The Modern Retailing Era

Transcript

Damian Hickey:Thank you, Marco, and thank you, CAPA. And like many of us, it's great to be back at Capella. My name is Damian Hickey. I'm responsible in Travelport for our global airline partnerships, and I'm going to talk to you in the next 10 minutes or so about Modern travel retailing. I've been in the travel industry for a very long time, and I know that travel is no stranger to innovation. But I would challenge here that in terms of retail, travel has fallen significantly behind many of the other world leaders in retailing. And I want to talk to you a little bit about what that means and why we believe that's the case. So, travel retail is broken. Now, that's a pretty profound statement to make. So, I'm going to get into a little bit of detail of why I think that's the case and to share with you some of the findings of some of the research and interviews that we've done that supports that case. But before I get into that, I'd like to spend a little bit to try and dig into actually what is retailing, because I think we all have a different perspective on that. First of all, and it may be somewhat counterintuitive, is that retailing is not about selling your product. Retailing is all about customer satisfaction and customer experience. And I think we've already heard that this morning. It's— and it's all— it's about customer satisfaction, not just about post-sale, Which is important to make sure those customers come back. But it's also about the presale customer satisfaction and experience. But let me also challenge that retailing is not just about the functionality of what you're selling and how you're selling it. But it's all about the experience and about that emotion, that connection that the customer makes with your product and service. And let me give you a few examples. When you look at an advertisement such as beer, beer is selling actually making you charming, making you elegant. It's not actually selling about— talking about making you drunk. It's not talking about you trying to get up on the stage tomorrow morning after having one or two many— too many beers at the CAPA gala dinner, right? So, it's selling It's selling that experience that you want. Similarly, Apple sells a lot of phones and a lot of computers. But actually, what they're selling is the ability to unleash your creativity, to be— you being able to do whatever you want to do with that Apple device. So, it's selling the design. It's selling the creativity and the elegance that— of the promise that Apple are making. Nike is about you actually achieving whatever you can as an individual. You look at Tesla. Tesla's talking about how much fun you can have while you're saving the planet. And Tesla is an interesting example because Tesla doesn't have dealerships. Tesla has showrooms. In fact, if you go into a Tesla showroom, You can't actually buy a Tesla car. You actually have to go home, get online, and actually go online to purchase that car. And I would argue it's a lot easier to spend $65,000 to buy a Tesla vehicle than it is to buy a $200 airfare. So, there are many, many characteristics that make up good retailing and in fact great retailing. And in fact, they're probably easier to identify by their absence than actually by their actual arrival. I mean, retailing is all about, similar to the internet, always being there, being simple, being easy, being personal to you as an individual. But what about travel, right? Research shows that an average consumer will visit a ton of travel sites before they actually take the wallet out of their pocket and make that transaction. And at that stage, they're completely exhausted by the experience. But why is that? And I think there really are 2 reasons for that. Firstly, travel, as we've heard all morning, is inherently complex. It's not just about getting from A to B. It's about how are you choosing in terms of what level of comfort you want to get from A to B. It's about where you're going to actually sleep. Yeah. Tomorrow night. It's about, what are you going to do when you get there? What am I going to do on the ground? Do I need to arrange that before I get there? Where am I going to eat? Okay. How am I going to get back? Okay. How am I going to get around? So, it's inherently complex travel. It's not like some of the modern retailers like Amazon who basically have to get a product, put it in the box, and deliver it to your door. The second reason is— well, in reality, the second reason is nobody solved the first reason. Okay? Because it is inherently complex. So, unfortunately, I'm going to disappoint you because I'm not going to tell you how to solve those problems. Okay? There are— Travelport has done a lot of work in terms of helping and has many of the solutions. And we're working on many more. And there are Travelport colleagues of mine in the room here. I'm sure you can find and meet during the conference that will talk to you about that. What I want to talk to you about is some of the findings that we've had in— and some of the research that we've done in talking to consumers. We published some consumer research earlier this year. And since then, we've done some very detailed in-depth interviews with hundreds of executives at senior levels within travel companies, within airlines, within travel agents, within corporates. We've plowed through many, many white papers of research in the industry. And some of the key findings I'd like to share with you. First of all, one of the findings that we got is that agents, travel agents, should be the ideal retailers of travel. Now, I know there are many airlines in the room here who would say, well, I'm a retailer of travel. And I don't deny that. Airlines are very good at retailing their own products. But what consumers want is they want choice. And the ideal intersection of that choice is with the agent who has access to all of that content. All of the airlines, the cars, the hotels, the ground transportation, the experiences. But it isn't happening. The good news is that travel retailers, travel agencies know that it's not happening and they know there's an opportunity. So whether you're an OTA, you know that there's a great opportunity if you can only be great at retailing. Yeah. But that's not just about leisure. Travel management companies have an even bigger challenge. They have to deal with everything that the leisure agent has, but they have to deal with the complexity of corporate purchasing rules and travel regulations. So, in our view, if you look at an evolution scale on a 1 to 5, we're probably sitting in terms of great retailing at a 2. And one of the challenges is— and one of the challenges I would put out to the travel agents who are probably sitting in the other room of this conference is you have to stop selling on price. Cheapest is not great. Cheapest is not dealing with customer experience and satisfaction. All you're doing is satisfying the customer's wallet. And in reality, not everybody can be cheapest. Today, everybody has access to all the same products. So if you want to be cheapest, the only way you can be cheaper is digging into your commissions or digging into your service fees or eating away your margin. And we know that's just a race to the bottom. Now, I'm a sales guy, right? So I'm an eternal optimist, right? So I have to believe there's an opportunity here. And the opportunity is if you can add value as a retailer, If you can add more value to the customer experience, there's a huge opportunity for you out there. Part of our survey has shown that the other challenges is if you can actually differentiate, you can make a difference. Look at these statistics. 46% of leisure travelers, they don't even remember who they actually booked their travel with. It even gets worse when you move on to to the corporate side. If you look at those that actually did remember who they actually last booked their travel with, 1/3 of them said it was a good experience. 1/3 of them said that it was a bad experience. 1/3 of them didn't even recognize they had an experience. So, there's a big, big opportunity out there. As I said, 99% of all corporate travelers don't even know who their travel management company is. And for those of you that are not mathematicians, that's pretty much 0 out of 10. All right? So, how do we move forward here? Okay? The only way that you can actually be a great retailer is if you stand out from the crowd. If you can differentiate. If you can provide that customer experience that is better than your competition. That your consumers and your— will actually remember. So I'll leave you with 2 questions and one invitation. Firstly, if you want to be a great retailer of travel, first of all, you need to work out who you want to be. What is that differentiated experience that you're going to offer to consumer? What are they going to remember you by? And how are they going to remember that right through from when they started to look to travel to when they come all the way back and want to do that repeat travel? So, once you've worked that out, then how are you going to get there? How are you going to get that differentiated experience and actually tap into that emotional experience that we know that the consumers want from retail? So, my invitation to you to help answer some of those questions. Next month— sorry, next week, we will be launching the outputs of that retail surveys that we've done, that research that we've done. on November 9th. But I would ask you, if you want to find out more and some of our ideas of how you can actually move forward and, and on great retailing, have a look here. November 16th, we're launching a number of retail webinars around the world, around the world in many different languages. So it's an open invitation to go to the website and sign up. So a little teaser for you to do that. So thank you for indulging me and look forward to the rest of the conference and to a very interesting panel coming up. Thank you.

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