LONDON — Few audiences are as captive as a mass of Japanese tourists milling around an airport terminal on their way home from London — and BAA retail is taking full advantage of the opportunity.
The company, which runs the major U.K. airports and operates all the related retail space, has just put the finishing touches on Heathrow’s Terminal 3, a project that took five years — and an investment of $167 million — to complete. Dollar figures have been converted from the pound at current exchange rates.
“Before, the stores in here were more like boxes on carpets, and our strategy was to give it a High Street [main shopping street] design,” said BAA Group Retail director Brian Collie over a cup of cappuccino at the terminal. BAA worked with the Chapman Taylor Partnership, which also designed the south terminal at London’s Gatwick Airport, to create the 85,500-square-foot space.
“Our goal was to give fliers a reason to shop, with stores on the way — not in the way,” said Collie. Indeed, with natural light and broad, boulevard-like walkways, Terminal 3 now mirrors Bond Street, via Montenapoleone and Madison Avenue — right down to the slate used on the facade of the Cartier shop.
The terminal now contains almost 50 stores, including Gucci, Chanel, Paul Smith, Bally, Pringle, Hugo Boss, Ermenegildo Zegna, French Connection, Nike and Kurt Geiger. Christian Dior will open in July.
Terminal 3’s World Duty Free area —covering fragrances, alcohol, consumer electronics and other products — is spread over an open space spanning 22,000 square feet, and looks like the ground floor of a high-end specialty store. It features the first-ever airport MAC unit and Armani Cosmetics, which in London launched exclusively here and at Harvey Nichols.
In terms of market spend, Terminal 3 is the fifth largest shopping center in the U.K., Collie said. In terms of sales per square foot, Collie believes it is the top shopping center in the U.K. Annual sales range from $670 million to $750 million. Fragrance is the biggest single department, generating $67 million in annual revenue.
Total sales for all commercial activity are about $5 billion across all seven U.K. airports, with half of that generated by Heathrow.Terminal 3, which hosts 44 flag carriers on long-haul flights, is now the largest retail space at Heathrow and the second busiest terminal with 17.3 million passengers each year.
“This whole project is about knowing the customer,” said Collie. “They’re brand aware and they’re from Japan, sub-Saharan Africa, the Middle East and the Americas. Our best customer is the homeward-bound, 40-year-old Japanese woman.”
Many of the stores also cater to a very specific clientele with special services or products. Stores including Bally will take on Korean-speaking staff at certain hours of the day, depending on flight schedules.
The units, most of which span 1,100-square-feet, are all concessions with three- to five-year contracts. Rent, Collie said, is based on sales-related targets, which means that BAA shares both the risk and the rewardof passenger traffic and spending in the terminal.
And while most retailers say sales have not been spectacular lately due to the decrease in passenger traffic from the Iraq war, SARS and a wobbly worldwide economy, all agree it was necessary to have a presence in the terminal.
“This is our first-ever airport store and we treated it as a ‘trailer’ store before opening our Bond Street unit,” said Bill Christie, Pringle’s head of retail.
Collie said Terminal 3 will serve as a template for BAA’s next project: Heathrow’s Terminal 5, which will be completed in late 2007 or early 2008.
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