May 7--Perhaps you need some golf balls, an Oxford cloth shirt, a DVD player, a pair of shoes or a copy of "Where the Wild Things Are." Where could you get them while grabbing a bite to eat at Subway, Starbucks, the French Meadow Bakery or one of some 50 other eateries?
At the Minneapolis-St. Paul International Airport.
Like airports that attract millions of passengers a year around the country, MSP International is an increasingly popular spot to eat, drink and shop. Airports give merchants a great shot at reaching some of the most deep-pocketed consumers.
"They have nothing but time -- and gold cards in their wallets," said Joe Anderson, who oversees retail concessions at Minneapolis-St. Paul International.
Like many busy "malls," the airport is drawing more tenants. This year it's in the midst of an expansion that will add 10 stores and four restaurants.
When the expansion is completed by the end of the year, the airport will have some 125,000 square feet of space devoted to eating, drinking and shopping. That's about half the size of City Center in downtown Minneapolis.
Travelers spent about $128 million in 2005 at the airport's restaurants and shops.
Trained to arrive early to clear security checkpoints, travelers are spending more time waiting in airports for their flights to depart. And passengers switching planes at hub airports often have an hour or more to kill.
At MSP, departing passengers typically have 15 to 90 minutes of what the industry calls "dwell time," Anderson said, and the airport wants to make their waits as pleasant and entertaining as possible.
It pays off for the airport, after all.
The airport gets a percentage of sales from companies leasing retail and restaurant space. Last year, MSP International's cut from that business was about $19.8 million, or about 10 percent of its annual operating revenue.
Gone are the days when airports pretty much just offered newsstands and snack bars that gouged travelers.
These days, most airports -- including MSP -- require merchants to provide "street pricing," meaning prices paid inside the airport must be the same as those paid elsewhere.
"But I still think people keep their wallets closed because they think we're overpriced," Anderson said.
The airport also leans on vendors to improve customer service.
"We made Caribou put in three $20,000 espresso machines," said Anderson, explaining the airport thought customers were waiting in line too long to get their java.
TAKING OFF
Increasingly, airports are home to the restaurants that travelers see constantly in the outside world, such as McDonald's and Starbucks. They're also seeing familiar retail brands, such as Select Comfort and Lands' End.
And they're encountering specialty retailers they'll rarely, if ever, find outside airports.
"The selection, number of stores and professionalism of the retailers and food operators continues to evolve and get better," said Patrick Gleason, vice president of SH&E/CAM, a consulting firm that advises airports about concession operations. "More retailers are entering the business. … And the expectations of passengers are getting higher."
The old "monopolistic" model started to change 15 to 20 years ago, as airports saw the opportunity to profit by providing a wider selection of restaurants and shops.
The Pittsburgh airport, which opened in 1992, became an industry role model. It boasts more than 100 shops and restaurants.
"It was designed as a blend of a shopping mall and airport," said Anderson. "All the normal mall experiences were built in."
At this point, some 18 million passengers fly out of MSP annually. With that much traffic, airport officials estimate it could support another 50,000 square feet or so of retail and restaurants.
In growing the airport's food and retail options, the Metropolitan Airports Commission strove to ensure a strong Minnesota flavor.
"Everyone is trying to give their airport a local feel," said Anderson.
The Minnesota presence at the airport includes Creative Kidstuff, The Red Balloon Bookshop, Dunn Bros., Select Comfort and French Meadow Bakery.
In Red Balloon's case, it was approached by one of the firms that manage restaurant and retail operations at the airport. The firm asked if Red Balloon would like to be part of the news store operating on the C concourse.
Essentially, Red Balloon provides its name and expertise to the bookstore operators, said co-owner Carol Erdahl.
"We select the books and have been involved with some design features for the store," said Erdahl. "We try to keep it much like the Red Balloon is on Grand Avenue (in St. Paul)."
Red Balloon gets a percentage of the children's book sales at the airport store.
"And it gives us visibility," said Erhadl. "We have a lot of folks call us and say, 'We saw you at the airport.' "
The Dunn Bros. coffee shop at the airport is a franchise store.
"We are certainly happy with what they have done out there," said Dunn Bros. CFO Dave Osdoba. "They tend to have a higher level of sales -- and rent."
OPPORTUNITIES
A.
irport retail provides special opportunities and challenges, said Carole Howe, founder and CEO of CBR Inc., a Twin Cities firm that has focused on airport retail for more than 30 years.
"In an airport, you have more traffic," said Howe. "Therefore, your sales will be higher per square foot. But your costs are higher."
Leased space can be three, maybe four times as expensive as it is in malls, she estimated.
Merchants have to pay higher wages to compensate workers for more challenging commutes, especially the requirement to pass through airport security to get to work.
Operators know changes in airport security procedures, industry bankruptcies, rising jet-fuel costs and shifts in air service can put a serious crimp in their sales.
The worst-case scenario is the loss of an airline or major cut in flights, Howe said.
"It all boils down to people walking by your door," she said. "As enplanements fluctuate, your business fluctuates."
Despite the airline industry's ups and downs, the trend is toward more air travel. U.S. airlines carried about 750 million passengers last year, some 40 million more than at the beginning of the decade. The federal government expects they'll fly 1 billion people by 2015.
"Airport retail will continue to grow, although maybe at a more moderate pace," Howe said. "But I believe it is a viable industry."
Typically, management firms such as HMS Host, Delaware North Cos., CBR and Creative Host contract with airports to provide retail and restaurant services. The management firms will either develop and implement their own retail concepts or work with established retailers to get their brands in airports.
Airport shoppers are looking for something different, something that will entertain them, said Howe.
CBR's airport merchants include established brands such as Creative Kidstuff, Dept. 56 and Field & Stream. But CBR developed most of the retail concepts it has brought to airports. They include Radio Road, a women's clothing store; Toto, a gift store; and Ciela, a jewelry store.
With airport shops limited to perhaps half the space allotted their mall counterparts, product selection is especially important.
"They have to have a 'cool' factor," Howe said. "Hopefully, they're things that can't be easily found in other places."
"Unnecessary extravagances" foster window shopping and impulse purchases, she added. And there are lots of them at the airport.
For instance, the Nevada Bob's shop at the airport offers a golf edition of Monopoly, $39.99. At the Naturally Cashmere/Tumi Luggage shop, you can pick up a $32 leather valet key fob or $1,050 cardigan sweater.
The Harley-Davidson shop at the airport doesn't sell choppers but it hawks an array of biker T-shirts exclusive to the store. They sell for $26 to $37.
Craig Collins of Point Pleasant, W.Va., was pleased but surprised to find a Harley store at the airport during a layover Tuesday. He couldn't resist buying a shirt.
He's a Harley owner and has been flying around the country the past two weeks, visiting friends and Harley dealers, riding their bikes and buying T-shirts from dealers to mark his biker journey.
"I've probably got two dozen shirts," he said, "from San Diego, Los Angeles, Nevada, Arizona."
Airport shopping is a little expensive but fun, he said. "It gives you something to do."
Robin Pringle of Providence, R.I., scoped out Tumi luggage before she headed for her flight home. "It's getting more interesting," she said of the shopping options she's seeing in airports around the country.
As long as you bring in the right product, you can be successful in an airport, said Barney Freedman, co-founder of Florida-based InMotion Entertainment. It's now in 50 airports, renting DVDs and selling DVD players, camcorders, iPods and other portable electronic equipment.
"You want higher-end products to sell to higher-end demographics," said Freedman. "Whatever you sell, you want it to be on the high-end of the spectrum. … I'm selling high-end electronics to a high-end demographic that other retailers can't capture. Our customers don't have the time on weekends to shop Best Buy or Circuit City. We go to them."
Martin J. Moylan can be reached at [email protected] or (651) 228-5479.
