Future Retail
Shorter term leases, local flavor a growing emphasis at airports
May 2001
A recent canvass of 38 representative North American airports shows three emerging trends involving master concessionaires and the relationship with the Airport authorities.
These trends appear to be international in scope and offer a snapshot
of the future of airport retailing. The survey approached from several
realms: A) Food; B) News & Gifts; and C) Specialty Category retailers.
This study viewed the length and choice of master contracts as well as
input from airport authorities and inclusion of local retailers.
First, the desire to have stronger local
impact upon the tenant base and mix appears across all geographic regions.
This desire to bring strong local and unique retailers on board is nationwide,
but strongest sentiments appear along coastal states and provinces. Remember,
many trends appear first on the coastlines and work toward the heartland
of the United States and Canada.
The second trend is the desire to shorten
the length of leases while striving to give retailers the opportunity
to make a profit and amortize the costs of their initial build-out.
Master concessionaire leases of 20-plus
years appear to be too long for many authority members to effect any significant
change. These long-term leases were ideal when airports were believed
to be static entities offering minimal to medium service levels, and airline
food consisted of dinner and lunch entrees. Over 19 percent felt they
would never enter a lease term of 20 years. Every airport representative
contacted desires for the concessionaires to be profitable while wanting
the airport to be perceived as in touch with today’s often fickle
flying public. That translates into retailers who change product lines
and mix. Customers are disappointed with airline food and often with airport
fare, and pricing is frequently an issue.
Airports prefer concessionaires who offer
a clearance or markdown on dated and shop-worn merchandise rather than
have the airport appear as a repository for faded fads. If a shop has
Smurf DollsTM in its window, what statement does that make about the relevance
of its merchandising?
Many airports have worked successfully with
master concessionaires and desire to maintain that relationship in the
future. The ideal retailing situation appears to be a blended situation
with a master concessionaire and the flexibility to introduce strong local
retailers into the tenant mix.
The Lambert St. Louis Inter-national Airport
looks forward to a unique situation with the recent merger of American
Airlines/TWA. Lambert currently has a master concessionaire and several
unique local tenants including Book Marks, a local bookstore chain, and
a local microbrewery. This situation appears to be a win/win situation
for an airport that could have been devastated if TWA had gone out of
business with no carrier to fill its significant presence. Another unique
aspect at Lambert is the cart program where local specialty retailers
can experience airport retailing without the major startup costs associated
with a build-out and an inline retail space. Brian Kinsey, retail specialist
at Lambert, says the newer merchants have a realistic opportunity to experience
the benefits of an air terminal setting. With a master concessionaire
in place, many locals demonstrated faith in the region by partnering in
Lambert Field to be a presence in this strategic market.
El Paso offers unique facades and challenging
designs to build its image and plans new uses for the La Plapita complex
within the terminal.
McCarran offers a unique concept for airports
with multi-terminals. Each terminal has a separate master concessionaire
contract, with HMS Host covering two terminals and CAOne covering the
other.
In smaller airports, would it be feasible
to offer to divide the terminal space with 60 percent of the available
square feet to one RFP and 40 percent to another? Would the ROI (return
on investment) be reasonable to a master concessionaire? Would the profit
on a partial terminal be worth considering?
Remember earnings per square feet are generally
higher next to the lease line. This is particularly important in the airport
setting, because time is the strongest factor in shopping. Therefore depth
beyond the lease line is less critical and will not exponentially generate
business. This is exactly the opposite in a traditional mall/shopping
center setting.
In traditional malls and shopping centers,
the psychology and philosophy is the unencumbered, uninterrupted, and
leisure-filled shopping experience. Thus, most major malls in North America
offer very few clocks visible on the concourse of the mall. By contrast,
in an airport nearly every arrival/departure monitor displays time, and
clocks are placed frequently throughout the terminals.
One unique, usually local tenant group consists
of certified massage therapists who offer a chair massage in 15 minutes
or less. This (fully clothed) setting offers comfort and relaxation for
the travel-weary. The chair massage is a non-threatening and readily accepted
practice to calm the anxiety-filled infrequent flyer as well as weary
road warriors. Several local and regional massage therapy operations have
been successful. Practitioners are usually part-time employees who work
during peak times. Facilities require little build-out, minimal utilities,
and few demands for terminal services.
Conroy's books include Effective Aviation Crisis Management 1996 and
rev.2000
is a 2-volume text is used by 28 carriers world wide as their manual when
a
crisis occurs.
Converting Military Airfields to Civilian,Business Parks, And Cargo Centers
1999 The manual from Development strategies through day to day operations.
To contact Craig Conroy call 724 443-6876 or 1 800 344-1492 fax 208
730-4428
or email [email protected]
or [email protected]
www.craigconroy.com website
