INDEPENDENT RAIL RETAILERS
Britain’s rail growth partners How working with independent retailers will reduce costs and rebuild revenue
MARKET LEADERS
Our tech powers £4.2bn of online sales GROWTH PARTNERS
£10m of new business every week HIGHLY EFFICIENT
The lowest cost sales channel INNOVATIVE
Driving the digital ticketing revolution RISK-FREE
Agile, private sector investment
A £4bn partnership that continues to grow Over the last 20 years, Britain’s independent rail retailers have driven innovation and growth, helping to create a market worth over £4bn a year. We’re experts in selling online, which is how some of us are already exceeding pre-Covid sales volumes, despite wider industry challenges, and helping to lead the rail recovery. It’s also why 18 of Britain’s 23 passenger train operating companies (TOCs) use our
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technology to sell tickets through their websites and apps, rather than spending millions of pounds developing and maintaining their own standalone platforms. In fact, some 40% of all train ticket sales are made directly by, or using technology provided by, independent retailers – a figure that continues to grow.
efficiency, create new markets, and deliver a world-class customer experience.
There is so much more we can do to transform the industry. We are keen to work with GBR, TOCs and the Department for Transport (DfT) to increase
That’s why we are working with the industry to rebuild revenue, relationships and reputation in a post-pandemic world. We are rail’s growth partners.
Our success is driven by the same things, after all: attracting new customers, encouraging existing users to take the train more, and finding ways to make travel simple.
BRITAIN’S £10.9BN PRE-COVID RAIL TICKET MARKET
Direct B2C websites Modest commission rates mean our success depends on growing the market. Our customer-led innovation and targeted marketing help us bring up to £10m of new business to rail every week.
£2.2bn
Our technology is also used by hundreds of travel and tourism businesses both at home and abroad, helping us to access new markets far beyond the reach of TOCs.
B2B/Corporate
£1bn £1bn
We’ve developed specialist retailing systems to simplify business travel and increase rail use among corporate clients, including over 130 Travel Management Companies (TMCs). Our teams work with businesses to address specific challenges, from multimodal journey planning, to travel policies and buy now, pay later options.
TOC websites TOCs have used independent retailers to deliver their online sales channels for over 20 years, saving them millions of pounds in development costs, while still benefitting from our world-class innovation and expertise.
Emerging stronger
Powered by independent retailers
TOC channels (e.g. booking offices)
As commercial businesses, we will continue to provide the industry with targeted, risk-free private investment to drive improvements, not only accelerating change, but releasing public money for other rail enhancements. That has to be better for the customer, better for the industry and better for the Treasury. But delivering real change requires true partnership, and that means creating a level
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Other
We bring £500m of new business to rail every year
Since 2020, we’ve increased our market share further, as more and more customers make the switch to eTickets.
playing field. We want to see barriers to entry reduced to encourage new retailers to enter the market. For that to happen, the right levels of reward and incentivisation need to be in place. As we show next, today’s real level of commission is too low, stifling rail’s growth. Today we bring up to £500m of new business to rail each year. Working together, we can raise that bar even higher. IRR – BRITAIN’S RAIL GROWTH PARTNERS
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We’re the lowest cost way to sell tickets
It’s a common misconception that the commission which independent retailers earn for selling tickets could be ‘saved’ as a cost to the industry if we didn’t exist. We receive 5% commission for online sales that are direct to the public, but only 3% for corporate ticket sales, and just 2% for season tickets (including the recentlyintroduced ‘flexi’ tickets). As the information panel opposite shows, most of the commission that we receive either goes straight back to the rail industry, or is spent on unavoidable costs that train operators would 4
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The real cost of independent retailers is only 1% to 2% of train ticket sales - totally risk-free incur if they were selling the tickets instead of us. In the B2C market, independent retailers are typically left with only between 1% and 2% after these unavoidable costs are taken into account – and almost
nothing at all in the corporate ticket sales market. That’s a very low real cost to the industry, and why we sometimes need to charge fees (we would prefer not to!): commission levels are simply not high enough to sustain a business without them. Sales made through independent retailers are also risk-free for the rail industry. We bear the risk of fraud, costs exceeding income, and even vanishing demand. During the pandemic, we still paid nearly the same amount in industry charges, even though our commission income dropped
dramatically. While TOCs received emergency financial assistance from the Government, we relied almost entirely on private sector support. Although train operators earn the same commission rates for online sales as ourselves (at stations ticket sales are a much higher 9%), they get to keep all 100% of ticket revenues if selling their own tickets (which account for most sales). That means they can use money intended to pay for operations to cross-subsidise ticket retailing. This is how TOCs can offer promotional discounts of 20%, for example – the money simply comes out of operational budgets. If it had to come out of commission income alone then it would be
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unaffordable. Promotions like this can be great for generating revenue, but they must be managed in an equitable way, where they are equally available to all retailers.
Independent retailers are the lowest cost way of generating new revenue for rail
Independent retailers bring a strong and steady stream of private sector investment into the rail industry, to deliver the lowest cost and most effective way to attract and keep new customers. Our investment is enabling the rail industry to transform retailing online and at stations, embrace digital, and save money. The real cost of this is as little as £22m a year, for which we deliver up to £500m of new ticket revenue and industry cost savings every year. That’s a return on investment of more than 20:1.
Covid has created a revenue gap of £4bn. Government and private enterprise must work together to focus on closing that gap. As the lowest cost, risk-free way of selling tickets, independent retailers – with the private sector investment and innovation that they bring – are the best way of achieving that.
WHERE DOES THE MONEY GO? Between 3% and 4% of commission earned goes on unavoidable costs that the rail industry would have to pay anyway AREA
INDUSTRY FEES
PAYMENT
TECHNOLOGY
MARKETING
COST TO RETAILERS
Between 0.7% and 1%
Between 0.5% and 1%
Around 1%
Typically 0.5% to 1.5%
Up to 0.5%
About £22m
About £18m
About £20m
About £20m
Up to £10m
RSP systems – both capital and ops costs. Fees every time a reservation is made, or a barcode or ToD ticket is sold.
Credit card fees and PayPal and other wallet systems. We also bear the full cost of fraud, so invest in systems to prevent this.
To provide top-rated customer experience, innovate and comply with RSP requirements, we invest hugely in tech.
We reach new rail customers, and keep existing customers, by building brands, direct advertising and through partnerships.
Customers need help with refunds, general queries and when things go wrong with the train service. We provide that, often 24/7.
Over 70% of the cost of barcode ticketing, including scanners at gatelines and on train, is paid for by independent retailers
We work with train operators to help them prevent and reduce fraud, saving £ millions every year.
TOCs’ online retailing costs much less than it would do otherwise – retailers are subsidising operators
Between 95% and 99% of ticket sales value generated by our marketing is kept by the train operators, funding operations
We provide much of the after sales support for TOCs’ own retailing, at a lower cost than could be done otherwise
AMOUNT
WHERE DOES IT GO?
HOW THE WIDER INDUSTRY BENEFITS
AFTER SALES SUPPORT
Figures are for the B2C market where commission is 5%, and will vary from one independent retailer to another. Figures for the B2B market, where commission is 3%, will differ.
IRR – BRITAIN’S RAIL GROWTH PARTNERS
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Working together to deliver the missing £4bn The pandemic has changed the way we work and the way we travel, resulting in a £4bn gap in rail revenues. The industry needs to quickly adapt – speeding up reform and putting customers at the heart of every decision.
existing and new – to increase revenues dramatically; GBR can’t do everything by itself! Independent retailers bring riskfree private sector investment, innovation and flair; and they are the lowest-cost way of selling tickets.
It must revolutionise fares and ticketing. There’s no place for a complex, unfair and expensive system; it needs to be simple, easy to understand and good value for money.
Another option is to cut costs. Certainly, there is some room to reduce staff, investment and maintenance costs. But to remove £4bn in the short time available is almost certainly impossible, and would inevitably lead to industrial unrest, worsening rail’s position rather than improving it.
One option to solve this problem is to work with partners – independent retailers both
Reducing costs can only be part of the solution. So the way forward must principally be through revenue growth. Given the likely longterm decline in commuting, this will need to be achieved through attracting and retaining new customers. The right levels of reward – higher than today’s real rates of less than 2% – need to be in place to drive this behaviour. All independent rail retailers are ready to work in partnership with the rail industry to achieve this – and to finally deliver a great British railway.
ONLY A LEVEL PLAYING FIELD CAN UNLOCK THE PRIVATE SECTOR INVESTMENT THAT What does a level playing field look like? With a level playing field every retailer – GBR, TOC and independent – is treated equally, with the same: levels of commission / reward
access to fares, tickets, discounts and fulfilment types
costs for industry systems
licence terms and conditions
Inclusion in providing services like Delay Repay and Account Based Ticketing (ABT) / PAYG
access to seat availability, performance and crowding data, to drive revenue and improve the customer journey 6
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The Government must ensure that all retailers, including GBR, operate on fair commercial terms and this should be agreed before the introduction of GBR in 2023 Baroness Neville-Rolfe DBE CMG Chair, House of Lords Built Environment Committee, in a letter to the Rail Minister, Nov. 2021
To ensure that a level playing field is maintained, an independent regulator – such as the ORR – must oversee it. And, because the primary business of GBR and the TOCs is to run the rail network, their ticket retailing operations must be separated – legally, financially and operationally – from running the railway.
SIX STEPS TO REVOLUTIONISE TICKETING, DELIGHT CUSTOMERS AND REBUILD TRUST Introduce contactless Pay As You Go (PAYG) to every urban area in Britain This needs to cover trains, buses and trams and have daily, multi-modal price caps to guarantee the cheapest fares. Keep it local: PAYG works for simple, everyday trips without the complications of railcards, reservations, Advance fares and 1st class.
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Make barcodes available for every journey
They’re easy to use and can be stored on your phone – no wonder customers love them. A true, nationwide scheme will save costs too: we’ll need fewer booking offices and self-service machines – and paper tickets can become a thing of the past!
3 WILL HELP DELIVER THE MISSING REVENUE
Make tickets simple
2,700 ticket types, 1,000 ticket names, and 650 off-peak restrictions make the current system incomprehensible and hugely expensive to manage. Start again with simple one-way fares, fixed/flexible/ semi-flexible tickets, and consistent time restrictions.
Why do we need a level playing field? Without a level playing field, the private sector won’t be able to bring the level of investment, and the drive for innovation, that are needed to increase rail revenues and to improve the customer experience. With a level playing field, the private sector will do just that. It will act as a partner to GBR and the TOCs to seek out customers new to rail, and to keep them for the long term. It will reach customers who would not otherwise be reached, and find new ways to improve their satisfaction. It will find ways to sell the distressed inventory that has never been sold before, and to better look after customers at every stage of their journeys. As soon as there is a level playing field, the rail industry will benefit from the investment brought by independent retailers – including new entrants to the market – to deliver new revenues, new customers and new levels of satisfaction, risk-free. A level playing field in retail is in the interests of the entire rail industry, now more than ever before.
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Reward customers who travel regularly or together
Lock people into rail by making it cheaper the more you travel (using account-based ticketing). And reduce fares for families and small groups (whatever the journey) to make the train better value than the car.
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Reduce headline fares
Some prices simply don’t make sense: it can cost less than £40 for a peak Advance fare from London to Manchester – or £369 return on the day. We need to unpick 25 years of fares regulation and create fares that doesn’t make headlines for the wrong reasons.
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Make it free and easy to change your ticket
Customers expect no-quibble refunds and exchanges; they’ve had them on the High Street for years. Ultimate flexibility on refunds, reservations and changing dates – and simple self-service tools – will further erode the lure of the car. IRR – BRITAIN’S RAIL GROWTH PARTNERS
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Innovation: the route to recovery Growing the market is the key to our success. We’re guided by feedback and research, and our independence gives us the agility to react quickly with innovative solutions. That’s good news for customers, our partners and the industry as a whole. Innovation will lead the rail recovery, but there needs to be a change of mindset to ensure we work together – on a level playing field – as growth partners. That means fair commercial terms and involvement in shaping GBR’s future retailing strategy.
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We welcome the recent comments by the Minister of State for Transport and the House of Lords’ Built Environment Committee in supporting independent retailers, the extension of barcode readers to all ticket gates, and the expansion of Pay-As-You-Go (PAYG) and Account Based Ticketing (ABT) schemes to more urban areas. These actions will ensure we continue to innovate – working closely with the TOCs, GBR and the DfT – for many years to come.
CUSTOMER-DRIVEN SOLUTIONS Our track record for innovation speaks for itself Spearheaded by Assertis and Trainline in 2016 through a trial with 3 TOCs, barcode ‘eTickets’ are now available across most of the network – with a 50% increase in adoption during the pandemic. A low capital investment that’s made a big impact on customer satisfaction.
Dedicated corporate booking systems from Evolvi, Click Travel and Trainline have helped independent retailers expand this billion pound market. TMCs now have a range of tools that make business travel simple, including integration with travel policy rules and bespoke report generation.
Launched initially by Raileasy, automated split ticketing apps and websites display the cheapest combination of fares for journeys on any route. More affordable journeys mean more passengers and improved reputation.
Vast customer databases and sophisticated customer segmentation and marketing allow us to efficiently target customers to increase engagement and frequency of purchase. Our international presence also means access to the hard-to-reach overseas visitor markets across the US, Asia and Europe. Trip.com provides booking services in 20 languages and accepts 31 currencies through its website and apps.
Smart apps can make buying the right ticket easy and put you in control of your end-to-end journey, with everything from delay alerts and crowding information, to amending tickets and claiming Delay Repay. Trainline’s apps achieve customer ratings of 4.9/5.
During the pandemic, we quickly adapted our direct and white label platforms to deal with the changing situation, including refund policies, compulsory reservations and extended booking windows. Trainline also launched its Crowd Alerts app, enabling passengers to share real-time train crowding information.
Commuter Club has now helped 20,000 customers save money by accessing the savings of an annual season ticket via a low cost monthly payment plan.
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There is an important role for a diverse range of ticketing retailers, which can help encourage innovation. Baroness Neville-Rolfe DBE CMG Chair, House of Lords Built Environment Committee
EXCITING TIMES AHEAD Just some of our plans for transforming customer experience through insight, technology and partnership SilverRail is developing a smart kiosk concept, making self-service ticket machines easier to use by replicating the online retailing experience
Partnering with third-parties, targeted marketing techniques will upsell products to customers and add value to their trip.
Smartphone apps will evolve into essential journey companions, with new features such as door-todoor, multi modal journey planning and locationbased auto-Delay Repay
We’ll work with TOCs and Transport for London to expand barcode ticketing across the network – including for cross-London journeys and season tickets – at minimum cost.
We’re developing ways to use AI, insight and booking data to maximise revenue by encourage greater use of quieter trains, and complementing the TOCs’ own marketing campaigns. IRR – BRITAIN’S RAIL GROWTH PARTNERS
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Who are we?
Independent Rail Retailers is a membership body representing the majority of Britain’s independent retailers of train tickets. Our members are licensed to sell tickets to the public, and to businesses, by the Rail Delivery Group (RDG), which is the train operators’ trade body. The first independent retailer was Trainline, formed in 1999 by Virgin Group. Today, Trainline retails tickets for 270 carriers across 45 countries, has a 4.9* rated app and attracts customers from across 170 countries to UK rail. Evolvi was originally developed by Harry Weeks Travel to provide a ticket retailing platform solely 10
for use by its own corporate clients, following a decision by the rail industry to remove paper tickets and the agency booking system (Elgar) from the market. In 2005 Evolvi was made available to all TMCs to provide a rail booking and ticketing service for their corporate clients. The first privately-funded independent retailer selling direct to the public was Raileasy, launched in 2007, followed by MyTrainTicket (then owned by Assertis) and redspottedhanky.com in 2010. As the popularity of online retail has grown, more companies have entered the space, each with their own innovations and focus.
OUR JOURNEY
1999
2005
Online retailer in the UK and Europe, with pre-Covid annual ticket sales in GB of over £2bn; FTSE-250 listed since 2019
Largest supplier of rail ticket retailing to corporate and business travel market, with over 50% share
2008
2007
Retails online through railsmartr.co.uk, and supplies TIS and journey planning solutions to train operators and the corporate travel market.
2009
Split-ticketing innovator with APIs for new retailers to enter the rail ticket retailing market
2009
Nationalrail.co.uk journey planner provider, and supplier of online retailing and journey planning to UK train operators
Specialist provider of ticket printing / fulfilment, railcard and refund services
2012
2011
Season ticket specialist which helps commuters get better value season tickets through a low-cost payment plan
2013
Tech-led corporate travel management specialist with platform for booking and managing trains, flights, hotels and car hire
2014
Online retailer whose parent company serves the corporate travel market with ‘buy now, pay later’ products and also provides services to retailers and banks
Online retailing supplier for GTR and SE Trains; a joint venture between Assertis and the Go-Ahead Group
2019 Split-ticketing specialist with own journey planner and ticket retailing system
2018 World’s largest online travel agency, founded in 1999, which entered the UK market with TrainPal in 2018
Dates represent entry into the UK rail retailing market IRR – BRITAIN’S RAIL GROWTH PARTNERS
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MARKET LEADERS
We enable £4.2bn – almost 90% of online-sales GROWTH PARTNERS
£10m of new business every week HIGHLY EFFICIENT
The lowest cost sales channel INNOVATIVE
Driving the digital ticketing revolution RISK-FREE
Agile, private sector investment
Contact us There’s more to discuss – and we’d welcome the opportunity. To learn more about the rail growth partnership, simply call Alistair Lees on 07980 865807 or email us at hello@independentrailretailers.co.uk Published by Independent Rail Retailers, Staple Court, 11 Staple Inn, London WC1V 7QH. © Independent Rail Retailers December 2021