Are Airports the Shopping Mall of the Future?
By Bojan Jokic, Epteca Co-founder & CEO
In the latter half of the 20th century, the world experienced a love affair with enclosed shopping malls and shopping centers, which popped up all over the United States and Europe. The shopping mall was the mecca of baby boomer consumerism; a symbol as much as a place to shop, as can be seen in any number of teen movies from decades past.
Even as malls and shopping centers across America, the UK, and Europe shut their doors or convert into mixed-use spaces, however, there is one place where the retail opportunities that were once offered in shopping malls are not only still present, but growing every day: airports.
Airports are the new malls, and offer retailers new opportunities to reach audiences that they might otherwise miss. Luxottica, an Italian maker of sunglasses, refers to airport sales as "the Formula 1 of retail".
According to an article in the New York Times, retailers say that sales per square foot are higher at airports than they are in street locations or shopping malls and retailing is the second-biggest source of revenue for the airports, and the leading source for London's Heathrow Airport.
Sales at airports are expected to increase by 73% from 2013 to 2019, predicts Verdict Retail (The Economist). According to Datamonitor Retail, the global airport retail market will grow by more than 60% to worth US$44.1 billion by end of 2015. With global airport retail sales set to surge over the next six years there are huge opportunities for retailers to grow their presence.
The NET Factor (No Extra Time) and Dwell Time Opportunity
Airport retail is expanding from magazines and souvenirs to luxury goods and brand experiences as retailers take advantage of the captive audiences they have during that NET (No Extra Time) between security, boarding and layovers. With an increase in travelers - more and more people are subject to delays and layovers, which leave them bored and wandering the concourse.
According to a DKMA report, passengers who spend more than 60 minutes at the airport are +33% more likely to buy F&B, +27% more likely to buy retail and +13% more likely to buy duty free than passengers who spend fewer than 60 minutes at the airport. This is extremely important, especially for leisure travelers.
Not too long ago, retail space was an afterthought in the airport design. Over the last decade, the retail trend has accelerated and retail space is in high demand, so airports are including shopper-centric elements including attractive concourse layouts and storage facilities. Airports with modern retail management and configuration earn 80% or more of their retail food and beverage income airside. The most common retail conveniences available to travelers at airports include:
- Automated retail - (e.g. ZoomSystems) means a vending solution that dispenses goods that would generally be sold in specialty retail shops;
- Carts/Kiosks - Any non in-line unit, including mobile and non-mobile facilities, stand-alone "grab 'n go" units, etc.
- Duty Free shops - Retail shops that mainly sell high-end luxury goods such as designer fragrances, cosmetics, jewelry, watches, chocolates, cigarettes, liquor
- Fast Food/Quick Service - Food is served at counters or is pre-prepared for "grab and go." Food may be quickly prepared to order, and may be branded or non-branded.
- National/International Brand - A brand that is marketed and distributed nationally/internationally.
- News/Gift - (also referred to as Convenience Retail, Newsstand or Sundries Retail) - A type of Concessions Operation that specializes in the sale of magazines, newspapers and other periodicals, candy, gum, snacks, sundries, magazines, paperback books and souvenirs.
- Sit Down/Casual/Bar - Typified by table service, although there may be carry-away or "grab and go" components. Food is prepared to order and restaurants of this type often include a bar.
- Specialty Coffee - These venues focus on coffee & may offer other beverages as well along with pastries, bakery items or other light food.
- Specialty Retail - A type of concessions operations that specializes in the sale of a particular category of consumer products such as clothing, sporting goods, electronics, travel accessories, books, leather goods and luggage, souvenirs, lotions and personal care items, and home accessories.
Design the path from customer check-in to boarding as a shopping experience
Airports may put potential shoppers right in the midst of stores and restaurants, but there are other considerations when it comes to capturing the dollars of today's travelers to win them over. Unlike malls, airports already have a built-in user base, and a captive audience. Once you've gone through security, you're stuck with whatever services, amenities, and retail options that the airport provides.
Ensuring the processes go smoothly and do not eat up too much of the time passengers have at the airport and increasing dwell time as much as possible has a big impact on the retail potential. There has been a direct correlation between the best rated airports and those offering the best shopping experience, making more money derived from retailing activities. If passengers are satisfied with an airport experience they are more likely to view it as part of their trip and change their travel habits to spend more time there, the survey showed.
Like any other industry, airports are seeing mobile devices becoming the most important digital gateway. Passengers can now navigate and shop through airports on the go, to make those tight connections. GPS technology, iBeacons, and services like Yelp, finding what you're looking for is no longer the guessing game it once was, so it's important to design an engaging shopping experience at the airport that takes advantage of every opportunity. Top brands like Starbucks and American Airlines have already heavily invested in it, and are seeing the power and benefits of proximity-based marketing. With major players pushing the technology, we can soon expect to see more features added, such as on-the-spot mobile payments, making purchasing even easier for customers and driving more sales for airport businesses.
Travelers have a spending mindset
The experience of traveling inspires people to shop and spend money. For leisure travelers, it is all about creating memories or milestone experiences, so they may be in the mood to splurge on items they wouldn't usually buy. For business travelers, it is about convenience of an expense account or the opportunity to shop, which is something they may not have that time to do on a regular basis.
To reap the benefits of this expanding traveler population, airports need to provide the type of experience that puts passengers in the mood to shop. In short they need to focus on making passengers happy.
One of the big selling points of malls was that everything you needed was in one spot. There was no need to drive around looking for a shoe store, then an electronics store, then find a restaurant to have lunch. Many airports are now focusing on being more creative in maximizing non-aeronautical revenue opportunities and more proactive in ensuring a welcoming experience with things like short check-in lanes, a fast, smooth security process and ease of navigation.
Improving dwell time and offering broader choice and value are among the keys to driving airport non-aeronautical revenue, according to Swiss airport market research firm DKMA. The survey showed that an airport's most satisfied passengers are twice as likely to shop and spend +7% more than the average on retail and +10% more on duty free.
The retail opportunity in travel is massive and surging. 1.087 billion people traveled internationally in 2013, equivalent to approximately 15% of the global population, with Europe as the most popular region for global tourism, attracting over 52% of all international tourists. Tourists contributed an estimated $1159 billion to various local economies, purchasing accommodation, food and drink, local transport, entertainment and shopping in destination countries (UNWTO).
There's an old saying that you can lead a horse to water, but you can't make him drink. Airports may already have brought the customers to the storefronts and restaurants, but getting them to buy requires an approach that appeals to their shopping habits and meets their changing needs.
The best way for brands to capitalize on the strong correlation between travel and retail opportunities is to leverage the plethora of data to engage with consumers using more relevant communications. The communications must be inviting, timely and contextualized for the traveler profile, preferences, location, destination points, history, devices and yes, even the weather.
By collectively building a Marketplace Ecosystem that brings together travel companies, suppliers of goods and services and customers, Epteca's innovative platform creates new revenue opportunities and enhances the customer experience in all the phases of their journey. Using profile data and predictive algorithms that match context and intent, Epteca can accurately anticipate not only what customers require, but also what they are likely to want, need or do during their trip. This allows for 'smart-selling and marketing' that taps into key sales points at the time when purchases are most likely to occur, to dramatically increase profits and create a positive brand relationship. Epteca delivers the right offering, presented to the right customer, at the right place and the right time, to sell more stuff - guaranteed.
To learn more, schedule a demo, or get started with Epteca's Marketplace Ecosystem, please visit http://www.epteca.com
Bojan Jokic has been a disruptive force in the travel technology industry since 1997 and today serves as CEO and co-founder of Epteca, an emerging technology company bringing unique 'smart selling' marketplace ecosystem capabilities to companies and brands worldwide.More from Bojan Jokic
Epteca is the pioneer of context marketing in the world of merchandising of branded products and ancillary services within the aviation and travel industry, a USD 280 billion market. The unique end-to-end platform with predictive algorithms matches customers context and intent, creating new service opportunities while enhancing the customer experience in all the phases of their journey. Since 2013, Epteca has been working with over 60 leading travel and consumer brands helping engage and inspire their customers with contextual, highly relevant and timely information and offerings. Epteca can accurately anticipate not only what customers require, but also what they are likely to want or do during their trip. Epteca delivers on what until now has been an elusive dream: the right offering, presented to the right customer, at the right place and the right time – guaranteed.