What better place to shop than an airport? Peta Tomlinson takes a closer look at some Australian retail initiatives.

It might be a last minute gift to take with you, a memento of your travels or simply because you’re there.

An airport provides some wonderful ‘me time’ for visitors and the chances are you will spend it shopping.

After all, once you’ve arrived and checked in for your flight, you can guiltlessly spend the next hour or two ambling around at your leisure.

In such an elevated mood, with bright lights, brands and bling all beckoning, who can resist a little retail therapy? Not many, according to the tills that are ringing loudly at Australian airports.

Sydney – currently revamping its retail offering as part of the T1 expansion – has some of the highest reported retail sales per square metre of any airport in the world, and double the annual turnover per square metre than some of Australia’s largest shopping centres.

Derek Larsen, general manager for retail at Sydney Airport Corporation Limited, credits the big spend on the feel good factor.

“People feel good when travelling,” he enthuses.

“They might have saved for a holiday, and are finally about to leave. Or they’re enjoying some down time in a hectic business day.

Personally, I think that with the right retail mix people will come to an airport early just to experience the environment, relax and purchase something – they see it as their reward.”

Even the economic downturn does not seem to be impacting on customer spend.

Preliminary figures for the year to date show Sydney Airport’s retail operators are still enjoying single digit growth in terms of PSR (passenger spend ratio), and double-digit growth in duty-free sales compared to the previous year.

While the strike rate (the number of people who shop) is holding steady, the average value of their transactions has increased significantly.

A result, says Larsen, of “simple initiatives – having the right products on the right shelves for the people coming through”.

Sydney Airport’s analysis of passenger spending habits maps their entire journey, including, notably, which airline they are flying, and to where.

This data has influenced the retail mix in the current redevelopment, which caters not only to the ‘traditional’ airport shoppers – women passengers buying luxury products – but also to men, children and teenagers.

Hence, there will be a focus on men’s fashion as well as women’s, and a number of world firsts, including the first airport Wiggles store, the first Lonely Planet, and the first McDonald’s to operate airside in Australia.

“These initiatives are purely focused on delivering to parts of the business that haven’t previously been explored,” Larsen says.

And with almost 100% leasing completed, it seems the retailers agree Another airport cashing in on the ‘happy people spend’ school of thought is Gold Coast Airport in Queensland.

The coast’s reputation as Australia’s favourite seaside playground is evident in a retail strategy designed to make visitors “feel like they are on holidays from the moment they step off the plane”.

It’s all part of the Gold Coast experience, says Paul Donovan, Gold Coast Airport’s chief operating officer.

While they shop in the airport’s redeveloped retail precinct (due for completion in March 2010), passengers overlook picture-postcard hinterland views.

The new retail mix has a strong focus on holidaymakers; it even includes a convenience store so visitors staying in self-contained accommodation can stock up on supplies.

Brisbane International Airport invested heavily in its newly redeveloped retail precinct, and when it opened – in December 2008 – it was the height of the financial crisis.

In spite of the difficult timing, management stuck with its key retail strategy of luxury goods for discerning buyers.

Stores stocked their shelves with Hugo Boss suits, Marc Jacobs jewellery, Oroton purses and A$4,000 bottles of Cognac.

Is anyone buying? “Absolutely,” says Barry Kairl, terminals and retail commercial manager. “We are delighted at the turnover, which is running between 5% and 15% up on the previous year.”

Brisbane Airport also has ‘exceptional’ duty free stores, which measure over 2,000sqm, and its share of affordable, quirky souvenirs.

Why has this strategy worked so well? “We underwent an extensive researching process of current and future retail trends and brands which gave us a very credible database of information,” says Kairl.

“We also worked at length with our retail owners and operators at the Terminal to get an invaluable and in-depth understanding of the ins and outs of their business.”

Adelaide Airport Limited (AAL) has been strongly promoting its retail offering, including a ‘Make the Most of the Moment’ campaign to tempt passengers with last-minute gift ideas.

Last year, the campaign was backed by a competition to win a spin around Adelaide’s Clipsal 500 street circuit in a V8 Supercar.

This year’s first prize is a trip for two to China, leveraging off AAL’s sponsorship of the pandas soon to arrive at Adelaide Zoo.

AAL has also used the launch of its new Adelaide Airport magazine to promote retailers through advertising and editorial.

As a result of all these strategies, says Ken May, AAL’s general manager, property development, retail revenue has grown over 10% in the last 12 months – well ahead of the overall increase in airport passenger numbers of 2.4% for the same period.

Perth Airport has tailored its retail mix on the basis that most visitors go to the west for a uniquely Australian experience.

Scott Norris, Perth Airport’s general manager commercial services, says retail spend rates and overall sales “remain good and are increasing” on the back of strong passenger growth.

Retail comprises around 16% of Perth’s overall operating revenue, and while there are “no particular issues with any retail categories”, Australian-made products are a standout performer.

The reason, Norris explains, is that so many passengers transiting through Perth, both domestic and international, want to take a piece of Australia back with them.

“Whether it be wool, food or wine, they’re looking for something that is relevant to their destination.”

Hence, ensuring that the local product offering is both relevant and authentic is a core component of Perth’s retail strategy.

The ‘Aussie image’ also features in a growing variety of brands at Perth Airport, most notably the newly opened surfwear shop Rip Curl, and Sunglass Hut.

Another feature of the Perth retail landscape is its strong duty free culture.

“Perth Airport is also focused on growing the variety, quality and authenticity of its F&B offer and is continuing to seek new retailers to add to the retail mix,” reveals Norris, adding that planning for Perth Airport’s newest terminal – Terminal WA – is well underway as a result of the massive growth in intrastate aviation traffic in Western Australia.

The A$1 billion redevelopment over the next five to seven years will include “a superior retail experience”, Norris says.

“All upgrades are in line with our retail strategy to increase the range of local and luxury brands and improve the overall retail experience for our passengers.”

And Melbourne Airport, currently undergoing the largest international terminal expansion since it was built in the early 1970s, is planning to give shoppers a truly “Melbourne experience”.

The A$330 million expansion will add 25,000sqm to Terminal 2, including 50% more café, lounge and specialty store space.

“Melbourne has internationally renowned fashion precincts, and we want to do justice to those,” enthuses Shane De Wit, Melbourne Airport’s acting general manager for retail and car parks.

“We will be drawing on the best Melbourne has to offer: shopping, art, culture and architecture.”

A 10 metre high glass wall overlooking the runway will give openspace views comparable to Melbourne’s parks and gardens.

Another precinct will recreate the city’s famous hidden laneways, while another salutes its cafe culture.

Melbourne’s strategy also takes into account changing passenger profiles.

“In the next five to 10 years we will see a massive increase of passengers from China and India,” explains De Wit.

“They’re not after the ‘grog and smokes’ that was once all that was expected of an Australian duty-free. This is an awesome opportunity for us to make sure we deliver for them a truly international flavour.”

That people are still spending in these Australian airports despite the economic crisis is evidence that management is getting their retail mix right.

With airports ever more reliant on non-aeronautical income, it is a timely reminder of the importance of research, knowing your customer, and how to constantly innovate for growth.

Asia-Pacific Airports 2009 Issue 3