Why experiential retail matters more than ever

The third article in our Food for Thought series, in partnership with Blueprint, looks at the key issue of why Experiential Retail matters more than ever

Jewel Changi Airport

The travelling consumer has changed significantly since the pandemic and duty free operators need to adapt to significantly different buying habits and demands. Among the latter is a growing thirst for immersive experiences, especially among Gen Z.

As previously reported, pricing advantage is becoming less relevant to airport duty free shoppers. Between 2019 and 2024 the importance of pricing advantage dropped significantly from 30% to 13%. The surprising news doesn’t stop there. m1nd-set data, based on more than 230.000 shoppers, highlights special promotions and ‘value for money’ having also decreased in importance over the same period.

Karl Walter

On the other hand, 84% of global travellers now consider shopping to be important to their overall travel experience at airports, with 70% making their final shopping decision in-store.

“The m1nd-set data is mind-boggling,” said Blueprint Partner Karl Walter, a 17-year veteran with Nuance Group and later Dufry (now Avolta). “Traditional instore sales tools seem to be losing their impact, underlining the need for the travel retail industry to rethink its value proposition. Experiential Retail plays a critical role in this process by converting travellers into shoppers.”

What’s the fuzz about Experiential Retail?

Experiential Retail is far from new in travel retail channel. For it to succeed, Experiential Retail needs to blend of elements such as traditional in-store entertainment, product education, sales staff interaction together with more innovative tools including online live demonstrations, virtual reality, social media algorithms, digitalisation, artificial intelligence, gamification, and much more.

The outcome are unique environments delivering immersive – and personalised – customer experiences.Walter commented: “Whereas Extraordinary Hospitality seeks to create long-lasting emotional bonds between travelling shoppers and industry stakeholders, Experiential Retail is the toolbox that facilitates that connectivity.”

Jewel Changi Airport

Airports are particularly capable of creating nurturing environments that allow for Experiential Retail to flourish. Singapore Changi, Hong Kong International, Hamad International, and Dubai International are lighthouses that lead the way when it comes to creating experience environments.

They feature everything from a Zen garden, 24-hour free movie theatres, the world’s tallest indoor waterfall, and rooftop swimming pools to the world’s largest kinetic sculpture titled Kinetic Rain, and a world-class art gallery. These airports are at the forefront of delivering unique immersive experiences.

Karl-Heinz Dietrich, Senior Executive Vice President Retail & Real Estate at Fraport AG, commented: “Frankfurt Airport continues to reinvent itself with creative and innovative ideas and events for passengers. Recent examples include public screenings showing major sports events, hands-on games, walkabout performances and culinary delights. These surprising activities are designed to show appreciation to passengers and visitors alike and enhance the overall airport (retail) experience. The initiatives have proven highly successful during recent events such as the European Football Championship and the Olympic Games.”

“What’s really fascinating is that airports all over the world are stepping up and raising industry standards. Airports themselves are now becoming travel destinations in their own right – worth a special journey.” explained Walter.

What contribution can Experiential Retail make?

The travel retail industry is uniquely positioned to make good use of Experiential Retail considering that airports, operators and brands are now more laser-focused on customer service and the customer experience.

Gloria Dix

One reason is to differentiate themselves. The brand Victorinox founded in Switzerland in 1884 excels at unique brand positioning. Head of Global Travel Retail & Fragrance Sales Gloria Dix commented: “Experimental Retail is essential for creating immersive shopping experiences that drive foot traffic, increase sales, and strengthen brand loyalty. Incorporating interactive displays, pop-up shops, personlisation, customisation, augmented reality, tastings, virtual reality, games, lotteries, performances, innovative technologies, social media, influencers and much more enable brands to engage customers on a deeper level and leave a lasting impression. This approach allows brands to test new products and concepts, adapt to changing consumer preferences, and differentiate themselves in a highly competitive market.”

Another reason is to drive footfall. The recent UEFA European Football Championship allocated 2.3 million tickets and involved the collaboration between 10 cities including Berlin, Cologne, Dortmund, Düsseldorf, Frankfurt, Gelsenkirchen, Hamburg, Leipzig, Munich and Stuttgart alongside major airports, operators and retailers throughout Germany. The result was a unique range of retail activities, offerings and experiences targeting travelling fans.

Eurotrade at Munich Airport is renowned for hosting its own Christmas market featuring handmade gifts, gluhwein, ice skating, and a forest of festively decorated Christmas trees.

Another reason for leveraging Experiential Retail is the opportunity to increase airport passengers’ dwell time. Japan’s Haneda Airport features unique cultural crafts and cuisine like the Edo Market Place which resembles Edo-period Tokyo. The award-winning airport also welcomes travellers to enjoy an onsen-style spa before or after their flights.

Helsinki-Vaanta Airport in Finland is a popular choice for travellers flying between Europe and Asia. The Finnair Lounge features a sauna, a quintessential Finnish experience. In 2023, Relove, among the world’s first second-hand stores at an airport, mixed up that experience with an eco-friendly coffee shop to bring something unique to the retail offer. Vancouver Airport has, for years, had a strong focus on indigenous art.

Impacting passengers’ satisfaction and spend

More effective Experiential Retail leads to greater passenger satisfaction, and dwell time – which ultimately drives revenue. A 2016 ACI report concluded that for every 1% increase in airport passenger satisfaction, airports saw a 1.5% growth in non-aeronautical revenue.

Milan Malpensa Airport

Milan Malpensa Airport estimated in 2023 that one minute longer dwell time for passengers has a +3-5% impact on spend per passenger.

Earlier this year, the Journal of Air Transport Management reported a 10% increase in dwell time is associated with an increase of 8% and 6%, respectively, in F&B and Retail revenues. The research, based on 89 US airports, highlights the correlation between dwell time and spend.

Karl Walter added: “It’s clear that consumer consumption – particularly amongst the Gen Z travellers – has moved into an immersive experience and extraordinary hospitality phase – to the point that it is now expected. As domestic retail and e-commerce continue to raise the bar for Experiential Retail, it will undoubtedly place more pressure on the travel retail channel to do the same. The good news is that Experiential Retail delivers experiences that shoppers remember – and they will often reward you through their wallets, if you get it right.”