Are Airports the Shopping Mall of the Future?

From:  Zoom Systems | Jul 15 2015

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.

But these days, more and more malls are sitting empty or shutting their doors. No new fully-enclosed mall has been in the United States since 2006, and experts predict that as many as half of all existing malls will shut down in the next ten years. In China, one of the largest shopping malls in the world sits mostly empty, with a vacancy rate near 99% since it opened in 2005.

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.