Been in an airport lately? With the summer travel season upon us, travelers will be turning into airports–and spending hours waiting for their planes to take off. This gives them hours to do much more than watch CNN or display gaze: in short, it provides them a prime chance to shop. While the remaining retail-sphere faces significant challenges in getting clients through the door, airport retail is booming.
New airports are designing their footpaths and atriums to optimize exposure to retailers. News & Present stores and Duty Free Shops are rapidly being linked with mass market and luxury name brand airport retail as areas of interest, need and involvement by the harried traveler. From brand experimentation at Jo Malone fragrances to work and perform requirements at Brooks Brothers, travelers are spending more time (and more money) in airports.
Captive markets: airport dynamics
Driven by economic and promotional powers, U.S airports recognized the potential to be more than traveling centres. From the late 1970s, they became central hubs for entertainment, retail, and services. After all, why not capitalize on the fact that your prospective customer had nowhere to go pre-flight except in your shop, restaurant or pub? “Captive” describes airport crowds: once you are there, you are there, without a way out ahead of the departure gate.
By 2001 however, the airport retail game plan changed radically. Airport company”post-9/11″ was no longer”the usual” and the traveler’s experience was greatly impacted. The times of speeding into your gate just before take-off came to an abrupt end. Those familiar with the internal workings of airport retail economics understood that 9/11 only accelerated changes which were inevitable.
Airports are expensive to operate. Apart from handling runways and tarmacs working on thousands of square miles of real-estate, the airport passenger terminals themselves are similar to big shopping malls, requiring complex infrastructures, multiple utilities and hundreds if not thousands of employees to operate, maintain and manage. And this doesn’t come cheaply.
Normally, airports finance operating costs through fees–e.g. leasing & landing charges, fueling charges, and service fees paid for by airlines, who then pass along these costs to their passengers. Naturally, we have seen the cost of airline tickets rise through time, a result of several things including increasing fuel prices, taxes, and airport fees. As airlines and airports compete for your company, it is evident that finding ways to off-set rising operating costs is a focal point for both. Not to mention the urge for the airport operator to discover ways of enticing the traveling public to use their airport over another’s.
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Enter expanded services and retail.
A new world calls for a new approach
As opposed to piling on charges to offset operational costs, airports have opened their eyes to an alternate revenue source: retail area. As an example, in New York’s JFK, the cost per sq. ft. can exceed that for prime shopping square footage from NYC. Leasing costs are so high that retailers elect to do away with stockrooms and backrooms, making stock both restricted –and not as visible.
Believe it or not, these changes are the result of plans first envisioned 40-plus years back! However, in airport management, time and changes happen slowly; bureaucracy creates hoops, and innovation slows to a crawl.
The further that airport management can encourage tenants, the more these tenants — merchants, entertainment venues, and restaurants–will help supplement mounting operational costs for both airlines and airports.
Seizing focus, generating earnings
Managing passenger timing is often an airport’s biggest challenge. Needless to say, there is getting through the security gauntlet. But as soon as you’re through, then what? How do passengers spend their time? How can you make your part of the travel experience pleasurable, so that passengers continue to reserve flights out of your airport–and your airlines?
Maslow’s Hierarchy of Needs theory posits that as soon as you address physiological and security needs, you have a much greater chance of reaching and affecting. What a perfect corollary for your airport experience.
Travelers are a different customer goal than the mall shopper or road stroller. At airport terminals, you have a”captured audience”; today what will you do for or with them? How are you going to influence their emotional state? What are their requirements? And can you meet these fast? The opportunities that exist centre around the answers to those questions.
With electronic promotion, the airline business can build awareness for what entertaining and effective delights await you in the airportlong before you drive up to the terminal, or even buy your ticket.
In the standard physical retail scenario, you’ve got an audience which may pass your store-front or visit your shop in a mallsometimes, even a few times per day. In airport retailing, you have more limited opportunities to capture attention and traffic.
Much like malls and street retail, there are contractual parameters of what is tolerable and what is taboo. Past malls and street retail, airports demand an extra layer of principles, that enable airline or municipal authorities to influence crucial decisions about how to (and how notto) market your brand.
Airport operators themselves are ‘brands,’ representing their tenant airlines, and their governing municipalities. Think of entities such as the Port of Authority of NY and NJ who own and manage three of the largest airports in the metro NY area–Newark Airport, JFK, and LaGuardia. These entities want to guarantee consistency and best’brand’ representation. As an operator inside their facilities, you need to meet strict criteria, though this varies by airport.
Services and customer support
It’s not only products and quick bites which are vying for travelers’ wallets. Spas, massage providers, and nice restaurants also control a sizable chunk of airport spending. As people settle in for a protracted wait, they make the most of these indulgent chances –sometimes intentionally, building in extra time to enjoy.
On May 15th, New York’s JFK airport welcomed the opening of The TWA Hotel at the former TWA terminal. The first ever airport hotel at JFK is actually situated in the airport terminal area.
When it opened, the iconic building epitomized modern aviation. As if the landmarked architecture is not enough of an attention-getter, Jean George Vongerichten is opening up Paris Café within. Why travel into NYC when you could have world-class dining just steps from your airplane’s gate?
Signs of the times
Rules regarding signage, that play such a vital role during the terminal, are ordered in varying degrees from the local authority. Brands and retailers that run across multiple airports need to dance to two masters. You must:
- Create signage applications that can be flexed, stretched, or readily manipulated to meet criteria that vary from airport to airport
- Deliver in promoting your business to the wide traveler profile within each airport
And from an operational standpoint, you will need to have the ability to react quickly, have resources from which to pull / shop your signage from so you don’t take up precious store square footage. As stated earlier, with higher leasing costs, there’s no back room to store signage and displays need in order to be repurposed at a minute’s notice.
Regrettably, in the U.S., most airports are still in their infancy with respect to completely understanding and re-positioning their approach to retail. Retailers can learn a lot from how European airports tackle, promote and improve the travel experience. London’s Heathrow, Singapore’s Changi, Amsterdam’s Schiphol and a multitude of others set the bar high and travelers are reacting.
While U.S. agencies will always have to place travelers’ security , they also have to work together to promote retail innovation. In accordance with one recent study, U.S. domestic travel passengers spend half of passengers do in the rest of the world. But the great news? Airports like JFK and LaGuardia in New York, Pittsburgh and Chicago’s O’Hare Airport have been revitalizing their retail industry –and getting shopping beacons.
Maximizing airport retail begins with the customer
Like all brick and mortar shops, maximizing earnings begins with understanding your clients — the travelers in your terminal– national, international, business, pleasure, family, solo.
Travelers’ (and therefore shoppers’) profile will change during the hour, day, week, and month. Subsequently, how your shop speaks to them must be flexible. You may greet a jet lagged group from Asia with signs in their native language. Flip your signals, and speak with a Western European clientele. Luckily, the openness of airport management to induce terminal retail leasing has helped in reducing specific signage restrictions, so there’s even more opportunity for variety and attention–and a much superior in-store experience.