The really good trips and adventures we have start at the airports. They are amazing places and I am sure you will agree with that....
I recently left a company, RDG Solutions and moved to Routes - the thing that links these two is the aviation industry and passion to if of people I work with.
Also recently, I wrote an article on airports' non-aeronautical (commercial) revenues. My previous boss, Ian encouraged me to do it and so now I present it to you.
Let me know what you think and ...enjoy flying with us ;)
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Having in place the passengers’ sophisticated needs and the most luxurious brands in the world, leading airports are pushing aside from the skies the storm-clouds of the industry’s downturn.
In the volatile times it is the global retailing business that seems to suffer the most from shrinking consumers’ spending. On the other hand, airport retailing performs surprisingly well, with global airport retail sales expected to grow to £15bn this year, up 11% from £13.5bn in 2007, according to Verdict Research, the leading authority on retailing markets. Also in the UK’s back-yard the trails of destruction are not so significant, with the world’s major operator and airport retailer – BAA - providing over 1 million square meters of commercial accommodation for more than 900 retail organisations and an impressive portfolio valued at £2 billion. BAA has recently expanded its capacity by adding 87 new shops and 25 catering outlets in Heathrow’s T5, as Mintel Report states.
In the difficult times, where the security is being tightened to the extreme, a specific environment has been created, surprisingly enabling airports to derive from the current situation. It is now or never for many airports to use this chance to maintain current position or to guarantee themselves future prosperity and sustainable business model.
Today, airport retailing is not an appendix to the main aeronautical activity anymore, but represents a true masterpiece of its own kind. Looking only at some of the leading European gateways – Charles de Gaulle, Amsterdam Schiphol or Copenhagen to mention but a few, it is hard not to be left with an impression that retailing in the airports’ version is a truly lucrative source of revenue for both airports and the retail operators. Those are expected to benefit from the commercial activity both today and in the future. Airports, therefore, need to start act as a high-street retailers and, as customers as becoming more affluent, sophisticated and realize how easily they can shop-around, they also need to be even cleverer than their industry peers.
However, there is a major obstacle in airports’ march to success in retailing. Today’s outlets are coupled with all sorts of goods from accessories, luxury clothes, to ‘first-need’ products. Those come ‘wrapped’ in an unique experience: general ambience, staff’s extreme attention and care of the customer, and details like merchandising and seasonal promotions. These are the trends that guarantee the competitive advantage to those who are able to implement them well.
On the other hand, for airports involved in retailing the uncertainty exists in almost every part of their business model, whether it is volatile customers (passengers) traffic, logistical difficulties, such as transportation and scanning procedures, or high operational costs. Retailing spaces being relatively smaller, than the high-street equivalents, and the hassle in hiring and equipping the staff with passes are also of a high importance.
Global airport retail leaders derive, however, from something that high-street retailers do not have – the ability to play on one of the most important factors in customers’ decision process – the sense of place and time. Lounges filled with a combination of longer dwell times, due to the security issues and boredom, while before the flight, play significant role in developing retail offer.
Leading airports understand that retail business is about the creation of unique passenger experiences and adding the value. It is also about understanding the customers’ profiles and the way that they are determined by the types of airlines and the routes they serve.
Dubai International Airport’s Duty Free, that is celebrating its Silver Jubilee this year, is surely one of the top examples of how the gateways should adjust their retailing strategy to match customers’ expectations. Operating more than 86,000 square feet retail space in T3, Dubai Airport have identified its target audience being a Fist and Business class passengers and successfully located the luxury zone on their routes; and it is all about the shopping environment there. While co-operating with specialist design company, Retail Concept Design (RCD), the Airport has created a strong sense of place in the Dubai Duty Free with its luxurious, open-space shops aiming to charm passengers with golden ornaments and the overall splendour.
Another example of deep understanding of the current trends is Copenhagen (CPH) gateway. The Airport expands and enhances its retail capacity to reflect the need of high-street offer. The store’s environment with high ceilings and stylish designs, as well as selection of top brands, like Gucci, Ralph Lauren, Versace and local companies, including J. Lindeberg or Sand, all together aim to create a sense of uniqueness to attract more affluent passengers. In fact, CPH reflects another trend in retailing - a demand for services and products grouped under the ‘well-being’ umbrella. Hence, the zones are created like the Optical Studio for passengers to check their vision and buy tailored branded glasses in just 15 minutes.
Since airports adopted the passenger’s personal experience model, the ‘details’ such as the
Personal Shopper or designated Men’s Lounge with luxury products and treatments just for men passengers, both offered by Charles de Gaulle Airport, act only as a cherry on this cake.
Clearly, today’s global airports not only appreciated their retailing activity, but are making a piece of art from it. The ideas here seems to be endless - a high-street offer, personal experience or literally following customers wherever they go, as Amsterdam Schiphol aims to do with its ‘Retail on Wheels’ mini-shops, last-minute arrival shopping stop in ‘Vizzit’ or advanced online shopping facilities.
Clearly, today’s global airports not only appreciated their retailing activity, but are making a piece of art from it. The ideas here seems to be endless - a high-street offer, personal experience or literally following customers wherever they go, as Amsterdam Schiphol aims to do with its ‘Retail on Wheels’ mini-shops, last-minute arrival shopping stop in ‘Vizzit’ or advanced online shopping facilities.
The good news is for those who are still at the very end of this creative list that, looking at the current trends, it seems like there is a still a chance to make the first step to create this longed-for match made in heaven between airports and retailing business.
