Retailing: from the outside in

We sat down with Jack Stratten, Director of Insider Trends, to chat about the ways customer expectations are changing, the rise of AI, and the reasons why someone might subscribe to a toilet roll delivery service.

Jack, thanks for joining us.

What do you think travel businesses can gain by looking at what’s happening in retailing in other industries?

Cross-sector learnings are incredibly valuable for the travel industry. Right now there’s a ton of overlap between travel and sectors like banking, fashion, or consumer goods. If you can tap into the trends and patterns happening elsewhere, it could help spot opportunities that others haven’t yet explored. By taking this kind of ‘outside-in’ perspective, you can unroot seeds of ideas you won’t necessarily find in the usual places.

There’s so much rapid change happening in the world of retail today. How do you think this is impacting consumer sentiment?

We’ve spent most of human history making decisions with a pretty limited set of options. Buying things used to require minimal effort, because there were only a small number of choices available. But in recent years we’ve gone from zero to a hundred in almost no time at all. We now evaluate more brands for everything we buy — clothing, groceries, travel too. This does something huge to our brains.

Look at some of the biggest retail players now — not just Amazon, but the likes of Shein, Temu, TikTok Shop. If you go into the Shein app for example, you’ll never see the same items twice. Basically it’s an infinite loop of products. We haven’t been trained to manage that as consumers, and we’re frantically trying to adapt.

What does that mean for travel?

Travel, like other industries, is trying to deal with saturation, and it’s really important that businesses understand the ramifications for shoppers. They need to do whatever they can to make sure the joy of booking a trip doesn’t become incredibly stressful, purely because we have too many options.

In the fashion world you’ll see brands like Wolf and Badger enjoying huge success because they’ve actually reduced the number of choices they offer. On a bigger scale, we’re seeing the likes of Amazon and Temu area addressing this challenge using data and highly targeted personalization to make sure customers get tailored options every time.

Let’s stay on the topic of decision-making for a second. Why do you think people find booking trips so overwhelming?

Travel is a really significant purchase, and often comes with a lot of pressure to get it right. Especially in a world where our disposable incomes are shrinking, relatively speaking. Consumers today often want experiences more than material things, but the financial stakes have been raised, as have their expectations. What I’m seeing again and again is that shoppers of all ages are investing more money in experiences than material things than ever before.

The difference now is that there’s just more riding on those purchases. That might be because there’s more information available to us now, or that we’re seeing others’ lives more through social media. Regardless, the outcome is the same— the fear of missing out is huge.

What role can travel agencies can play in alleviating that stress?

Unlike other industries, travel consumers are lucky because there IS a party that can help guide consumers through the confusion. And that is, of course, travel agencies. You don’t get that in fashion (unless you’ve got a personal shopper, which is rare). Travel businesses curate something for the customer that helps them manage saturation. By presenting the right information to the customer at the right times, they can make informed decisions. And that leads to good experiences, great reviews, and long-term loyalty.

That leads us nicely onto a point from Travelport’s recent research — ‘consumer washing’. What are your thoughts on that?

‘Consumer washing’ is a great term. What strikes me is that it seems to have become easier and more normalized for businesses to pull the wool over people’s eyes, disguising profit-making strategies as ways to serve consumers better. The reason it’s happening more now is because retailing has become more chaotic.

Think about it — there are more businesses than ever, selling via more channels, using more advertising. This creates a framework where it’s easier for businesses to flood customers with different claims. The rules of the game remain the same, but with all this choice overload, it’s become easier for businesses to get away with it.

How are consumers responding to this trend?

Customers are becoming increasingly suspicious, no matter the industry. They’re actively looking out for tricks, reading reviews, etc. And when they feel wronged, they share their opinions online and so, the cycle continues. This is why transparent pricing is so important. Any doubt in the customer’s mind about whether the price is the actual price is another layer of stress, another reason to not book. Transparent pricing is a way to establish a sense of trust.

When it comes to improving the customer experience, who can travel can learn most from?

One example is legacy banking, which has been massively simplified through digital disruptors and now offers a much better customer experience as a result. We see that in retail to some extent. The heart of the growth behind e-commerce, mobile commerce, buying through apps is just the simplification of processes. Most consumer studies show that convenience is priority number one. Sure, price is always there — but convenience is massive.

In banking it was about removing barriers — Monzo, Revolut…they were able to spot ways to speed things up and make it more convenient. Sure, there’s a whole front-end thing they did to jazz it up and make it feel younger, there’s a big marketing piece around that. But fundamentally what people liked about FinTech at the beginning — and probably what people still really like — is that it was quicker, simpler, more convenient.

What would travel need to do to make that happen?

You can’t really underestimate the importance of having a very modern and infrastructurally sound tech stack. Businesses have great ideas, and legacy retailers have brilliant ideas all the time, they just can’t do them because the tech stack isn’t in place to give them that freedom to overcome legacy issues.

If you want to be that fast growing, fast moving, modern looking and feeling brand, your tech stack has to be sound and reliable, so that you can be agile and flexible and innovative. Without that, it doesn’t matter if you have the best creative ideas. But, like Travelport says in the recent research, it’s broader than just technology that needs to change. It’s a mindset shift, too.

What’s your take on all the recent AI hype?

What people often overlook is that predictive AI has already been doing great things for businesses, for a long time, making things more efficient, (sometimes) cheaper, and more convenient. And those great things can continue to be supercharged as AI gets better. Data analysis is a big area of opportunity in this sense.

But now we’ve got this public-facing idea of generative AI in the mix too, and customers are still trying to figure out what they should be doing with it. We’re basically all learning as we go, which is fun, but also means that a lot of people are getting it wrong. Some people are overestimating the value. Some people are underestimating the value. It can be fun, it can be scary, but we’re all figuring this out at exactly the same time.

Where are you seeing the best use cases of AI in retailing?

We’ve seen lots of cases where generative AI has been used, for example, in chatbots to help create more sophisticated, automated customer service. For instance, IKEA invests massively in this, and it solves 90% of people’s customer service issues. They then had way more scope to retrain that staff to become interior designers, improving their skill sets, helping more customers.

Within travel, I can absolutely see the potential for generative AI to do really interesting, imaginative, and creative things. Not to just automate and speed up processes, but to make services great, and even very human-like. We have to accept that reality, and that is quite possibly where we’ll get to.

Where do you see AI having most value for travel?

There’s the obvious answer in that it can help simplify things and help businesses spot new opportunities and so on. I think the other potential value of AI in travel, and we’ve seen this in lots of different industries, is streamlining different sources of information, so things are technically easier to manage.

In that sense, I think AI can really support better search and NDC in a multitude of ways. And while there are many examples of AI being merged into search, all that really matters is the end result. This way, the customer gets more personalized and relevant information faster, which was always the goal of search engines from the beginning.

What other retailing trends could we see coming to travel?

One example from Travelport’s research is subscription services, which have grown hugely in popularity in the past five years. And the reason why is that people have increasingly less time. Subscription boxes like HelloFresh feeds into the idea that you’re solving for a busier life. We also can’t deny the significance of COVID. It’s not like the idea of subscription didn’t exist before then, but it exploded during COVID as people were subscribing to everything — from bacon, to pet food, to toilet roll.

Toilet roll? Really?

That’s right. A business that’s absolutely killing it is the Australian toilet paper company Who Gives a Crap. Five, ten years ago this would have seemed crazy, but it’s been a massive success and they’re now one of the three biggest players in that little corner of retail. Their marketing is amazing, but more interestingly, this trend points to the idea that customers now are willing to subscribe to almost anything if it’s convenient. It goes back to the earlier point about how busy modern life really is.

What do you think that says about modern consumers?

I wonder if it points to the lure of membership. I see a lot of customers really wear on their sleeve that they subscribe to a craft beer company or coffee company for example. It’s almost an identity thing. Costco is another one. It’s basically the world’s biggest membership organization and makes like five billion dollars a year before they’ve even sold any products. Why? Because of that annual membership you paid to get the discounts on products. It’s not just about the money savings. It’s like being in a big club or something.

Do you think that identity piece extends to travel too?

Absolutely. Travel very much forms part of someone’s identity, much more so than bacon or pet food (or toilet roll). Travel is part of culture and an individual’s personality. I think the idea of a travel subscription really makes sense to a modern customer because it tells the world, “I’m a traveler and I go to lots of different places. I have my finger on the pulse about where to go next and therefore what the best deals are.”

Jack, finally, what does ‘modern retailing’ mean to you?

My opinion is that, ultimately, it’s about the customer. And that’s a viewpoint I know Travelport shares too. At the end of the day, people vote with their wallets, so businesses in every industry need to be focusing on giving them what they need. And being mindful that that will continue to evolve — so too must retailing continue to evolve. And whatever kind of transformation you go through, everyone has to feel like they’re part of that transformation.

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