Shorter term leases, local flavor a growing emphasis at airports
By Craig Conroy
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.
About the author
Craig "Buzz" Conroy is an Aviation Researcher, Author, and Speaker. Conroy
addresses Aviation and business groups from Puerto Rico to Portland. He was
formerly an Executive with two of the world's largest developers and in 1992
combined his scientific background with his interest in Aviation to research
and develop programs for aviation.
Conroy's books include Effective Aviation Crisis Management 1996 and
is a 2-volume text is used by 28 carriers world wide as their manual when a
Converting Military Airfields to Civilian,Business Parks, And Cargo Centers
1999 The manual from Development strategies through day to day operations.