Tuesday, August 2, 2011

The Airport Experience Now Includes Shopping for the Family

After visits to malls plummeted during the recession — and have yet to bounce back — many mass-market retailers stepped up their search for other locations to lure shoppers.

Places where people might be bored. And unable to leave. One time-tested answer: airports.

While luxury stores set up shops in airports long ago to attract duty-free international shoppers, retailing in many domestic terminals was limited to newsstands and the occasional shop selling coffee mugs and local smoked meat. The real diversity in airport shopping was in the food concessions.

No more.

“Airports are becoming, really, a service facility, like a shopping mall,” said Jose Gomez, senior vice president for business development for Mango, the fashion retailer.

While clothing and specialty luggage and electronics stores aimed at male shoppers — like Johnston & Murphy, Brooks Brothers and Brookstone — have been fixtures at airports, the new wave of stores moves beyond the businessman traveler to include teenagers, women and bargain shoppers.

Mango recently opened two stores at San Francisco International Airport. It will open one in the Orlando airport this fall and plans more airport locations in the next two years. Victoria’s Secret opened seven airport stores in 2010 and 2011.

Muji, a Japanese housewares and apparel store, has opened two airport locations, and Sean John, the clothing line by Sean Combs, a k a Diddy or P. Diddy, has a store in Hartsfield-Jackson Atlanta International Airport, which has grown from “news and gift and generic concepts” to “almost complete retail diversity” over the last 10 years, said Paul Brown, director of concessions at the airport.

Even Brooks Brothers — which was one of the first clothing stores to expand into airports, opening its first airport store in 1999 — is riding the wave, with plans to add about five stores a year to the 26 it already has in the United States. And overseas, the fashion retailers H&M and Zara have each opened several airport stores.

The draw of the airport location is simple: an attentive clientele. “After security, you’re locked up,” Mr. Gomez of Mango said.

Domestic travelers spend more than an hour, on average, waiting in airports once they have passed security, said Gerry Cecci, vice president for airport management at the Westfield Group the mall company, which manages retail sites at airports including Boston, Newark and Miami.

“Someone may have a street concept or a mall concept that’s very successful, and bringing it to the airport environment, you capitalize on the captive audience and on the dwell time,” Mr. Cecci said.

Retailers say that while rents are higher at airports than in mall or street locations, sales per square foot are also higher — especially when it is raining or snowing and flights are delayed.

“We have a motto — bad weather is good for business,” said Paulette Garafalo, president for wholesale, international and marketing at Brooks Brothers. “Whenever there’s bad weather, we enjoy a hearty day. It’s the polar opposite of retail here.”

Making money in retailing at the airport, though, requires some adjustments to the traditional sales model. Stores are smaller, and the customers are often rushed, or at least very time-conscious. A premium is placed on convenience.

“Though there is a dressing room where you can try on dresses, maybe people are not so much inclined to try on, because they don’t have a lot of time,” Mr. Gomez of Mango said. “So accessories and tops sell better.”

Retailers also have to alter the layout of stores. Aisles have to be wide enough for luggage, and the pristine storefront displays used in malls often have to be tossed aside in favor of more open concepts and the stacking of merchandise at the store’s entrance.

“They figure out that removing the plate window glass and opening up is turning out to be a great idea,” said Mr. Brown of the Atlanta airport.

Many airport stores, including the Brooks Brothers outlets, are operated by specialists in airport concessions, the Paradies Shops. The company also run newsstands and other airport stores. The Brooks Brothers airport stores are geared toward business travelers and are stocked with “items they’ve forgotten, or items they know they need,” Ms. Garafalo said. “We have business travelers that plan their shopping knowing if they go through a certain hub several times a week.”

The retail push in airports has been welcome by most airports as they try to build revenue not dependent on airlines.

“The relationship between the airport and the airline has changed dramatically, in that the airport can’t just put its costs on the airlines,” said Paul McGinn, the president of MarketPlace Development, which manages and leases retail space at the Philadelphia International Airport and La Guardia. “Airports have to be self-sustaining,” he said, and retail “has become a valuable source of revenue.”

At large airports, while airlines contribute the most to revenue, at about 41 percent, retailing (including food) is the second-biggest source of revenue, at 19 percent, according to the aviation industry consultants MAC Consulting and Intervistas. (Rental car and parking make up the other parts.)

In the old days, retail space was added to the airport layout after the rest of the terminal was designed, but as the retail trend accelerated over the last decade, airports are including store-friendly elements like appealing concourse layouts, loading docks and storage facilities in new terminals, airport executives and consultants said.

Rents at airports are generally higher than in malls — it is street pricing plus 10 percent at most sites in the Atlanta airport, for instance, Mr. Brown said. But retailers said sales per square foot are higher. Demand for airport space is high — the vacancy rate at airports is now just 5.4 percent, down from 8.2 percent a year ago, according to CoStar Group, a real estate research firm. Over all, the retail vacancy rate is 7.1 percent, CoStar said.

Mr. McGinn said that at airports, however cranky travelers might be, they were also willing to buy.

“The experience of traveling tends to put people in a mode that they’re prepared to spend money,” he said, whether it is because they are on vacation or charging to expense accounts.

And, he said, he suspected there was another element at play that explained the armfuls of smoked salmon or I♥NY hats, or now, Victoria’s Secret scanties and Mango T-shirts that travelers present to their families upon returning home.

“It is also a venue where, and this is always a funny thing to talk about, but there’s an awful lot of people that are motivated by guilt,” he said. “That certainly inspires a lot of sales.”

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