SubscribeAirports from Heathrow to Hong Kong and onward to Sydney have come a long way in their retail offer to their aircraft passenger. Indeed good airports target not only the traveller, but meeters and greeters, weepers and wailers and the airport employees; such has been their advance.
Look back thirty or forty years and one was lucky to be able to purchase an Agatha Christie novel and a decent cup of tea. Fast forward to today and airports such as Heathrow and Sydney have become veritable shopping malls complete with global brands selling everything from swimwear to fine cigars. This from a traveller’s point of view is the ideal, a place to purchase a quick gift bought by a business person through to a family being able to buy last minute and often forgotten items before flying off for their much needed family break in the sun.
This elixir of passenger terminal retailing is however not a global phenomenon as there are so many different layers of retail sophistication together with the physical constraints of the airports themselves. International airports and particularly ‘hub’ terminals usually, but by no means always offer a wider variety of both shops and products.
The very nature of these places makes it essential to cater in retail terms for both the passenger travelling from A to B as well as the terminal being a stop off point before flying on to the ultimate destination! Compare this type of operation with a provincial airport in the UK, Europe or the USA and the retail mix becomes a totally different type of offer due to the type of destinations flown to. This then for airports and the bodies managing them is the dilemma of the retail mix and how to define it.
A fantastically successful UK national retailer
As every year goes by, the shape, breadth and depth of airport retailing is more and more global. If there was a balance or even a mix of local, national, and global this is being fundamentally eroded by the locals, often good newcomers being taken over or forced out by the nationals who in turn are taken over by the large global players. The trend keeps going. What does this offer the travelling consumer? This is not an easy question to answer, as the variety of consumers in any airport is quite extensive, some travelling a ‘local’ route and others international. So even here is a difficult conundrum.
In days gone by all airports had different retailers so a traveller never really knew what the retail offer was going to be. Yes there was an element of pleasant surprise but equally there were some really awful enterprises that should never have been a part of the airport offer. This is still the case, in many airports. With the gradual globalisation of airport retailing, an element of sameness is fast developing so that it can be difficult to tell on the surface where an airport is in the world by its retail. Is this a big turn off for the shopper or does it give them confidence to spend? After all a GAP product is the same the world over whether it is on a high street or in an airport.
A global retailer successfully trading out of the international terminal in Sydney
Before any conclusion can be made, one needs to take a look at just what ‘Local’, ‘National’ and ‘Global’ are in the retailing phenomena of airports. Global is a relatively easy definition. These are brands which tend to sell mass produced products and from an airport’s point of view tend to be selling items such as perfume, spirits and the like, as well as high luxury products such as Gucci’s leather range.This form of retailing does have many benefits to the shopper even before the potential enticement of ‘tax free’.
These companies have huge purchasing power so that the selling price is about as competitive as it gets. Despite this, there are many airports in the world that still over-charge their captive audience. The better airports however are known internationally by consumers as being good value, thus giving confidence to the purchasing act, if the product can be purchased as a tax-free item the shopper certainly feels the added comfort factor.
Gift shops are ideal for local traders, an example in Sydney
It is an all win situation for both the retailer as well as the consumer. Of course the ultimate losers could be the other two categories who if selling the same type of product would certainly not be able to compete on price. ‘National’ retailing, the so-called sector in the middle probably has the more difficult slot. One major factor being that while National may mean a lot to national passengers the brands themselves may never have been heard of by the international traveller. There is potential in the development of ‘Local’. In years passed it was just your local store that happened to have a unit ‘up at the airport’.
This tea shop in Shanghai Pudong adds local colour in a professional manner
This, as most passengers will know was not the best retailing modus operandi. Local will often find it difficult to compete on price, that is obvious but it can compete on product offer.If the local retailer, specialises in selling local goods such as delicatessen style products this is interesting and dynamic to the passenger. It may even get the traditional non-spender to actually purchase! Even retailers who sell products from many different countries such as the wine specialists Berry Brothers are perceived as Local by the traveller. Local here means British tradition both in service and in shop environment. It’s British! In short Local can add colour and interest and partner the Global offer at airports.
North America is increasingly bringing in a local flavour to their airports through the ‘Sense of Place’, trend. This seeks to bring the airport into the heart of the community and absolutely re-enforces what is ‘Local’ both in the product offer and in the environment. This type of influence on local retailing is particularly effective for gift shops. Such as ‘The Spirit of the Red Horse’ in Minneapolis, this is an excellent example. It would however be wrong to thrust this genre throughout the retail offer, to try and localise a global brand will simply dilute its’ world wide recognition.
Minneapolis has a strong “Sense of Place” theme with Spirit of the Red Horse being a good example of local trader reflecting this.
What is plain to see is that some retail sectors suit the three different categories. For any retailer contemplating an entry into airport retailing there are a number of issues to confront. One of the most significant for both retailer and airport operator alike is the actual cost of the airport from a retail build and fit-out perspective. It is in short a lot more capital intensive per meter than your average shopping centre! How then can the science of airport retailing and the strategic management of Local, National and Global retail offer be facilitated to the benefit of the three essential parties involved? These being first and foremost the customer followed by the retailer and airport operator.
For if you are an airport operator such as BAA the very success of the retailer is your very life-blood because while it is possible to improve retail sales and therefore operators’ revenues, in this instance landing charges are regulated by the government. Effective Master Planning of both customer flow, site of shops and seating areas is absolutely critical. It is a process that interrogates what type of passengers use what terminal, be it pan-European or North America bound, Charter or Scheduled aircraft journeys, Business or Recreational travel.
All these elements have to be fully measured in order to plan the Local, National and Global retailing mix that the passengers would expect. The wrong shop in the wrong terminal would be disastrous and even the right shop in the right terminal will still need to be situated strategically so as not to be missed or sited next to a symbiotic retailer.
What then of that essential ingredient in all of this ‘the customer’. This is a process, which is an extension of Master Planning. It is critical is to understand what the passengers want. Is it Local, National or Global brands and products? The key is to define who the retailers’ customers are rather than who the airport customers are. A difference that although may appear to be subtle is in fact great. Once a site is chosen then the retail offer is about matching customer expectations and enticing them into your store. Start with the customer, understand the customer, but beware, the customer flow may change rather like the weather.
So what can be done to affect a cohesive retail mix of all the categories mentioned? Shorter leases from the airport operators themselves would certainly help the Local styled retailers who could then take a chance and add airports to their own retailing portfolio. The difficulty is that most airports and their operators are inherently conservative and risk averse. Fit-out costs are expensive as explained previously but even here is perhaps a way of the airport carrying out a partial fit-out that, combined with a more flexible leasing policy would aid the expansion of the retail offer. It would certainly encourage more participants.
Some local traders in Xi'an which do not live up to international expectations
What we do know is that the retail mix is important. Every airport and indeed terminal is different, but the extra effort in order to create an interesting tenant mix must be worth the work. Airports all over the world have the same problems, passengers who spend and are to a certain extent a known quality, and the many that spend nothing. The Holy Grail must be to convert some of these non-shoppers into shoppers and by having a more effective retail mix of global, national and local could just be the answer.
