Impact Of Social Media Involvement On Duty-Free Shop Sales At Australian International Airports

Literature Review

Throughout Australian international airports duty free shops are currently catering to global and local passengers. Variety of duty-free items, especially alcohol and tobacco items were the two most sold items in these stores. Some of the passengers even look for imported chocolates and costly souvenirs, which are available in low costs. These shops serve international passengers leaving Australia for international destinations. High end products, such as branded digital cameras, music players are in high demand. The custom department clear the passengers travelling outside Australia when goods are purchased and tagged in duty-free shops. The sealed products at the international terminus are easily carried in the hand baggage. This customer facility is currently available at major Australian airports, namely at Perth, Brisbane and Melbourne terminals. On a periodic basis the space for these shops are leased through proper tenders, and airport authorities profit from the rents paid by the shop owners. The purchase pattern of the 761 passengers was noticed and the correlation with customer’s age, gender, social media involvement was researched. The objective of this exploration was to discover the reasons for non-performance of duty free shops and investigate the scopes to increase the sales. The revenue earned due to profitable trade will increase the overall revenue collection of the airport authority.

Duty free shopping has two aspects from the angle of airport authority. The sale can be inward or outward sale, in the current work inward sale has been considered. Inward sale of items signifies that passengers travelling to and from international or domestic destination will buy a product from the duty-free shop inside the airport terminal. The government, local or central, will provide certain tax exemptions on the products, which will substantially reduce the price of the items. This concept was highly developed by Qantas Airways, a popular Australian carrier. The number of passenger movements and their purchase intensions are major aspects of sale from these shops. There are two important factors beneath the entire process. Firstly, the government’s inclination towards the duty free revenue, and secondly the absence of proper advertisement of these shops in social media. The scholar in this study has attempted to relate the customer’s social media involvement with purchase intension of duty free products.

Business-related expansion of Australian airports has started has been a long planned development of the government. The alteration in aviation policy in Australian national system has been done to promote the sales of attractive and lucrative products in relatively low prices compared to outer market. The commonwealth countries have controlled the revenue market of duty-free commodities under the Airports Acts, 1996. In last few decades, the structure of government policies has introduced aviation liberalization in the country (Fu, Oum, & Zhang, 2010). Present-day researches on airport revenue are due to many striking factors, one of the most important factors is traveller and cargo flows, which drives the system towards globalisation.

Risk management strategies have determined the increasing importance of non-aeronautical revenues. This income flow has been diversified and reliance on aeronautical charges has reduced. Peripheral surprises, like violence and economic recession have not been able to jeopardise the industry. On an average, 48% of the revenues were derived from general business activities at the major world airports (Graham, 2009). The concept of 24 hour airport service was first introduced in the Schiphol airport of Dutch city, Amsterdam (Hakfoort, Poot, & Rietveld, 2001).  This world class airport model has been followed, and others airports like Dallas, Bangkok, Frankfurt, Dubai and Singapore have come up with top class facilities (Cresswell, 2012). Growth beyond conventional sources in New Zealand has amplified the development of non aeronautical revenues. Amenities, such as terminal vending and car parking have contributed towards this (Sabar, 2009). The case study on Mexico city international airport revealed similar principles (Galland, & Lassen, 2011).

Research Methodology

Coming to the Australian picture, increasing significance of non-aeronautical activities over the last decade or two has significantly increased (Stevens, Baker, & Freestone, 2010). The reports of Productivity Commission in 2002 and 2006 convey the similar results that more profitable earning comes from the non-aeronautical segment of the airport business compared to aeronautical business. The reports of Productivity Commission, 2002 indicated that, profit earned from non-aeronautical sales was almost four times compared to aeronautical business (Gillen, 2011). The report of 2006 also emphasised on the growth of non-aeronautical business with participation of private partnership with government agencies. In Canadian aspect, airport duty free industry was more than 170 million dollars in 2001 (Graham & Anne, 2012). The sale decreased substantially between the years 2002 and 2005 because of restrictions implemented by the Canadian government. Later, in 2006, airport duty free (ADF) pact was implemented and more than 54 countries joined it. The opportunity to increase profit share was exercised with ease, customers also benefitted from the policies. From the Australian point of view, non-aeronautical sales were increasing but the decrease in earnings from duty free segment was a striking concern. Two categories of product are marketed in the Australian duty free market, alcoholic products and internationally acclaimed perfume products (Athukorala, & Kohpaiboon, 2011). In the current study, traveller’s choice of products has been categorised and analysed. The age, gender based purchase pattern have been considered in the research. Effect of social media on customer buying choice of products from duty free have also analysed (Auger et al., 2010).

The research work was designed to analyse the cause of decline in revenue collection from duty-free shops (Arif, Gupta & Williams, 2013). The study was based on traveller data, collected in the month of January, 2018. The target shopper group was selected to be older than 18 years of age. The exclusion criterion was based on the purchase capability of the selected group. As the teenagers were assumed to spend family income, the purchase figures would have created an erroneous result. To remove the cumulative consideration of purchasers, only one person from a group was considered as potential customer. The scholar and his research team were able to gather purchase data of 800 customers. The team interviewed the customers about their choice of products purchased from airport terminals. Some of the passengers were interviewed in the international lounge area of Qantas Airlines, Singapore Airlines and Virgin Australia. The respondents were informed about the purpose of the interview and they were assured of the safety of the data. Later, the collected data was sorted, and a total of 761 usable and valid data were found for the study. The interview was based on 23 close ended survey questions. The customers answered questions on the shopping reason and products of choice; their social media involvement was also recorded. The demographics (age, gender, and ethnicity) were noted for comparative study. Statistical analysis was done using SPSS software package and MS Excel was used for graphical illustrations.

• The demographical characteristics of the travellers were analysed. Firstly, the introspection was done for passenger’s age. The frequency distribution has been provided in table 1. Figure 3 represents the data in the table 1, it was noticed that the median of the age distribution was in the age bracket of 40-44 years. The gender distribution revealed that female travellers are significantly larger in number (54.8%) than any other segment of the passengers.

Data Analysis

Table 1: Age of the passengers travelling

Age Group	Frequency	Percent
15-19	21	2.8
20-24	81	10.6
25-29	99	13.0
30-34	79	10.4
35-39	62	8.1
40-44	66	8.7
45-49	54	7.1
50-54	76	10.0
55-59	65	8.5
60-64	53	7.0
65-69	58	7.6
70-74	25	3.3
75-79	13	1.7
80-84	4	.5
Prefer not to answer	5	.7

Table 2: Gender distribution of passengers

Gender	Frequency	Percent
male	342	44.9
female	417	54.8
Prefer not to disclose	2	.3
Total	761	100.0

The purchase intension of the travellers was scrutinized with the cross tabulation with age and gender of travellers. Females were observed to be the dominant sex when compared to men in purchase decision, but no significant difference () was noticeable. Traveller in age groups of 20-34 were the highest in purchase intension, but there was no significant difference among other age groups when analysed for purchasing intensions () .

Table 3: Age based purchase for air travellers

• Financial disparity in availing waiting placesin terminals was thought to be a decisive factor. Only 4.6% travelers were found to be availing lounge facility. There was no significant difference in purchase intension () and no conclusion was possible from this observation

• Number of persons travelling togetherwas hypothesized to be a significant factor on purchase intension. Most of the time travelers were travelling alone or with a single companion. The inferential analysis produced significant difference. And more number of persons travelling together with intension to purchase products was statistically significant () with purchase intention during travelling

• Observation on purchase intensionrevealed that total 75.56% travelers were travelling with purchase intension from duty free shop. The goal was to analyse their needs, so that retention of customers for the segment is possible. Their reasons for shopping was analyzed for variance, the results have been given in table 4. Other than good quality guaranteed products, rest of the purchase intentions were statistically significant with amount spent for purchasing.

Table 4: ANOVA for purchase reason with expenditure

ANOVA	F	Sig.
Reasons for shopping at the duty-free Cheaper Price	12.176	.000
Reasons for shopping at the duty-free Variety of goods	4.256	.000
Reasons for shopping at the duty-free Guaranteed good quality	.988	.506
Reasons for shopping at the duty-free Fashion/Novelty	1.763	.000
Reasons for shopping at the duty-free Unique/Special products	5.612	.000
Reasons for shopping at the duty-free Products not available in own country	2.745	.000
Reasons for shopping at the duty-free Indulge my-self	9.846	.000
Reasons for shopping at the duty-free Gift to family/friend/colleague	11.335	.000
Reasons for shopping at the duty-free lack of time elsewhere	4.855	.000
Reasons for shopping at the duty-free Other	8.611	.000

Social media involvementof the passengers was thought to be a significant factor for purchase decision in duty free shopping. Instagram, SnapChat and Whatsapp were three most popular social media for the air travelers. For advertisement purpose, social media was supposed to be influential medium. But, unfortunately, there was no significant relation between the social media involvement and duty free shopping expenditure. Only significance was obtained between WeChat media (F = 1.54, p < 0.05) and expenditure outline. Promotion of duty free shops in social media was a viable option, but more intense research was required for it.

• Travelers’ reasons for flyingwere noted and cross tabulated with purchase intensions.  People were mainly travelling to spend their holidays or visiting near and dear ones. But no significant relation () between flying reasons and purchase intensions was discovered.

Level of association of customer satisfactionwith purchase intensions and amount spent at duty free shops were hypothesized to be significantly related. From figure 12 it was evident that customers were inclined for purchasing goods based on positive impression of the duty free section at airport terminals. The impression of variety of products was cross tabulated with purchase intension of the customers and () significant relation was found. Choice of international products was significantly related () with purchase decision. Ease of finding products (), gift ideas (), helpful and friendly behaviour (), feel of the shop () were all significantly related to purchase intension. Encouraged by the inferential part, effect of customer satisfaction on purchase expenditure was researched. ANOVA was used as the statistical tool for analysing the effect. Test of homogeneity of the variances of the impressions of customers was significant (Levene statistic (5, 754) = 89.05, p < 0.05), and a statistically significant relation between expenditure in duty free shop and impression of the customers (F = 18.28, p < 0.05) was observed.

• Sought after items were categorized; electronics items were the most sought after. It was followed by cosmetics and Australian wine. A cross tabulation with purchase decision of flyers was evaluated. Customers buying decision was significantly related with their wish of some well known products. Wish for Australian wine (= 9.67, p < 0.05), electronic gadgets ( = 13.12, p < 0.05), jewelry ( = 5.0, p < 0.05), Liquor ( = 8.4, p < 0.05), perfume ( = 13.31, p < 0.05) and tobacco ( = 22.78, p < 0.05) were significantly related to purchase decision of domestic and international passenge

Conclusion

The analysis and the research helped the scholar to arrive at certain conclusions the categorical explanation have been incorporated in the following points.

Effect of lounge availablity on duty free shopping was not a imperative field in the study. Small number of passangers were availing lounge facilities, and the frequency was not significantly enough for comparision purpose. Comparison of lounge availers with normal passengers was inconclusive from the angle of revenue collected (Castillo-Manzano, 2010).

Assessment of advantage number of persons travelling on duty free shopping was conclusive. Number of passengers travelling together had a significant relation with purchase decision from duty free. People travelling alone or with a single companion were more attracted towards shopping. Probably cost, privacy could have been the deciding issues (Medlik, 2012).

Investigation of effect of social media on airport duty free purchase was not encouraging. Among all the social media accessed by passengers, WeChat was the only social media which had statistically significant relation with purchase decisions. But money spent in the duty free was not at all related to social media preference.

Effect of age on purchase from duty free shops was researched and no significance relation was found. The result was obvious in nature and hence age of travelers was not an important factor of this study (Lin & Chen, 2013).

Evaluation of travelers’ travelling characteristics based on reason of buying was not able to draw any conclusion. Though, people were going for holiday and to meet relatives, but these reasons were not related to duty free shopping.

Probable impact of customer impression of the duty free shopping was the main research topic of the work. Customer’s impression on shopping was categorized to various categories. The impression of variety of products, choice of international products, ease of finding products, helpful and friendly behaviour, feel of the shop were all important factors to increase the revenue from duty free shops (Lin & Chen, 2013).

Projection on sought after or desired product items was significantly related with purchase decision of the customers. Hence shops were supposed to take a note of this issue for future stocks and orders.

As an aviation management scholar some proposals were drafted for increase in revenue earned from duty free shops under the category of non-aeronautical profits. There were some encouraging facts of the current study which could help the strategy committee to increase the sales at the airport terminals.

• Firstly, customer desired products needs to be stocked in the inventory. The products were Australian wine, cosmetics (perfumes), electronic gadgets and liquor. This would help in customer attraction and increase in sales.
• Secondly, variety of product lines, proper decoration of the shops (so that customers find it easy to find a product), discount coupons, well behaved and trained staffs were essential for the customer satisfaction.
• The third and the most important aspect of the study was (table 4) existing customer’s buying motivations. Cheaper price was order of the business, especially if clubbed with discount coupons. Customers wanted to buy unique products for gifts or as a souvenir, especially if the products were not available in their country. So a section of antique and unique items was need of the business.

References

Arif, M., Gupta, A., & Williams, A. (2013). Customer service in the aviation industry–An exploratory analysis of UAE airports. Journal of Air Transport Management, 32, 1-7.

Athukorala, P. C., & Kohpaiboon, A. (2011). Australian–Thai trade: has the free trade agreement made a difference?. Australian Economic Review, 44(4), 457-467.

Auger, P., Devinney, T. M., Louviere, J. J., & Burke, P. F. (2010). The importance of social product attributes in consumer purchasing decisions: A multi-country comparative study. International Business Review, 19(2), 140-159.

Castillo-Manzano, J. I. (2010). Determinants of commercial revenues at airports: Lessons learned from Spanish regional airports. Tourism Management, 31(6), 788-796.

Cresswell, T. (2012). The Production of Mobilities at Schiphol Airport, Amsterdam. In On the Move (pp. 231-270). Routledge.

Fu, X., Oum, T. H., & Zhang, A. (2010). Air transport liberalization and its impacts on airline competition and air passenger traffic. Transportation Journal, 24-41.

Galland, D., & Lassen, C. (2011). Aeromobility and Social Consequences: The Case of Mexico City International Airport. In Cosmobilities Conference.

Gillen, D. (2011). The evolution of airport ownership and governance. Journal of Air Transport Management, 17(1), 3-13.

Graham, A. (2009). How important are commercial revenues to today’s airports?. Journal of Air Transport Management, 15(3), 106-111.

Graham, Anne. Managing airports. Routledge, 2012.

Hakfoort, J., Poot, T., & Rietveld, P. (2001). The regional economic impact of an airport: The case of Amsterdam Schiphol Airport. Regional Studies, 35(7), 595-604.

Lin, W. T., & Chen, C. Y. (2013). Shopping satisfaction at airport duty-free stores: A cross-cultural comparison. Journal of Hospitality Marketing & Management, 22(1), 47-66.

Lin, Y. H., & Chen, C. F. (2013). Passengers’ shopping motivations and commercial activities at airports–The moderating effects of time pressure and impulse buying tendency. Tourism Management, 36, 426-434.

Medlik, S. (2012). Dictionary of travel, tourism and hospitality. Routledge.

Sabar, R. (2009). An evaluation of the provision of terminal facilities for the design of low cost airport terminals.

Stevens, N., Baker, D., & Freestone, R. (2010). Airports in their urban settings: towards a conceptual model of interfaces in the Australian context. Journal of Transport Geography, 18(2), 276-284.