NEW YORK — A decade ago, Pittsburgh Airport had the foresight to see beyond bad coffee and newsstands to launch the mall-within-the-terminal model. The airport attracted national chains such as Gap, Nine West and Clinique, and gave captive...
NEW YORK — A decade ago, Pittsburgh Airport had the foresight to see beyond bad coffee and newsstands to launch the mall-within-the-terminal model. The airport attracted national chains such as Gap, Nine West and Clinique, and gave captive audiences facing endless delays something worthwhile to do with their time: shop.
Many other airports in the U.S. followed Pittsburgh’s lead, upgrading amenities from shopping to food, with generally positive results. That is, until Sept. 11, 2001. Then came other setbacks: the war in Iraq and SARS.
Most airport concessions operators put a brave face on the challenges, saying that traffic is beginning to bounce back and much of the turbulence is over.
“Traffic was off in the range of 30 percent and, in some cases, higher, after Sept. 11,” said Paul McGinn, president of Marketplace Development in Newton, Mass., which manages the concessions at Philadelphia and LaGuardia International Airports. “It came back relatively quickly in Philadelphia by the end of the third quarter of 2002. LaGuardia has been a little more impacted.”
Spending at the nation’s top 50 airports was $2.8 billion in 2001, according to Airport Revenue News’ 2002 Fact Book. The industry also judges an airport’s sales record based on sales per boarding passenger, with John F. Kennedy International Airport in the lead with $9.50 per person.
Among the spate of mall retailers rushing into terminals in search of alternative revenue streams, not all have been able to adapt to the airport business model. Stores are smaller and hours of operation are longer. Buildouts are more costly and the logistics of moving merchandise through security can add to operating expenses.
However, the rewards can be substantial for those that do adapt. Many airport stores produce $1,000 per square foot, according to Pauline Armbrust, editor of Airport Revenue News.
With 20 million to 40 million passengers passing through each of the major commercial airports every year, there’s plenty of traffic. By contrast, malls typically get 15 to 20 million visitors annually.
In a post-9/11 world, people are spending more time in airports, arriving earlier to get through security checks. Prior to 9/11, 45 minutes “dwell time” was the norm. Now travelers spend an hour and a half on average.The old adage, location, location, location, applies to airport real estate just as it does to any other property, and stores situated beyond security checkpoints are more desirable than those outside secure zones.
“Passenger behavior has changed,” said Armbrust. “People are anxious to get beyond security and go straight to their gate.”
LaGuardia entices consumers to shop outside secure zones by clustering stores and restaurants such as the Metropolitan Museum of Art Store, Sunglass Hut, Brookstone and New England chef Todd English’s Figs eatery.
Retailers at Las Vegas McCarran International Airport have noticed a dip in spending in the past year, so some changed their product offerings. “Cost is an issue, so they’re bringing in lower-priced items and food and snack items because airlines aren’t providing food services anymore,” said Judy Tabimina, airport concessions manager. L’Oréal is set to open one of its first airport stores, but hotel-themed shops such as Caesar’s and Rio have left the terminal. Still, the ubiquitous slot machines buzz to the tune of $30 million a year.
Westfield America, which operates concessions at seven airports including Ronald Reagan Washington National, Dulles International, Boston Logan International, George Bush Houston International and Newark Liberty International, has put its marketing muscle behind airport concessions, advertising in tourist directories, with bus-tour companies and on billboards inside terminals.
“We’re up 2 to 3 percent over last year,” said Tim Lowe, executive vice president of development of Westfield. “People are buying more. We’re at 95 percent of pre-9/11 levels.”
Newark Liberty Airport overhauled its shopping areas two years ago, adding 60,000 square feet of retail space in Terminal C., where stores include Kenneth Cole, DKNY, Brookstone, Johnston & Murphy, L’Occitane, Occhiali da Sole and Landau Jewelry. Two D-parture Spas provide nearly round-the-clock pampering, said Ann Freedman, retail operations manager, noting that the spas are required to stay open whenever there’s a flight departing.
“We spent a fair amount of money on customer-service training,” said Freedman. “And we’re adamant about street pricing. All Port Authority leases stipulate street pricing.”
Most concession operators try to strike a balance between well-known national chains and local mom-and-pop shops that add interest and authenticity to the mix. Denver International’s Susan Vale Sweaters are designed by Susie Vale, a former Mary Quant model, who has the products handknit in the U.K.Perhaps the most upscale mix of shops can be found at John F. Kennedy International Airport, where Clinique/Estée Lauder, Coach, Ferragamo, Hermès, Shades, American Clothier and Bulgari operate stores.
“The customer base at Terminal One is such that the high end sells,” said Ed Paquette, executive director of the terminal. “Even during the weak economy the shops did well. We get mostly international passengers with lots of discretionary income.”
Paquette said that world events such as 9/11, the Iraq War and SARS had a small impact on JFK retailers, noting that the airport houses international carriers. “Europeans tend to fly where Americans will not,” he said. “In addition, most threats have been against American carriers.”
As airports attract more high-end stores, they are finding that they need to upgrade the surrounding environment. Denver International is working with Smart Design, a Vancouver firm, to create a master plan with a “sense of place” for the airport’s concessions program. “We’re creating the architectural aesthetic and new design guidelines for concessions,” said Shaw. “We’re trying to re-create the Colorado experience.”
“This has been as dramatic a time as anyone can remember in the aviation industry,” said McGinn, “but despite it all, people are still traveling and will continue to travel. The retail component of airports has been upgraded in the last 10 years, so it’s become the rule not the exception. We see it as a growth part of the airport business.”
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