Creating an effective retail experience 8-10 November 2010 Riga, Latvia Innovative design and constant reinvention are the two key ingredients to turn.

“Creating an effective retail experience”

8-10 November 2010Riga, Latvia

“Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”

Alan Bork

Airport Retail Consultant

High Street retailerCopenhagen Airport (privatized in 1994)Brussels Airport (privatized in 2005)Airport clients throughout the world

Chairman of Danish Duty Free Association (fight against DF abolition) First chairman of Nordic Travel Retail Group 2000-05

“Creating an effective retail experience”“Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”

This presentation will take its focus on how “organizing and planning” the retail experience, can create “an effective retail experience”

For clarification:

“effective retail experience” = maximum spend levels SPEND PER

PASSENGER

The dynamics of the

Retail Business

Terminal P

lanning

and

Space Allo

cation

Getting the

Timing Right

Conceptual Planning

andRetail Lay-Out

An effective retail experience4 elements

What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER

Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax

Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax

# pax

# pax = SpendingMoney?

How MuchMoney?

Per pax

What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER

VolumeNationalityDestinationDemographicsTravel purpose

Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax

.....Footfall (how many in retail zone?)Terminal flowsLocationShop FrontsSignage & communication

.....Conversion (how many actually spend money?)AccessabilityProduct offerPricingIn-store promotions

Transaction Value (how much money do they spend?)Attraction of product & price (Value For Money) Tax regulations & allowancesIntra-EU vs. Non-EU

AIRPORT

AIRPORT

OPERATOR

AIRPORT &

OPERATOR

What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER

Understanding the business dynamics….

The business model and the players 4 parties around the negotiation table

The role of the airport Understanding and playing the role

The success criteria's the airport´s the operators

Understanding the business dynamics

Landlord = Airport

Food & beverage operatorRetail operator

Supplier / Brand

The business model and the players

Understanding the business dynamics

Landlord = Airport

Food & beverage operatorRetail operator

Supplier / Brand

The airport “owns” the customer…..this is very much setting the agenda

The business model and the players

Understanding the business dynamics

But don´t get too arrogant….. the guy blowing the trumpet in the back-seat is equally important to the business

Understanding the business dynamics

……."success [for the airport] is measured in the ability to make different service

providers functioning smoothly together aimed at the one goal of fulfilling the need and

expectation of the passenger. The airport's participation in this is crucial not only when

talking about different travel related passenger facilities but also with regard to the

retail business"

The role of the airport….

quotation from article in Travel Magazine

Understanding the business dynamics

The operator's success criteria…

Location - location - location flows other retail activities food & beverage passenger processing facilities

Passenger profile & mix pax profile & yield spending behaviour dwell time

Brand exposure shop window

The airport´s success criteria…

Maximising M2 revenues exploitation of terminal capacity balancing the business lines mix of activities within the business lines “short term contracts with high concession fees

and high minimum´s”

Passenger services the need of the traveller the wishes of the travellers

Maximising passenger attraction ambience Airport’s Brand Image

Common interest, or

..conflict of interest

Understanding the business dynamics

How long are the queues?

When is my flight leaving?

Where is my gate?

Do I have time for shopping?

The passenger mindset

Getting the timing right

LeavingOffice or

home

Maximum Passenger Receptiveness - The excitement / stress factor

Parking Check InSecurityCheck

Airside Dwell Time Boarding TIME

A I

R P

O R

T

E X

P E

R I E

N C

E

Maximising the passenger journey

Excitement

Stress

Getting the timing right

LeavingOffice or

home

Maximum Passenger Receptiveness - The excitement / stress factor

Parking Check In SecurityCheck

Airside Dwell Time Boarding TIME

A I

R P

O R

T

E X

P E

R I E

N C

E

Getting the timing rightMaximising the passenger journey

LeavingOffice or

home

Maximum Passenger Receptiveness - The excitement / stress factor

Parking Check In SecurityCheck

Airside Dwell Time Boarding TIME

A I

R P

O R

T

E X

P E

R I E

N C

E

Excitement

Stress

Getting the timing rightMaximising the passenger journey

Low Market Mid Market Top end Market

High

Medium

Low

Price pointingAppeal

Conceptual planning and Retail Lay-OutMapping the RETAIL

Short Medium Long

High

Medium

Low

Price pointingDwell time

Conceptual planning and Retail Lay-OutMapping FOOD & BEVERAGE

Pax in

Pax out

Pax out

Terminal Planning & Space AllocationTerminal footprint

Objective: to maximise footfall

RetailFood & BeverageSeating

Pax in

Pax out

Pax out

Wal

k T

hrou

ghLounges

Objective: to maximise footfall

Terminal Planning & Space AllocationTerminal footprint

5 simple principles:1) Retail before F&B2) Lounges after commercial3) Maximise exposure4) Clear overview5) Simple flows

100% footfall

FRA LHR

51 mill.pax 66 mill.pax

Lufthansa British Airways

Major HUB airports

Function as main HUB for major national airline

Western Europe

Serving major metropol and financial power centres

High share of transfer & long haul

High share of business travellers

Spend per passenger € 8 € 24

Retail efficiency: Frankfurt versus London Heathrow

Different airports deliver different spend levels

800 900 1000 1100 1200 1300 1400 15000.00

5.00

10.00

15.00

20.00

25.00

30.00

Retail Efficiency FRA vs. LHR

M2 per million pax

Spen

d pe

r pas

seng

er €

LHR

FRA€8

€24

850M2

1.400 M2

Airside sales per departing pax VS. Retail/F&B space per million pax

Different airports deliver different spend levels

1200M

Landside

Airside

Frankfurt T1 and T2

Different airports deliver different spend levels

Heathrow T3

Retail

F & B

Services

Different airports deliver different spend levels

Heathrow T5 Upper Level Departures

Services

F & B

Lounges

Retail

Different airports deliver different spend levels

Heathrow T5 - lower level gate areas

Retail

F & B

Services

Different airports deliver different spend levels

Heathrow T3

Heathrow T3 – orientation zone

Heathrow T3 – dynamic flows

Heathrow T3 – clever location of toilets

Frankfurt – duty free & travel value

Frankfurt – branded luxury shop

Frankfurt

Frankfurt

THANK YOU