Retail as Priority

Retail As Priority

A call for keeping retail in the forefront during planning and airport operations

BY Monica L. Rausch, Associate Editor

March 1999

MIAMI — While airports recognize the potential revenue to be had from making retail management a priority, many are ignoring the special needs of both retailers and their employees when designing and operating the airport. That was the message retailers and airport personnel gave at the 4th Annual Airport Retail Conference hosted recently by the Center for Business Intelligence.

Robert Weinberg, president of the real estate development firm MarketPlace Development (MPD), defines an airport's "status hierarchy:" Airplanes, airlines, their employees, and passengers rank at the top, he says. Airports' primary concerns are moving passengers, providing for basic human functions (restrooms and telephones), and then eating and shopping.

"In the culture of the airport (retailers) come pretty far down the hierarchy. Should that be? I don't know," he says.

"It explains the location of the retail space, the quality of the storage facilities. It explains why Cincinnati could build a huge terminal for Delta and not put in any loading docks."

Typically architects and designers look to build beautiful airports, or "secular cathedrals," says Weinberg, and end up hiding the retail. "It's all part of this theory that this is a public space and must be protected from commerce at all costs."

Weinberg and others shared insights on why retailers should be involved in airport planning, how to tend to the needs of retail employees to ultimately improve customer service, and what limitations brand name retailers are faced with at airports.

Retailers as partners
Peter Gingras, deputy manager of aviation properties for Denver International Airport, says discussions on airport retail need to involve airport architects and designers to give them an idea of what needs concessionaires have at an airport.

Helen Deknatel, commercial director for JFK International Airport's Terminal 4, says the terminal's reconstruction project is one example of a case in which commercial activities are considered "an integral part of the total airport design." But Terminal 4's plans are atypical of airport construction, she says.

"During the planning and design process ... commercial experts should be included from scratch, and not halfway through the design process. The architects have to be made aware of the fact that retail logistics at an airport are just as important as passenger and baggage logistics."

Airport operators need to consider retail operators as partners, not just tenants, she adds. "Airport operators should bear in mind that the retail activities are an important part of the total airport product."

Employee Satisfaction; better customer service
Presenting the "total airport product" includes good service to airport customers, Deknatel says, and improving employee morale can have a huge effect on how customers are treated.

"An unsatisfied employee will show a deteriorating performance and ultimately (affect) the customer satisfaction level with its direct relation to sales, profit, and revenues."

Some issues she says retail employees typically have to deal with and how airport operators can help the situations include:
• Airport accessibility: Many airports are difficult to reach by public transportation, especially during off-peak times, and employees may have to arrive hours early to start early morning shifts. Employee parking lots are sometimes a 10-minute shuttle bus ride to the terminal. Make transportation to and from the parking lot "as pleasant as possible," says Deknatel.
• Retail logistics: The lack of involving retail experts in designing an airport often results in logistics hassles, she notes. Employees sometimes need to go through the same security checkpoints as passengers. Accessibility and availability of washrooms and locker rooms often aren't considered and are placed at a distance from retailers.

• More than one manager: Retail employees have several "bosses," says Deknatel, which include not only the retail supervisors, but airport managers, security officers, and, in duty-free shops, customs officers.

• Out of the loop: Deknatel advises airport operators to distribute weekly or monthly news bulletins to let employees know what's going on at the airport; e.g., flight delays which cause an unusual amount of customers to flood an outlet, new airline schedules that change store hours, or the closure of certain areas due to construction.

Discouraging factors
Roger Berkowitz, president/CEO of Legal Sea Foods, Inc., says airports offer great potential for profitability and the chance to enhance a brand name. However, he describes airport bureaucracy as "mind-boggling," noting that "if you can operate in an airport, you can operate anywhere."

The agreements retailers need to sign, which he considers "the most restrictive agreements known to mankind," are stripping away incentives for food lessees to do business at an airport, he says.

Berkowitz, along with Alex Winiecki, senior vice president of Brookstone, a retail chain dealing specialty items, and Chip Wade, executive director of non-traditional development for the restaurant chain T.G.I. Fridays, say that with brand names, keeping consistent customer service and management at locations both in and out of airports is important. This consistency sometimes makes it difficult to work within the restrictions some airport authorities place on them. Operators of both Fridays and Brookstones have walked away from some opportunities to locate at airports because of operating restrictions or the fact that they were assigned locations not deemed ideal.

Also, when setting revenue goals, Winiecki advises retailers and airports alike not to put too much value on enplanements and keep in mind that operating costs are higher at airports.