ARI's Ray Hernan and Richard Gray "Building Better Together"
Meeting both Ray Hernan, CEO of Aer Rianta (ARI), and Richard Gray, CEO of ARI Middle East, it comes as no surprise that for both of them the main goal in travel retail is to engage and delight their customers, because they are both engaging and delightful men.
Hernan, whose background is in high street retail, says while high street has been “ravaged” by ecommerce in recent years, travel retail offers its own challenges. “The environment in the airport is more complex,” he says. “In a high street store, the customer journey begins when they enter the store. At the airport, that journey begins when they walk through the entrance, and continues through check-in, security, while they eat at any food and beverage outlets and until they board the plane.” For the vast majority of this journey, the retailer has no control over the customer experience.
This CEO recently spent some time at an airport’s security clearance area. He says travelers are having to completely relearn how to travel, what they need to take out of their bags; they need to be retold everything. While this is challenging enough, the reality is that staff are in the same position. In many airports staff have had few travelers or been laid off completely, to come back with completely different rules after months off, while other airports are having to hire new. This can lead to frustration on the part of passengers that inhibits the feeling of wanting to shop, not to mention the decrease in dwell time that this circumstance engenders.
For Hernan, the holy grail experience would be a system that feeds itself, creating a satisfying holistic journey integrating all areas of the airport, including airlines.
Getting to know the customer
Hernan says another challenging aspect of this channel is that it’s impossible to know your customer personally. In traditional retail the floor team will have a relationship with many of the customers, in some cases knowing them for years, whereas with very few exceptions this is not the case in airport retail. A connection with this traveling customer is a priority for the company. “Travel retail needs to somehow replicate knowing the customer, something that would be easier if more information could be shared,” he says.
“Engagement” is the word that flows through conversations with both Hernan and CEO Middle East Richard Gray. Gray says, “A few years back, everyone was talking about ‘disruption’ — how to disrupt the customer journey. Why would we want to disrupt? That’s not very pleasant. We want to engage the customer; make them feel valued.”
Evolution not revolution is his motto, with gentle subtle changes that delight the customer and create a pleasant, welcome, engaging experience.
Hernan adds that this engagement should begin long before the traveler enters the airport. Ideally, the retailer would be able to engage with customers soon after they purchase their ticket, or at the very least it would be nice to be able to receive some information from airlines about the demographics of the passengers, but airlines are notoriously reticent to share information.
While Hernan is happy about the evolution of the relationship among the famous trinity of brands, retailers and airports during the pandemic, the lack of information sharing by airlines can be a frustration.
While sales are down, spend per passenger is up, in part because of increased dwell time and in part because of the ability for staff to communicate with passengers. A well-trained team is invaluable, with staff having the opportunity to engage with customers in a general atmosphere geared to enticing and delighting.
According to Gray, there are a couple of interesting trends. One is because passengers these days are overwhelmingly adult, and purchase are very different for adults vs families. Another interesting trend is purchasing for oneself.
“Travelers are buying personal treats like cigars, Rolex, higher-end vodka,” Gray says. “Not so much gifting to others, but rather more personal gifting.” He adds that this offers another opportunity for upselling, with staff having genuine interaction with customers: ‘You’re buying those handsome new cufflinks for yourself; what are you thinking of picking up for your wife?’”
What’s good for staff motivation is also good for sales. For ARI, it’s important that staff feel motivated. The environment should be fun and enjoyable, where staff and customer both feel reenergized. ARI’s distinctly Irish existence is evident when Hernan discusses emotional engagement, where storytelling is an important aspect of the interaction.
A success story
Never has travel retail been the same story from country to country or region to region, but in the reality of the past year we can add from airport to airport. Cyprus is part of ARI’s Middle East region, and it has done exceptionally well. Larnaca’s sales surpassed 2019’s.
In this airport in particular can be seen the positive result that comes from listening to one’s customer. Over and over again passengers have stated that they are bored with airport offer and would be more likely to shop if they found something unique. This desire is in part satisfied with travel retail exclusives, but ARI has found great success with its Kypriaka range. “Kypriaka goods must be manufactured in Cyprus,” says Gray. “The range offers a selection in multiple categories including liquor, beauty, fashion and food. Our Kypriaka goods sell better than top global brands.”
Ready for business
Preparation, being ready — this is a concept that comes up frequently in conversation with Richard Gray. “There are consequences of action, and consequences of inaction,” he says. When lockdowns began to occur, Gray’s team spent four weeks doing nothing but assessing key priorities and discussing. ‘What are the key priorities? What is the future? At what point are we ready to make some tough decisions?’
At this point currently, Gray says all stores are ready for what’s to come. These include owned stores, managed stores and partnerships. Teams are in place and well trained, stock is at appropriate levels, supply chain is in place and hygiene practices are solid. “Once travelers feel the environment is safe, they are desperate to engage,” he says. And confidence is growing.
Bahrain — a new experience
Gray says the experience of first encountering Bahrain Duty Free as a moment so enchanting, such a “wow” moment, that you forget anything else you’re doing. He gives Bassam Al Wardi full credit, calling it “Bassam’s dream” and stating that Al Wardi — who was promoted to CEO and Board Director of Bahrain Duty Free in January of this year — hit the ground running.
Bahrain International Airport never closed through the pandemic. This hub opened its new passenger terminal building early this year, serving 14 million passengers per year in a space of 210,000 square meters.
The new terminal is an important cornerstone in the Kingdom’s Economic Vision 2030, which is aimed in part at attracting more business and tourism, in addition to increasing hub activity at the airport.
As part of the overall vision, the decision was also made to bring shopping in the airport up to a higher level. Bahrain Duty Free, which won the concessions for duty free and specialty retail, has almost tripled its floorspace from 1,600 square meters to 4,700 square meters. The company is pledging to deliver an experience and store environments at “world class” level in the new facility, according to Al Wardi. “The new environment is bright, spacious, and with a wide perspective. It is beautifully laid out and is very different to what you will see anywhere else. We believe we have one of the very best duty free shops in the region.”
The unique “boutique” design of the terminal creates an environment that motivates passengers to enjoy the amenities. Passengers can move through the space quickly, which leaves ample time for shopping and enjoying a meal. The ceilings are high and the design, which was inspired by the local environment of sand dunes and water, is inviting.
Looking after people
It’s said that you can get a real understanding of a company’s climate by speaking with those who run it. Meeting Hernan and Gray, one immediately gets the sense that people are central to ARI’s corporate existence. This is certainly evident in the way they speak about their customers and their staff, but the people focus of the company moves beyond the borders of its organization.
Where Vaccines were unavailable, the company bought vaccines for locations. After the recent landfall of the deadly Tropical Cyclone Shaheen, Bahrain Duty Free offered help for colleagues and the community, offering food, water and clothing.
Bahrain International Airport was a critical hub during the recent exodus from Afghanistan, with the Kingdom facilitating the evacuation process by allowing flights to take advantage of its location as a transit point before reaching their final destinations. The country’s location also means a large number of people have sought refuge in the country. The retailer has been an important provider, researching what is needed for these refugees and ensuring those needs are met.
The company also did whatever it could to help the staff and the extended “resilient” community in Beirut after the devastating explosion of last year.
What digital means
When the conversation centers around customer engagement and the care of people both inside and outside the company’s direct connections, digital seems an unlikely next topic, but ARI’s digital focus does not stray far from the message.
“We were already very advanced in our digital offering,”says Hernan, reminding us that the company actually released a new world-class digital platform in Montreal in the summer of2020, one which is already available for travelers in Ireland and Auckland. “But we’re not going to compete with Amazon. The goal of our digital offer is not solely online sales; it’s to increase the breadth of choice for the customer and ultimately assist to make their experience with us more convenient, should they wish to use it.”
For ARI, digital is an extension of its strategy of communication and engagement, with extra customer and staff support. “For us, digital is not solely online shopping.Yes it offers more opportunity for partnerships and marketing, and we can use it to help engage customers and drive them to the store. But most importantly, digital helps us bridge the gap to more personal communication.”
And this brings us solidly back around to what Hernan says his own goals are in his role as CEO:in line with the newly defined ARI customer value proposition, to help create an environment where the shopper feels engaged, enticed and delighted, with a shopping time that feels more like an experience.