Evolving Concepts

Evolving Concepts Success with airport concessions requires a focus on customers, marketing, and the business relationship BY John F. Infanger, Editorial Director January / February 1999 TUCSON, AZ — The airport retail...

One other item of note from Adam is that airport retailers shouldn't forget that employees who work within the airport complex also offer a vital customer base.

Bob Weinberg of MarketPlace Development says that centralization of retail activities can play a major role toward success. Create a central location with an attractive theme for retail, he says.

A good case in point, says Weinberg, is the new retail center at Philadelphia International Airport. There, a moving walkway is positioned on the backside of the retail center; however, rather than having walls separating the two, large windows allow passengers on the walkway to peer into the shops. "It begins to get them in the mood," he explains.

Business Partnerships
One of the most critical aspects of the airport retail revolution that usually becomes evident rather quickly for newcomers is that with this entirely new approach toward selling to passengers comes the demand for a new way of conducting business between landlord and tenant. It is why the concept of "business partnerships" today is pervasive in any discussion about airport retail.

Says, Crowley-Jacinto: "Taking risks is critical to success." Thus, adjust or risk rents based on the potential for more sales.

Adds Weinberg: It's not a matter of getting the retail contract and then moving on to other airport issues. Airports must continually monitor and change the retail experience, working hand in hand with tenants all along the way. Unfortunately, he adds, airports are generally understaffed to do this.

Meanwhile, Tom Wilke of Orlando International Airport says that one of the responsibilities of the airport in the partnership is marketing to airlines and passengers. He says that his airport budgets some $1.3 million annually for this. Also, his airport adjusts minimum rents based on shop location to traffic flow. It's also the responsibility of the airport to provide a timely review process of retailer performance, he says.

Wilke says that concessionaires have the responsibility to provide quality goods at reasonable prices; clean, well-maintained facilities; and a courteous and well-trained staff.

A key to getting the partnership off on solid footing, says Wilke, is for the airport to keep the costs of proposals down. Ask for simple proposals without elaborate artistic renderings, he advises — "just a simple floor plan and an explanation."

Jeannie Raikoglo of the aviation properties division of the Port of Portland (OR) defines partnering as mutual expectations, mutual understanding, and mutual goals. If problems arise, she says, airports need to listen to the tenant, look at all the facts and how they compare to situations at other airports, and be creative in finding a solution. Tenants, meanwhile, need to be fully prepared, present a full picture ("open books, etc."), and also be creative.

For example, explains Raikoglo, if sales are below expectations, the first thing a tenant asks for is the last thing an airport will give: rent reduction. Besides, she says, such a move won't resolve managerial or operational issues if they are the problem.

A common experience, she and others point out, occurs when the retail tenant is new to the airport environment and has not yet fully adapted their operation. Case in point #1: One concessionaire was losing customers because they had to wait too long in line; the "calling numbers" system it used off-airport was unacceptable to airport customers. Case in point #2: A concessionaire failed to lure passengers into the shop. A shop facelift highlighting exactly what was being sold helped solve the problem. In both instances, an outside "objective" consultant was brought in to unmask the problem.

Finally, Pamela Del Duca with the Del Star Group, a Phoenix-based concessionaire, offers the following advice to airports:
• Avoid "analysis paralysis" via too heavy handed paperwork and reviews by committees, commissions, and contracts.
• Set a clear agenda.
• Respect individuality — "Allow me to be a creative retailer."
• Offer fair contracts with shared risks.
• Consider offering "one stop shopping" for retailers for setting up the contract.
• Don't define architectural parameters without concessionaire involvement.

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