Airport retailers’ substantial growth despite downturn
Global retail sales at airports are thriving. They are expected to rise by 11% by the end of 2008, increasing from £13.5bn in 2007 to £15bn this year. Operators are promoting their retail locations as shopping destinations, the success of which has attracted major investment driven by improved airport sites and facilities.
Heathrow’s Terminal 5 for example hosts 112 shops and restaurants including Harrods, Tiffany & Co and Plane Food, the exclusive restaurant backed by Gordon Ramsay. The success of T5 has been pushed by tenant brands actively developing their service and modifying their store design to increase foot traffic. For BAA, these efforts have significantly enhanced the T5 experience.
Airport operator, BAA runs Heathrow, Gatwick and Naples airports has won the accolade of reaching retail standards amongst the highest rated in the world. This underlines the drive to promote airport destinations as leaders in retail. They have recently launched ‘moments to fly for’ ads, promoting it’s package of facilities.
According to Verdict Research, the credit crunch has not nor is it likely to hit the lucrative retail sales in airports. Analysis has revealed a direct correlation between increases in low-cost travel, and airport retail spend. Gladding said: “The increase in business travel as a result of globalisation is providing a further boost to airport retailers.”
Building passenger pre-awareness is also credited with supporting sector growth. Companies are commonly employed to send passenger’s offer ads via mobile phones 2 hours before departure. Targeting passengers through streaming information reminds them of retail brands, and encourages foot traffic. This has seen increases in redemption rates, and greater brand favouring. These promotion strategies enable weekly customer data to be easily collected and analysed to identify key times and days where target messaging is most effective.
Tactics such as pin-point targeting have produced strong results, allowing retailers to trace and adjust offers, giving their brand growth real sustainability. Verdict Research concluded that the airport retail sales boom is the fastest growing retail channel, second only online sales. Verdict’s analyst, Nick Gladding explained that the continuing growth spurt is attributed to increased affluence, growing tourism, and rapidly expanding airline networks and new routes. He added: ‘The increase in business travel is providing a further boost to airport retailers.’
Also, due to stringent security delays, more time is being spent in terminals than ever before, leaving passengers with little else to do other than browse and spend. However, the unique atmosphere created is proving a great stimulant for attracting passengers. Substantial growth is expected in tax-free stop-over destinations such as Dubai, so it seems no matter where the credit crunch crisis hits, airport retailers will be immune.
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