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The business of airport retail

22 December 2014

 Syd Airport Medium

Jetting off for holidays? Whether it’s domestic or international, airside retail in the major hubs and airports of the world is nothing like it used to be.

Remember when airports offered a café with soggy crinkle cut chips, curling white bread sandwiches and instant coffee all ensconced in depressing institutional grey Lino, and a newsagency, which, if you were lucky, included a sub branch of a bookstore.

If you don’t, then you must have been born in the 1990s because it’s only in the past 20 years that airport retail has undergone radical surgery to become so much more. The facelift has been driven by, among other things, more people flying with higher disposable incomes and less time to spend shopping in town. The fact that savvy retailers realised they also had a captive audience they could woo with beautiful and often different products that were also cheaper (duty free) than those available in department and standalone retail stores in the cities, has also played its part.

Think about you as a passenger: you’re looking forward to the idea of flying off on holidays, or you’re bored and looking for diversion or you’re strapped for time and wanting to buy presents for the family and friends at home. Now, put on a marketing hat and think about the customer profile: It’s not cheap to fly. If you are flying then you’re probably what marketers’ term, ‘premium’. Millions of premium customers pass their outlets every year, a major proportion of them with high disposable incomes. Is it any wonder retail outlets and brands want more than your eyeballs – they want your dollars?

In an article from fashion website, BoF, written at the end of 2013, it quotes: “Duty-free and travel retail sales of perfumes, cosmetics and luxury goods jumped 28 percent between 2008 and 2011, and are expected to grow by another 25 percent in the next two years, according to Generation Research, a Stockholm-based consultancy, which predicts that, by 2020, the travel retail and duty-free market will be worth $120 billion per year.”

In the same piece, BoF also pointed out that the “UN World Tourism Organisation announced that, in 2012, the number of unique international tourist arrivals passed a record one billion for the first time in history. And indeed, driven by continuing globalisation and the rise of emerging economies, half a billion more international tourists, defined as those staying over one night in a non-native country, travel today than they did in 1995.”

Figures like these are why in the 2014 Airport Food and Beverage (FAB) awards, Sydney Airports was shortlisted in three categories: Airport Coffee/Non-Alcoholic Beverage Outlet of the Year, Airport Bar of the Year and Airport Chef-Led and/or Fine Dining Offer of the Year.

The retail outlets included Quikshots for Airport Coffee/Non-Alcoholic Beverage Outlet; Coopers Alehouse for Airport Bar of the Year; and Spanish tapas-style gourmet restaurant MoVida for Chef-Led and/or Fine Dining Offer of the Year.

When did those curling cheese sandwiches and instant coffee give way to the likes of these establishments? Recently, actually.

MoVida is an institution in Melbourne and opened at Sydney Airport’s T2 Domestic terminal in August 2013. The 137 square metre bar serves travellers with a selection of its renowned Spanish tapas and raciones.

At the International Terminal there is a Penfolds wine boutique, offering in-store tastings and exclusive access to new vintage releases, as well as a wine education program. The store is staffed by a professional team of multilingual TWE brand ambassadors who provide customers with expert advice on the varietals on offer.

According to the PR statistics for the airport, “Sydney serves more than 63,000 cups of coffee a week – 44 per cent of which are served before 9am each day, making it Australia’s busiest coffee precinct.”

That sort of pressure has led to remarkable changes in coffee offerings and even led them to celebrate a month of coffee as a promotion for passengers.

One of the best things about flying internationally is the huge range of tax and duty free savings on offer. From perfumes and electronics to hand-made chocolates and fashion, airside retail is highly lucrative, and the operators are taking sales even higher with special promotions, exclusive products, and the ability to tap into what the passengers’ marketing profile tells them about their possible buying habits.

There’s a Tag Heuer flagship store (one of only three in Australia) at Sydney and a Masters of Time arcade featuring Cartier, Breitling, Bulgari, Girard Perregaux and more.

International travellers can access a huge range of world-class brands, including Apple, Sony, Chanel, SKII, Kiehle’s and Shisheido; boutiques by YSL, DIOR, Lancôme and Estee Lauder and that’s only thinking locally.

At many airports there are exclusive products and launches testing products not just for the local but often world markets.

The world’s first and only Lonely Planet store is located after Customs at Sydney Airport. (Travel guides are one place where the internet lags and hard copy is still hard to outdo.) Other drawcards: you pay less for luxury goods, and the opening hours, from as early as 7am and often until 10pm every day, are only outdone by the internet itself.