Photo by Kevin Schmid on Unsplash
May 14, 2024
Is Airport Retail Evolving Into the New Shopping Mall?
Hybrid stores, a blend of retail and food and beverage offerings, are reshaping the landscape of airport retail worldwide. According to Lagardère Travel Retail’s Travel Experience Voices series, 76% of surveyed airports recognize hybrid concepts as a long-term trend, with 24% noting a surge in popularity for their ability to enhance the customer experience.
These dynamic spaces, as described by Dag Rasmussen, Lagardère Travel Retail chairman and CEO, integrate convenience, entertainment, and engagement and redefine the travel experience. “Hybrid concepts stand at the crossroads of innovation, blending digital with physical, global with local, and retail with F&B,” he said.
The survey, conducted between January and March 2024 across 58 airports and 150 brands in 27 countries, highlights the growing significance of hybrid stores in the travel retail sector.
Efficient store layout ranks as the top feature for both airports and brands, followed by a diversified product offering, omnichannel integration, content design, communication elements, and unified services. However, challenges such as space optimization, offer mix, and revenue maximization persist for airports developing retail masterplans.
In response to increasing environmental awareness, airports and brands prioritize the environmental impact of retail offerings, emphasizing collaboration to progress along the decarbonization journey. Data sharing for improved performance is also recognized, although implementation hurdles such as GDPR and compliance regulations remain.
Despite the potential for data-driven insights through generative AI and data partnerships, adoption rates remain moderate, with only 47% of respondents utilizing generative AI and 56% open to data partnerships.
Overall, the global airport retailing market is on a trajectory of growth, set to exceed $90 billion by 2033, from a projected valuation of $29.84 billion in 2023. This surge, projected with a CAGR of 11.7%, underscores a shift toward omnichannel retailing to meet evolving traveler needs.
Recognizing the changes in consumer behavior, airports worldwide are prioritizing food and beverage (F&B) markets and are adapting to increasing demand by embracing omnichannel retailing. Travelers seek immersive experiences rather than mere products.
“This is a really exciting time for airports. Travel is growing again, and travelers, especially younger travelers, have come back looking for new airport experiences,” said Stephen Hay, global strategy director at Airport Dimensions. “They tell us that they want to spend on new experiences like lounges, quality food and beverage and a different sort of retail experience. Airports need to seize this opportunity and ensure they have the tools, relationships and engagement capability in place to drive revenue growth.”
Consequently, airports are expanding F&B spaces, moving away from traditional planning methods.
This evolution translates into a plethora of dining options, ranging from local delicacies to international favorites, all aimed at enriching the passenger journey. Furthermore, you can book your flight but also tailor your shopping experience — selecting items, pre-ordering duty-free goods, and arranging delivery — all seamlessly integrated into your travel plans.
One such example is Smartseller, a collaboration between Gebr. Heinemann and Casualfood, which has adapted its hybrid retail concept for small airports, initially launching at Ljubljana Airport in Slovenia in 2021. The project combines travel retail shopping with food and beverage offerings, with a focus on small and medium-sized airports.
At Ljubljana Airport, the concept, now known as “Little Slovenia,” offers F&B, duty-free shopping, and local souvenirs in the non-Schengen departure lounge. The design reflects Slovenia’s natural beauty with wooden elements and greenery, creating a welcoming space for passengers. Smartseller’s modular concept allows for easy integration into existing airport infrastructure.
Managing director Karl Niendorf highlighted the concept’s appeal in the moments before boarding when passengers are most receptive to retail experiences. “The space at the gate, in particular, often offers scope for an appealing retail concept,” he said. “Before boarding, travelers are relaxed and therefore more open to offers that fit into that moment. The Little concept has been created especially to fill this gap.”
With threats like online retail competition looming, duty-free retailers are also exploring innovative formats like click and collect, concept stores with trendy products, and personalized shopping experiences.
Overall, the evolution of airport retail toward hybrid stores signifies a shift to a more connected, vibrant, and sustainable travel retail industry.
Discussion Questions
What strategies can airports and brands employ to effectively optimize space in the development of hybrid retail stores, considering challenges like diversifying the product mix and maximizing revenue?
How can industry players use data and technology to improve passenger engagement and satisfaction as airport retail evolves and more food and drink options become available?
Poll
Loading …BrainTrust
Rachelle King
Retail Industry Thought Leader
Bob Amster
Principal, Retail Technology Group
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Recent Discussions
More Discussions
Would Recording In-Store Associates Help as a Training Tool?
Ethosphere is banking on AI-driven recordings of in-store associate practices as the next big thing in…Some Retailers Are Trimming Holiday Sales Discounts: Is This a Dangerous Play?
Some retailers are pulling back from deep discounts this holiday season. Is this a dangerous play?Has Kroger Discovered the Limits of Automated Warehouses?
Kroger is winding down its relationship with Ocado, citing cost overruns and a reorganization of its…
Airport retail has always had a difficult balancing act in that it has to cater for both customers on a tight schedule and customers looking to kill time. That’s why you see investments to reduce friction (such as automated checkouts and lots of shelf edge information on products) as well as investments to entertain and engage (like Dufry’s augmented reality and AI beauty products try-on). This hybrid approach is sensible and will be joined by newer technology such as optimizing inventory with AI.
The increased sophistication of airport retail is working. According to our (my company, GlobalData) data, the airport retail market grew 17.9% to $35.2 billion last year. This is higher than pre-pandemic.
I agree with your assessment. The growth numbers you cite are impressive, especially since I assume, confirmed by my own unscientific comp shops, airport shops are significantly more expensive. Personally, I also can’t figure out how you would be able to carry a suit or a new box of beauty supplies and still be able to stuff them into one carry-on bag. Smarter people than I must be figuring this out.
One serious issue that I’ve always wondered about, from a security standpoint, is that this exponentially adds to the population of potential bad actors with access to secured spaces in the airport. I feel like this is a good idea until it isn’t, and when it isn’t will there be impacts to how these stores are able to recruit and staff their stores?
Paradies, Hudson, WB Smith are all making adjustments not only in F&B but also in total experience retail locations inside the airports/rail stations. What you are seeing in not only improvements in food (adding farm to table products) and alcoholic beverages in some case but also placing a Lego store or a Mac Cosmetics store next to them or a store within a store. They are thinking not only about that customer that is in a hurry but also customers that have a multi-hour layover where they will need something to do.
I have traveled for most of my career, primarily domestically. Other than the Bowery Bay Shops at LaGuardia I have not seen many airports with mall quality retail. Gift shops, convenience stores and the occasional Brighton or Tumi shop, yes, but that’s about it. It’s never enough choice for me to bring out my wallet.
When you have a captive audience you have a perfect retail opportunity, so why not? Shopping would be far more interesting than sitting at a gate waiting for your delayed flight to takeoff.
The contrast between shopping at airports which are primarily domestic (there are a lot in the US) and international hubs is very interesting. I think domestic passengers are much more hurried and not in the mood to shop (other than for essentials), whereas international passengers (especially tourists) have more time to kill and are more adventurous. The contrast in retail between domestic terminals and the international terminal at LAX always brings this home to me!
Great points, Neil!
With due respect to Cunard – they of ‘getting there is half the fun”, fame – I think the main difference is money: that $5300 pair of Denver-Paris tickets may seem to take a bigger bite out of the wallet than STL>MDW, but they had a much bigger budget to work with!
Budget definitely plays a role. I also think there are psychological and need dimensions too. People on leisure trips, especially foreign vacations, are in the mood to spend and indulge so they buy more stuff. There are also all of those ‘forgotten’ or last minute items like sun block, etc. In the UK, Boots’ airpot stores do a roaring trade! because of this.
Well sure, in the UK sunblock must be a special order item !! 🙂
It’s probably why the airports are so busy … all those Brits flying away to seek sunnier lands!
Insightful Neil. Many times the domestic stores don’t seem to have much traffic outside of those with more sundries.
I think what you will see is more shops within shops and a bigger retail presence from the big 3. The hard part of retail in airports is having to abide by airport concession guard rails (what type assortment to sell, how to price the product, etc) but I think the need is there to solve traveler’s issues (hungry, thirsty, etc.) and keep the traveler captivated with the retail experience.
Effective airport retailing can positively impact passenger satisfaction, dwell time, and ultimately, commercial success for airports and brands alike. To optimize space in hybrid retail stores, airports and brands can implement efficient store layouts, leveraging technology for data-driven insights on consumer behavior. Brands should curate diversified product offerings, prioritize high-margin items, and integrate omni-channel strategies for seamless customer experiences, ensuring revenue maximization while addressing space constraints.
Industry players can utilize data analytics to understand passenger preferences, tailoring offerings, personalized recommendations, pre-ordering, and seamless payments enhances convenience. Augmented reality can elevate engagement, allowing virtual try-ons. Continuous feedback loops via surveys or social media facilitate responsiveness to evolving needs, ensuring heightened satisfaction amidst expanding F&B choices.
This is a healthy retail shift for travel. It shows directional alignment with the rest of retail where omnichannel reigns and the connection between digital and physical is essential to delivering on experience.
Still, airport retail, moreso than other channels, is limited by space, which makes merchandising and assortment optimization that much harder. A good way to leverage technology here is to connect instore and online inventory (similar to Target’s in store QR codes). Imagine the convenience of ordering something instore, from online inventory and then having it home by the time you return from your trip. Not especially novel but the simple convenience of not having to lug purchases home from the airport is a big win.
Today’s consumers want new and different shopping experiences. As travel picks up, airports have a captive audience with (arguably) discretionary income. If retailers and brands can deliver on the right experience, there is nothing but upside for airport retail.
In recent years, airport shopping has become a significant channel of trade with its own set of advantages and challenges. The obvious advantage is that the shoppers are captive. The disadvantage are many aspects of competition for attention, including natural airport distractions, passenger anxiety, iPhones, announcements, and passenger’s concerned with watching their carry-on’s somewhere while in the stores.
Currently, airport commerce offers a wide variety of products, categories, choices, and assortments. In the past, every airport had a shop selling magazines, newspapers, paperback books, candy, essential travel aids, and maybe a very generic coffee shop with paper thin chairs and messy tables.
The next generation of airport shopping included food courts, and a travel store with back pillows, carry-on cases, and very basic electronics. Food courts would have fast food chains like, or similar to Sbarro, Auntie Ann’s, Chinese fast food, Cinnabon, and more recently Starbucks, along with Starbucks or Duncan on each concourse.
Today’s airports are indeed shopping malls. There are plenty of chain restaurants in airports beyond fast food, plus travel and necessities stores, as well as specialty stores like jewelry, diamonds, upscale electronics, fine clothing, casual wear, golf stores, fine food, premium candy, toys and games, and much more.
Airports now offer more local color, such as local restaurants, local brands of foods, and premium specialty items, like figurines that retail for more than $1,000 each.
At ZRH, you can buy Rolex watches at much lower prices, and at BOS, you can buy a lobster. Don’t leave BRU without premium chocolates, or NAP with truffles. At DEN, passengers can shop for mountain-themed products. A wide variety of tropical goods and apparel are available at MIA. Specialty gold jewelry shops are exist at DBA.
Shopping in LHR is more fun than at the Mall of America. In HKG, you can find upscale boutiques. Shops at MUC sell beer steins and cuckoo clocks. Turkish carpets, ceramics, and spices are sold in IST shops. Fashionable clothing and stylish furniture can be found in CPH’s shops. There are more electronics stores in HND than anywhere else I’ve ever been. There are many tech stores in SFO. A similar type of premium store is available in LAS as in casinos.
The logistics challenge comes from passengers’ desire to shop on the other side of security, and ideally close enough to their departing gates, since they must keep all their belongings on them at all times. The airport shopping industry will continue to expand, regardless of limitations or challenges. -Db
Airport retail? As in, all of the stores you walk past while you are going to your gate? Food and drink options, sure thing. Maybe buy a souvenir for your kids out of guilt, but real shopping? Nope, not happening-at least not in terms of actual shopping. Making the terminal more engaging, sure but no one is purchasing anything. Just look at the bored clerks the next time you are in a terminal.
True in a lot of grotty American airports, not true in international hubs like Heathrow and some of the fantastic airports in Asia. Shopping is big business there!
This is happening around the world. I see it everywhere I go. My home airport, MSP, is nicer than the Mall of America, just across the street. Personally, I put this in the “country might not be worth saving” file. But it seems to be very popular and, I assume, successful. That said I would appreciate if they would stop shrinking gate seating to add restaurant spaces. No one likes standing for an hour because there’s no place to sit anymore.
I’ll get off my soapbox.
I am having your soapbox sanded down, and lacquered to a bright shine!
I can use it to sit on when I’m waiting at the gate.
Airports have been migrating to the mall concept for years. They can be a boon to airports, retailers and an experience to passengers who have to dwell in airport terminals. Not likely that these malls will be attractive to non-travelers because of time and accessibility issues. The airport mall, especially in international airports, in which dwell times are typically longer than in domestic airports is destined to stay with us and become more experiential over time. In smaller or domestic airports, they will do a good steady hybrid business. Love that space!
Ever been through Shanghai’s Changi airport, rated #1 in the world? It has 280, at last count, retail and restaurant concepts, in addition to sculpture gardens and an IMAX theater. I think that encapsulates pretty easily why it’s always in the top spot. People love diverted experiences, and Changi delivers handily. Other airports should takes notes.
Singapore, not Shanghai. (Pudong, nor really any mainland Chinese airport, is particularly noteworthy for their retail. Though in the southern cities like Nanning you can pick up massive lots of local fruit to take home!)
Airports have a captive audience, and how they embrace travelers will reflect in their retail successes. For the time-starved, hurried passengers, several stores have recently implemented self-checkout lanes to speed the journey. I used one in the Atlanta airport about a month ago and the experience was awesome (I was in & out in less than 3 minutes!) For the time-flush passengers, retail concepts that offer multi-faceted, hybrid concepts will do well. I especially like the concepts that, through their use of unique decor (wood floors, relaxing furniture, cozy tiles and paints) create a moment of calm for passengers. Let’s face it, travel can be exhausting and filled with high tension at times. Retailers who can pull travelers into a store and make them forget they’re in an airport will be uber successful.
I’ve noted a real difference between hub airports’ offerings (think MSP or DTW) and smaller airports with less connecting service (think Kansas City or my home airport, Milwaukee). Retailers are drawn to higher traffic locations — just as with the rest of their site selection — and they are also going to cater to transferring customers with more time to kill between flights.
At least here in Milwaukee, most of the retail is focused on convenience, gifts and curated local souvenirs. There are a few exceptions (a PGA store, a Spanx store and a Brighton store) but these don’t offer the critical mass of a typical shopping mall.
Airports are probably the most time sensitive environment that we could discuss as a context for shopping. So I totally understand the emphasis on time and space efficiencies. Then there’s inventory efficiency. What are people really shopping for, and willing to then pack and carry, as they trudge through the airport? Airports seem like a great laboratory to solve any kind of friction issue. And also the time efficiency factor as the shopper is clearly focused on getting to the gate. But while there might be limited dwell time in the airport, mall stores would want to create an experience that encourages a longer dwell time. And in a mall store the question could be, how do we build basket size? How do we maximize units per transaction? That’s at odds with the circumstances at the airport. At the airport it’s about limited space, focused inventory, and identifying the items that will be most wanted by the most number of shoppers. So the nuances of the shoppers mission and how the retailer executes to that mission seem very different for the airport and the mall.
It’s all too easy to assume that airport retail concepts are fighting inescapable realities such as hurried schedules and frazzled travelers. But what if the shops, restaurants, and attractions are so compelling that travelers begin to plan more time for airport visits? I would have called that crazy talk until I visited Laguardia after its extensive remodel. I found myself planning an early departure to the airport as a substitute for a hurried breakfast at the hotel on a recent visit. Well-planned airport retail can change consumer behavior over time.
OK…you just moved the needle in how I view airport dining. I can relax because I am at the airport in plenty of time AND have a nice breakfast.
Oh, you’re one of THOSE people : )
I love to shop at airports, especially if I arrive early or a flight is delayed. It’s convenient because there are no other factors (driving time to/from, time away from family, etc.) to fact in. But I’m not often enticed to do shop at US airports. Where I’ve spent money there have been more quality (but not necessarily high end luxury) options across apparel and accessories. Formats I’ve seen work include: island stores with interesting displays close to food options, stores with high quality coffee shops inside. Stores with ‘capsule wardrobe’ type items that appeal to the traveler who is trying to pack light. Highlighting items that travel well and don’t crush is also appealing. Interesting specialty stores (outside basic luggage/electronics) are also fun.
In the past four weeks I have been in Barcelona, Paris, Mumbai and Detroit airports. I often wonder how much NON F&B people are actually buying, especially from the high end stores where staff generally look bored. As brand beacons, the high end stores probably make sense when factoring in what the airport offers them to stay. Souvenirs and books would seem to do well too.
In Mumbai, you have to talk through duty-free to go from immigration to baggage, it is an IKEA like concept. I find it to be more of a nuisance but great opportunities to pick up last minute gifts upon arrival.
As with anything, I think the basic blocking and tackling would be most helpful. Airport apps with easily usable maps, partnerships with airlines to order / book services ahead while in flight. For example, Delta knows me, it has all my flight information, my credit card, etc…could the app prompt me for a Starbucks upon arrival in Detroit and identify where the locations are. It could more easily prompt me for an Uber, taxi, etc…it does to some extent now but not one-click simple interfaces.
Some newer Delta terminals have seating with iPads and there are a number of things travelers can access from there. Since I am not likely to download an airport app, it seems like airlines should drive these effort. Just need to incentivize them correctly.
A mall at an airport (or any cluster of retail stores and food outlets) can hardly be considered a typical or traditional mall. I’d call it the mall of convenience. Passengers who have time may opt for shopping and eating, but consumers don’t target the airport as their mall of choice. The ability to optimize the space, layout, offerings, etc. is the key. With the data and analytics that is collected, it’s never been a better time to place a location in an airport, provided that’s your target customer.
Airport retail has most definitely upped its game. And F&B experiences have attracted and delighted shoppers. Is it going to be the “new shopping mall?” Perhaps not, but the retail scene within upgraded airports is nothing to shy away from.
Cracking the code within this setting remains a work in progress. As fellow Braintrust member @Neil Saunders pointed out, it’s a delicate balance between hurried shoppers and those looking to fill a void while waiting for their flight. I would encourage retailers to create a space that satisfied three things: 1) grab-and-go; 2) gifts and essentials; and 3) browse-and-deliver to their destination or home. If a retailer can formulate a viable concept to satisfy all three need states, I believe that airport shopping will flourish.
To truly establish itself as a differentiated business model (rather than just a more expensive derivation of a traditional store/restaurant), airport retail needs to create demand that cannot be met elsewhere. Singapore’s Changhi airport is a perfect example of this – its Jewel wing hosts many restaurants that are not found anywhere else in the country. For example, the first Shake Shack in the country was placed there, thus creating demand for locals and travelers alike.
While the concept is promising, many spaces are underutilised, for example, areas near boarding gates can be converted into compact F&B hubs, similar to the “Little Slovenia” concept at Ljubljana Airport. However, they must avoid overloading passengers with generic products. Instead, they should offer unique, local items that reflect the destination.
On the other hand, data and technology are underused in many airports. Real-time data analytics can predict foot traffic and adjust staffing and inventory dynamically, yet few airports implement this effectively. One way for airports is to adopt apps for personalised promotions and seamless pre-ordering which can improve passenger engagement and satisfaction.
Airports are getting more creative in how they serve shoppers. Beyond the addition of Just Walk Out in airport stores, we’re seeing more vending machines selling brands like Beats by Dre and Kylie Cosmetics. It’s a smart way to reduce rent and labor costs, and serve travellers around the clock.
Let’s be real here, who loves the idea of sitting idle at an airport of all places (other than those with sky lounge status)? Airports are “mental holding patterns” that have you locked in until. Meaning, until takeoff and what if there are delays yet again? The goal is to ease the anguish and anxiety by turning them into “experience centers” with shopping mall like acumen. Yes, for the just-in-time business traveler, we could care less. But for families or empty nesters the desire is greater. What do travelers hate? They hate the airports they hate the most! The redesigned LaGuardia is one benchmark for the ideal upgrade (aside from the golf cart like gate distances you’re forced to walk).