The Gamma3 Council, an association of brands and retailers in the high-end segment in the Americas, has been holding a series of virtual webinars organized by Diego Stecchi, managing partner of Luxury Retail Partner, who founded the group in 2007.
A recent Gamma3 Council session examined the impact of COVID-19 on the Caribbean as it pertains to cruise ships, since the ships are such an important source of customers and passengers in the islands. At the time of the session, the CDC’s no sail ruling was in effect through the end of August, but as the speakers expected, the ruling has now been extended through September.
Participants in the June webinar included: Elodie Thellier, President, (TAG Heuer) LVMH Watch & Jewelry Caribbean & Latin America; Christelle Caron, Sales Director, Cruise Lines, Moet Hennessy; Marco Di Santo (moderator), Sales Director – Travel Retail (Cruise ships channel WW) and Caribbean Region, Bulgari; and retailer concessionaires Gian Franco Botteri, Director of Operations & Adrian Riches, Cruise Service Operations Director, Dufry; and Brenda Baty, Chief Commercial Officer, Starboard Cruise Services, Inc.
Moderator Marco Di Santo began the program with an overview of the cruise industry pre-COVID, noting that the cruise sector had been very healthy, with forecasts to grow year over year, from about 27 million passengers in 2019 to 32 million by 2021.
“We expected very robust growth of 4-6% in these years. There were many new ships coming as cruise lines added capacity to their fleets. Now, of course, it is a very difficult time for the cruise lines. What impact do the concessionaires on the panel think COVID will have on onboard retail going forward?”
“We are eager to get back to sea,” said Starboard’s Brenda Baty. “We do not know when the ships will sail again, since restarting will be deter-mined by governments around the world. In the U.S. in particular, re-opening the cruise market will be determined by the CDC.”
Balancing Digital vs. Romance
“In terms of how retail might look onboard — and looking at some of the changes happening in land-based retail which might carry over to cruise retail — we see a lot of retail activities shifting to digital. At the same time, what’s so unique to cruising is the romance of the cruise experience, where you are strolling down the promenade and browsing — it is a very different model,” she continued.
“I believe some measures, like social distancing protocols, will be adopted, but we don’t want to take away the cruise guest experience that comes from travel retail and its romance.
“We are working really hard to balance between the new post-COVID requirements while still offering the experience that the guests really want as part of their vacation.”
Baty says that, nevertheless, there are a variety of digital experiences that can be contemplated, including options such as creating a touchless environment for browsing and ordering.
Dufry: Reaching guests at more touchpoints
Dufry’s Gian Franco Botteri, Director of Operations, said that while Dufry is waiting for the ships to sail again, the company is in constant communication with the cruise lines, and digital will definitely play an important role in retail when they get back onboard.
“The Dufry Group has a lot of digital platforms in our airport business, which can be tailored to the cruise business,” explained Adrian Riches.
“We see digital allowing us to communicate with guests before and during the voyage, which is good for us. We also see more one-on-one selling on the cruise ship. Where we will lose ground is with the big special one-day crowd-oriented events, which I can’t see happening for a while.
“I see us retooling and going back to the good old days of one-on-one selling, but more serious selling with less people that will give us an opportunity to up-sell and go on to higher ticket sales. And this is where the partnership with the brands can really kick in and give us even more time to educate a passenger about a brand and maximize spend per passenger.”
Riches explains that Dufry sees the customer journey really starting at the point the guest books the voyage.
“In our airport business we have Reserve & Collect, a website that allows customers to pre-order their purchases and collect them when they fly. Conversations with our cruise lines have been very favorable so far about trying to adapt this technology for cruising. With this service, we can start communicating early and give guests the ability to pre-order before they arrive at the ship. We can also provide guests with special offers or invitations to events with more personalized service.”
The view from the brands: experience & engagement
TAG Heuer’s Elodie Thellier fully agrees that digital is something the industry will need to explore.
“But our cruise business is really driven by the experience and the relationship that our staff can build onboard with the guest. How are we going to engage with the guest now?” she asked.
“Not with big crowds and huge events. We are going to have to think of a different way to cater to small groups and individualized shopping. Maybe we have to think about different venues, like dedicated suites or areas where we can create a very different experience and generate higher tickets. We – brands and retailers –have to make it very comfortable for the guest. For example, how will we have guests try on merchandise? How will we do tastings or show beauty products?”
Since TAG Heuer is a brand known for doing fun activations, with a lot of guest participation, onboard, how will the brand capture traffic, asked Di Santo?
Thellier: “We will still engage with customers, but in a different way. TAG Heuer is known for innovation and being avant garde so we reinvent the way we engage, especially in the cruise business. Right now we are looking to roll out a touchless digital process.”
Moët: “One-on-One Service”
The situation for Moët Hennessy is particularly challenging, because the company has to re-think sales and service at both the retail shop and the bars, said Christelle Caron.
“We think it will be easier to meet new health and safety protocols in the retail store than in some of the other venues. The shop can use markers on the floor and social distancing. We can wear masks. Yet, the retail footprint can be challenging, especially for wines and spirits. The experience will continue inside the shop, but we also need to engage the guests outside of the shop. If guests see a long line of people waiting to go into a shop, they will more likely walk away.
“Many guests do not have a pre-purchase in mind but they often end up buying something just by browsing. If they do not enter the store, we lose a potential sale.
“I see us moving towards a more personal approach with one-on-one consultations. The digitalization will also become critical in the new consumer journey. We will need to be creative in working with the cruise lines to extend the shop’s footprint to onboard apps and shopping channels.”
The panel also discussed what kinds of activities might arise onboard among more volume-oriented brands that have traditionally depended on crowds to draw customers.
“We will have to be more astute in understanding our guest and seeing how our guests will respond when they come back,” cautioned Baty.
Data & deployments
The importance of data and sharing of information between the cruise lines and the retailers was another area of intense discussion.
“It is very relevant for the cruise lines to share data so that we can better understand who the guests are and what their needs are,” noted Caron. “We take pride in crafting experiences that deliver on their expectations and that connect on premise and off-premise: What are they drinking? What are they looking for? What would they like to know? Knowing this, the likelihood of converting the sale is much higher.”
Thellier concurred, adding “Data is extremely relevant so to offer the proper assortment and be able to surprise the guest.”
Baty said that data is one of her passions: “What are guests buying? We must quickly collect new data in order to make sure that the right products are onboard. Especially in the new environment, information like this will allow us to be agile.”
The panel also examined the relationship between retail onboard and in the island destinations, agreeing that these are “complementary” businesses, although onboard retail has the advantage of having guests for a much longer period of time.
Deployments will have an impact. More sea days and the growing popularity of private islands could also work to the benefit of onboard stores.
Whereas most typical 7-day cruises had four sometimes five port calls, with two sea days, cruise lines will likely have more sea days and less port time early on.
“This is good for us as retailers, because it gives us more time to engage with the guest,” said Baty.
Thellier also noted that cruise ships stopped at as many as three major shopping islands only a few years ago, but today ships are stopping at one shopping island, one call at a private island plus one call at a secondary port. Future deployments will influence how passengers shop.
Caron observed that private islands can offer a special opportunity to engage, and build a lasting relationship in a unique, relaxed atmosphere, referencing the new Moët bar launched on Great Stirrup Cay in The Bahamas with Norwegian Cruise Line.
Ending on a positive note, the panelists believe that Americans will rush back to cruising faster than the rest of the world, opening up new opportunities for onboard retail.