Hudson Explains Why It Is Taking The Automated Retail Route At Airports

Desy Papper

Hudson’s automated retail pilot at South Carolina’s Myrtle Beach Airport. Hudson Group/David Bruno Airport PPE vending, a store powered by Just Walk Out technology from Amazon, AMZN and most recently the vending of big-name brands like Apple AAPL and Beats confirm Hudson’s commitment to automated retail. The biggest airport retailer […]

Airport PPE vending, a store powered by Just Walk Out technology from Amazon,
AMZN
and most recently the vending of big-name brands like Apple
AAPL
and Beats confirm Hudson’s commitment to automated retail.

The biggest airport retailer in North America—owned by Swiss global travel retailer Dufry—has led from the front with consumer-facing digital retail. Stepping up that transformation was seen as crucial just to keep up with the domestic acceleration to e-commerce and digital during the pandemic.

The retailer’s latest efforts in automated retail can be seen at South Carolina’s Myrtle Beach Airport where its first multi-brand specialty unit was launched less than two weeks ago. Clustered vending units sell a number of items ranging from Maui Jim and Revo sunglasses to toy brands Kikkerland Design and Lego, as well as lifestyle labels like Happy Socks and 47 Brand.

Two more airports—Chicago Midway and San Jose International—will roll out the concept this summer.

In an estate of more than 1,000 stores pre-pandemic, though many are re-opening, such developments make only the tiniest contribution to revenue—at a time when airport retailers are desperate for more sales.

Last year, the pandemic meant Hudson’s sales slipped by 65% to just under $700 million, while its chief rival, Paradies Lagardère, cleared close to $500 million when a regular year would bring in $1.2 billion.

So what is driving Hudson’s obsession with novel digital concepts?

From transaction to active selling

Hudson’s executive vice president and COO, Brian Quinn tells me: “Automation is just one of the digital innovations we are leveraging in airport retail. These initiatives—such as self-checkout and Hudson Nonstop—give us the assurance that we can seamlessly adapt to the changing purchasing behaviors of travelers, both now and in the future.

“Additionally, they are helping us to transition our sales associates from being primarily transaction-focused to being sales-focused. That said, we still expect to serve our travelers in more traditional ways, as one-size-fits-all shopping will not work in our business. Many travelers prefer the traditional in-store experience, so we need to ensure that we have concepts that appeal to all needs and demographics.”

In Hudson Nonstop, which uses Amazon’s geographically-expanding Just Walk Out technology, staff are no longer needed for checkout duties and are more active in tending to customer needs. The first unit at Dallas Love Field Airport has been open for a little more than a month and Quinn says he is “very pleased with its financial performance as well as the high level of customer acceptance and satisfaction.” Additional airport locations are planned this year, but he is keeping his cards close to his chest about where for now.

Staffing is also important for the company’s newly-launched automated retail units at Myrtle Beach. “This is a key differentiator for us relative to other companies providing airport vending because we can provide immediate help from our nearby locations. These units will be near a Hudson store to facilitate customer service and restocking.”

A sign on the ordering panels of the machines directs travelers to any of Hudson’s nearby stores in the event they have questions. That’s a smart move in giving confidence to those who might not trust a machine to vend the right product, or just not work. And especially so when the products inside can be expensive electronic items from the likes of Sony, or skincare from The Art Of Shaving and Plexaderm.

“Sales from these various concepts are currently a very small part of our business,” admits Quinn. “However, we expect revenue to increase as we roll-out additional units, and as travel continues to rebound.” That rebound is underway across the US domestic air network. Recently 1.5 million travelers were counted in a single day for first time since March 2020, and TSA data currently show 26 consecutive days of passenger volumes exceeding 1 million. In March 2019 daily numbers regularly exceeded 2 million.

In the near-term Hudson is focused on placing automated retail units primarily at domestic airports, though the company says it sees the benefit of having them at international hubs as well “but the mix of brands may be different.”

Competitor Paradies Lagardère has also stepped up its digital services with the launch of U.K. startup MishiPay’s “Scan, Pay and Go” technology, already under test in Muji in London. Paradies has launched it in two stores at Fort Lauderdale-Hollywood and Charlotte Douglas airports allowing customers to skip the line and pay with their mobile phones.

Automation here to stay

Travel retailers will continue their digital drives as the market slowly opens up and automation is likely to remain a fixture rather than a fad. Quinn comments: “We believe automated specialty retail will become a key part of our overall retail portfolio. This type of retailing gives travelers greater access to a variety of specialty brands and allows them the convenience of shopping on their own schedules. For airports, it provides incremental revenue opportunities, often leveraging unused space.”

Not only that, but automated units can serve as incubators, where airport retailers can test brands before deciding to put them into their brick-and-mortar stores. At a time when they have had to cut inventory to get rid of excess stock, this could be a useful and efficient way of introducing new brands to see how they perform.

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