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LONDON — While Heathrow Airport’s Terminal 5 may have experienced some much-publicized teething problems during its launch last March, the terminal’s operator, the British Airports Authority, hopes the 450,000 passengers who pass through its 200,000 square feet of retail space every week will shrug off the economic downturn, lured by the airport’s raft of luxury boutiques offering exclusive product ranges, new store designs and price incentives.
This story first appeared in the December 31, 2008 issue of WWD. Subscribe Today.
Prada, Gucci, Bulgari, Dior, Coach and Harrods all have expansive spaces in the $6.7 billion terminal, ranging in size from Dior’s 800-square-foot accessories store, done out with delicate white wood and glass cabinets, to Prada’s sprawling 2,600-square-foot, spotlit space, which carries both clothing and accessories.
Cat Jordan, head of commercial media at BAA, said the company had asked each of the fashion houses in the terminal to provide either exclusive products or to design unique shop fits for their spaces. To wit, Paul Smith has created a new 2,400-square-foot store concept called Globe for the terminal, with high ceilings and reclaimed parquet floors, which sells items such as travel books, photography tomes and framed prints alongside the designer’s men’s and women’s wear collections. Meanwhile, Coach has opened a store that carries an exclusive handbag design.
Jordan said these incentives are serving the terminal’s retailers well in the face of the recession.
“Airport retailing is subject to the same market conditions as the rest of the retail sector. However, BAA is currently enjoying growth on a per-passenger basis,” said Jordan. “We firmly believe that this is…a result of our improved service offering, greater choice and our increased focus on passenger experiences in our airports, as exemplified by Terminal 5.”
While some retailers, such as Tie Rack and Sunglass Hut, offer promotions on goods within their ranges, Jordan said higher-end stores generally don’t focus on price as a major selling point. However, most retailers offer a 15 percent discount on U.K. retail prices as their goods are sold on a tax-free basis.
The terminal’s retailers also have a more affluent than average captive audience. Jordan said that 90 percent of the travelers at Terminal 5 are classed as being within the ABC1 social groups, with 49.6 percent AB consumers and 42 percent C1 consumers. There are on average 239 British Airways departures daily from the terminal to destinations including New York, Amsterdam, Paris, Frankfurt and Brussels.
Increasing store penetration in airports has traditionally been a challenge for retailers in the channel. The terminal’s layout was designed to overcome one obstacle to luring customers into stores — namely, the fear that they’ll miss their flights. The Richard Rogers-designed glass building has floor-to-ceiling windows so the runways are always visible and the space is flooded with natural light. Departure boards are set up at regular intervals in the terminal so travelers can check their departure gates while partaking of services such as a Nails Inc. nail bar, Shu Uemura’s lash bar and a Blink eyebrow bar.
“It’s been designed with ease in mind,” said Jordan.