Airport Retailing

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  • Topic: Airport, Regional airport, Airline hub
  • Pages : 21 (4764 words )
  • Download(s) : 36
  • Published : September 13, 2012
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Mastering Airport Retail
Roadmap to New Industry Standards

Contents
Executive Summary ........................................................ 1 Demand Dynamics and Offer Development Securing Strong Market Growth ................................... 2 Key Success Factors for Optimizing Airport and Operator Performance ............................... 4 Focus on Operator’s Financial Robustness, Offer Flexibility and Operational Performance ............. 8 New Industry Standards Creating Turbulence in the Value Chain ............................................................ 9 Conclusion ...................................................................... 12 Contacts .......................................................................... 13

Foreword
Over the past five years, the efforts of the airports to develop revenue from non-aeronautical sources have driven strong growth in the airport retail sector. The sector will become all the more strategic as the decline in air traffic forces airports to reduce their dependency on airline fees. Airports are battling to improve performance and optimize the management of concessions, while retail operators face the challenge of responding to the airports’ new expectations and growing competition. This study by Arthur D. Little, based on a comprehensive industry outlook and substantial experience in travel retail strategy consultancy for key clients in the Travel & Transportation sector, provides an insight into some of the key questions for the sector: n

How can airports maximize retail revenues and what are the best practices from the top-performing airports? How have airports’ expectations of retail operators changed? What impact will the new rules of the game have on the value chain and what challenges will industry players face in the long term?

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Authors:
Vincent Bamberger, Aurélia Bettati, Stefan Hoeffinger, Thomas Kuruvilla, Vincent Wille.

Mastering Airport Retail

Executive Summary
After five years of strong growth, prospects for airport retail in the mid-term remain positive even if forecasting seems to be a risky exercise in this current climate. Arthur D. Little forecasts duty-free sales will be 6 points above traffic forecasts for the period 2008-2012 (using IATA December 2008 forecasts of +2%, we estimate duty-free sales could grow by up to 9% over the period): duty-free sales should be one of the key drivers to compensate for the effects of the downturn for airports. To sustain growth and outperform the market in the coming years, airports and operators will need to focus on five key success factors: n

Developing the density of the retail surface to maximize performance (sales per departing passenger). Adapting the offer to reflect the passenger profile. Using a range of approaches to convert browsers into buyers, and to increase time spent shopping. Extending their price advantage over city-center retailers. Expanding customer target groups to include non-travelers and arrival passengers, and diversifying distribution channels.

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As part of their drive to optimize performance, airports are applying new criteria in their assessment of operators tendering for concession contracts. Operators’ local know-how and the way they leverage it to propose the highest concession fees is no longer as important as it has been; airports are increasingly looking for operators who can demonstrate financial robustness, strong offer flexibility, international know-how and high-quality operational performance. These changes in airports’ expectations reinforce global operators’ competitive advantage. Indeed, the trend among operators towards internationalization and consolidation helps them reach a critical size, allowing them to improve their professionalism, increase their buying power, extend their brand portfolio and offer very competitive and robust concession fees. In order to survive, local operators are repositioning themselves in...
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