Retail gone stale?

Gatwick South Airport.jpg

Retail sales at airports have been on an upward trajectory.

Compared with high street retailers, retail spend continues to grow year on year and the global duty-free industry is expected to reach $67bn by 2020, up from $48bn in 2016.  However, this masks a key point that for many airports actual spend per passenger is falling.

Over the last decade the food and beverage (F&B) offer at airports has developed considerably. What was once a limited choice of fast food and meal deals, now ranges from fine dining, to casual pubs and a wider offer of grab and go.

Airport lounges have also made changes over this period by widening their audience.  Independent lounges such as No1 (seen above), Aspire Lounges and Plaza Premium Lounges now allow economy passengers a luxury lounge experience at an affordable price.

With improvements across catering, lounges and other airport services increasingly capturing customer dwell time and spend, the airport retail offer needs to work ever harder to capture passenger engagement.

We believe there are three ways the retail offer at airports can be improved:

  1. Uniqueness and experience of the offer. Passengers are growing weary of seeing the same items at airports that they can easily purchase elsewhere.  Furthermore, they can compare prices within seconds using their devices.  Retailers need to think outside the box to provide a more localised offer where customers can buy goods that are distinct to a region or location.  Added to this, the in-store service proposition needs to be enhanced, an example being the Ray-Ban flagship in New York, which offers eye-examinations, customised cases, and live music.
  2. Integration of units and formats. The commercial offer at airports is often made up of categories in distinct zones: retail, F&B, services etc.  This can limit the exposure passengers have to certain aspects of the offer.  By integrating the categories not only can the customer experience be improved but more categories gain exposure to customers.  This is now common practice on the high street with bookshops having coffee shops, restaurants selling merchandise and department stores including bars and restaurants to increase customer dwell time and retail spend.
  3. Digital. Digital can bring the retail offer to the customer.  Adding tablets on tables at F&B outlets, for example, enables the customer to browse the retail offer while dining.  Similarly, the retail space can be bought to the lounge via digital devices which is particularly important in capturing high net worth passengers who often prefer to go directly to the lounge without visiting airport shops.  Lastly, digital can also help airports overcome the challenge of engaging with outbound passengers who do not want to carry their purchase during their entire trip, by offering services such as collect on return or home delivery.

Today’s passengers have different expectations from those of fifteen or even ten years ago and whilst they use the airport for the same purpose, they do so in a very different way.  Many airports have adapted their F&B for today’s passengers, but retail needs to do the same.

Kabir Seehra