Airport Retail Operations Take Off

Apr 21, 2003

Despite the woes of the airline industry and meager growth in airport traffic, retailing at airports is practically booming, if the situation at Indianapolis airports can be taken as the norm. According to an article in the Indianapolis Star, sales from local Indianapolis airport retailing — including food, beverages, gifts and specialty products — jumped 115 percent from 1995 to 2002, from $11.5 million to $24.8 million. And that during a period in which passenger foot traffic increased only 2.6 percent.

Retail operations at the Indianapolis airports are managed by BAA Indianapolis, a subsidiary of the UK’s BAA plc, the largest manager of airport retail operations worldwide. A shopping center-like approach is used to determine the right mix of retailing and the best location for each airport store. Shoppers are surveyed constantly, and results are shared with food vendors and retailers.

Although the airport’s corridors resemble a mall, the two have dramatically different customer bases. “We have a captured audience, but the passengers are there for a limited time,” says Mary Ann Falatic, BAA’s retail director. “You have to think about your product mix in terms of that. What is it they need, and what is it they want?”

Some theorize that success depends on removing stress and boredom from passengers. Retailers are now offering plenty of shopping options and personal services, such 15 minute massages and haircuts. But much of the strategy goes back to fundamentals. “Merchandising is very, very important at an airport,” said Pauline Armbrust, editor and publisher of Airport Revenue News. “The nationals have totally refined what they offer at airports versus what they offer in their mall stores. It’s a different market.”

Moderator’s Comment: Can lessons be learned from airport
retailers’ success in the face of adversity?

In a sense, the stress caused by lengthening security
lines and fears of terrorism make airports a proving ground for serving customers
in a state of mind that may one day infect retail operations everywhere. And
the unique opportunity to sell to a “captured audience” may also make airports
a perfect laboratory for testing the effectiveness of impulse purchase items
and value-added stress-relieving services. May be worth paying more attention,
next time you’re stuck waiting for a delayed flight.
Moss – Moderator

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