for passengers and flight attendants to view, edit or cancel an order.
The passenger app can also store a customer’s preferred payment method as well as mileage or loyalty points, making it easy for airlines to integrate loyalty programmes with ancillary merchandising.
No one can deny that mobile commerce is the future. Currently, onboard sales are still largely dependent on the legacy point of sale devices that were built to process orders and payments but largely disconnected from any passenger systems.
“This is backward and inconvenient for passengers increasingly accustomed to doing everything – from hailing an Uber to ordering pizza – on a mobile app or voice-controlled device,” Abramsky cited.
Passenger-centric retail analytics is relatively uncharted territory in the airline industry: “This is what sets Guestlogix’s passenger mobile app apart from competing for point of sale solutions,” said Abramsky.
“With a mobile-first platform for airline commerce, carriers can significantly increase onboard sales but also develop any other ancillary revenue opportunities they can imagine throughout the day of travel, including advertising, sponsorship, in-flight entertainment and destination activities.”
What’s interesting about Guestlogix’s solution is that it enables airlines to gather granular, passenger- specific data that provides a clear view of passenger needs, wants, and behaviours, including travel habits, purchasing histories and travel plans. And the future of air travel seems to be heading in this direction.
Clearly, to make the business case, airlines are interested in retail solutions that can help drive up revenues and manage cost-efficiently.
Back at Retail inMotion, Lirio Silva says driving sustainable ancillary revenues for airlines is at the heart of the solution provided. “We believe that with the right onboard retail programme, and the right software to support that programme, passengers will feel more empowered to make purchases onboard.”
He explains that the software is designed to be user-friendly for crews and can be integrated at every step of the passenger experience – allowing them to make purchases before check-in, at the gate, and access inflight entertainment.
Retail inMotion takes a holistic approach to support its client’s onboard retail programmes. “We help train crews to use our software and make sales on board, design menus and catalogues that catch passengers’ eyes, and support with a plethora of logistics and back-office functions,” says Lirio Silva.
In December last year, SunExpress Germany extended its existing contract with RiM for three years and covers full onboard retail management for the airline. As part of the contract extension, Retail inMotion is responsible for designing and managing the airline’s onboard retail programme, including category management and the implementation of Vector.
The SunExpress onboard retail programme consists of around 30 food and beverage items and other boutique and duty-free articles, which are offered to passengers on board.
For passengers, the onboard payment process seems to be the most frustrating part of the retail experience, for instance being told to always have the correct change, airlines using slow point of sale devices or currency acceptance limitations at check out.
Blanchard says better and faster inflight technologies are certainly breaking down the barriers of yesterday when it comes to inflight payment. “We initiated this movement by introducing the first payment solution on an Android phone in 2012 with American Airlines.” Now, obviously, smartphones and tablets have replaced the incumbent payment computers.
Today, RiM’s payment solution covers five continents, accepts both international and local payment cards and airline loyalty currency, and is used by more than 40 airlines across the globe. Blanchard indicates that nearly 1 in 10 commercial passenger planes in the sky use the technology to process onboard payments.
“More and more of our airline clients are transitioning to a cashless cabin environment by implementing contactless payment options. By doing so, they are making onboard payments easier and faster for their passengers,” says Blanchard.
Soon, he sees the trend of passengers paying directly from their device or via an inflight entertainment system developing even more. Retail inMotion has already integrated such solutions where passengers can order at their seats, process their payment at their leisure and have their selection delivered directly to say seat 22B. “This trend, together with the development of airline mobile wallets, will completely reduce payment frictions in the cabin.”
In no time, it will be a whole new world of ‘selling in the sky.’