With the recent news that Carnival Cruise Line is in the process of overhauling its onboard retail experience, TravelPulse discussed shopping trends with Miguel Maal, a partner at strategy consulting firm OC&C.
Maal provided an in-depth analysis of the present and future status of retail at sea:
TravelPulse: What differentiates the onboard retail experience from, say, shoreside malls and individual brick-and-mortars these days?
Miguel Maal: The three things that benefit cruises in respect to shoreside malls and individual brick-and-mortars are:
-A detailed understanding of the demographics and leisure "mission" their travelers are on.
-A keen mapping of the purchase preferences and behavior of these demographics when cruising.
-A known time of exposure to travelers, which they can design a "consumer purchase journey" around.
TP: What are cruise guests looking for in shopping that is unique?
MM: They are looking for a set of combinations between:
-A good "deal", ranging from the tax-related upsides of being in international waters to not being abused given they have no immediate options.
-A retailer they perceive as genuinely sharing their passion for their preferred aspirational categories, with whom to exchange ideas and that can give them peace they are not in a zero-sum transactional environment.
-Opportunities to bond the travel experience and selected purchases into a meaningful, significant moment they can remember.
TP: Is there an increasing focus on theming the retail experience, a la Disney, and telling a story along with it?
MM: Disney's overall strategy is to create "themes" it rallies all its revenue-generation activities around, in a way that each builds onto all other activities: content (movies, TV series, music, apps), theme parks, merchandising, brand licensing and-somewhat recently-cruises.
It is a compelling strategy because it poses a significant entry barrier given the scale that is necessary to make it profitable. However, Disney's execution of this strategy is industry-leading and they maintain discipline in quality-based differentiation.
Other cruise companies don't rely on themes but do focus their brands, ships and routes based on narrow segments (family, singles, retired, wealthy, etc.) and cruise missions (resort, party, explore exotic geographies, luxury, etc). Other ways to differentiate include:
-Experience in developing innovation in new builds, which is difficult to replicate.
-Lower price for similar experiences, based on larger scale and the ability to reposition and reroute older ships to more value-oriented service as new-builds come in.
-Variety of geographical coverage and cruise missions, which allows for a wider variety of offers for repeat cruisers.
-Opportunistic theming of cruises with less restraints to very rigid rules that Disney needs to abide [by].
TP: What is being done to compete against online retailers such as Amazon?
MM: It is not clear whether cruise operators will compete directly or find a cooperation model with Amazon. This is an issue that is being actively explored today.
A possible, unconfirmed model would be for cruise operators to have onboard retail for categories that are not "natural" for Amazon. Categories that benefit from in-person experimentation, or that are sold in low volumes or where the average price does not sustain Amazon's fulfillment costs are examples of these.
Another aspect is the combination of assortment and fulfillment. Cruise retail-given the physical constraints of ships-could never compete in assortment if it had to fulfill the purchase onboard since inventory limitations are strict. However, [an] assortment can easily be expanded in pre or post-cruise fulfillment models, which are being studied as well.
Finally, Amazon has approached cruise lines to experiment adding Echo devices in cabins, much like they have in some hotels. This creates the opportunity to negotiate.
Needless to say, everyone is cautious both of competing and collaborating with Amazon.
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
