creating an effective retail experience 8-10 november 2010 riga, latvia innovative design and...
TRANSCRIPT
“Creating an effective retail experience”
8-10 November 2010Riga, Latvia
“Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”
Alan Bork
Airport Retail Consultant
High Street retailerCopenhagen Airport (privatized in 1994)Brussels Airport (privatized in 2005)Airport clients throughout the world
Chairman of Danish Duty Free Association (fight against DF abolition) First chairman of Nordic Travel Retail Group 2000-05
“Creating an effective retail experience”“Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”
This presentation will take its focus on how “organizing and planning” the retail experience, can create “an effective retail experience”
For clarification:
“effective retail experience” = maximum spend levels SPEND PER
PASSENGER
The dynamics of the
Retail Business
Terminal P
lanning
and
Space Allo
cation
Getting the
Timing Right
Conceptual Planning
andRetail Lay-Out
An effective retail experience4 elements
What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER
Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax
Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax
# pax
# pax = SpendingMoney?
How MuchMoney?
Per pax
What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER
VolumeNationalityDestinationDemographicsTravel purpose
Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax
.....Footfall (how many in retail zone?)Terminal flowsLocationShop FrontsSignage & communication
.....Conversion (how many actually spend money?)AccessabilityProduct offerPricingIn-store promotions
Transaction Value (how much money do they spend?)Attraction of product & price (Value For Money) Tax regulations & allowancesIntra-EU vs. Non-EU
AIRPORT
AIRPORT
OPERATOR
AIRPORT &
OPERATOR
What are the factors driving retail spending?The “formula” for SPEND PER PASSENGER
Understanding the business dynamics….
The business model and the players 4 parties around the negotiation table
The role of the airport Understanding and playing the role
The success criteria's the airport´s the operators
Understanding the business dynamics
Landlord = Airport
Food & beverage operatorRetail operator
Supplier / Brand
The business model and the players
Understanding the business dynamics
Landlord = Airport
Food & beverage operatorRetail operator
Supplier / Brand
The airport “owns” the customer…..this is very much setting the agenda
The business model and the players
Understanding the business dynamics
But don´t get too arrogant….. the guy blowing the trumpet in the back-seat is equally important to the business
Understanding the business dynamics
……."success [for the airport] is measured in the ability to make different service
providers functioning smoothly together aimed at the one goal of fulfilling the need and
expectation of the passenger. The airport's participation in this is crucial not only when
talking about different travel related passenger facilities but also with regard to the
retail business"
The role of the airport….
quotation from article in Travel Magazine
Understanding the business dynamics
The operator's success criteria…
Location - location - location flows other retail activities food & beverage passenger processing facilities
Passenger profile & mix pax profile & yield spending behaviour dwell time
Brand exposure shop window
The airport´s success criteria…
Maximising M2 revenues exploitation of terminal capacity balancing the business lines mix of activities within the business lines “short term contracts with high concession fees
and high minimum´s”
Passenger services the need of the traveller the wishes of the travellers
Maximising passenger attraction ambience Airport’s Brand Image
Common interest, or
..conflict of interest
Understanding the business dynamics
How long are the queues?
When is my flight leaving?
Where is my gate?
Do I have time for shopping?
The passenger mindset
Getting the timing right
LeavingOffice or
home
Maximum Passenger Receptiveness - The excitement / stress factor
Parking Check InSecurityCheck
Airside Dwell Time Boarding TIME
A I
R P
O R
T
E X
P E
R I E
N C
E
Maximising the passenger journey
Excitement
Stress
Getting the timing right
LeavingOffice or
home
Maximum Passenger Receptiveness - The excitement / stress factor
Parking Check In SecurityCheck
Airside Dwell Time Boarding TIME
A I
R P
O R
T
E X
P E
R I E
N C
E
Getting the timing rightMaximising the passenger journey
LeavingOffice or
home
Maximum Passenger Receptiveness - The excitement / stress factor
Parking Check In SecurityCheck
Airside Dwell Time Boarding TIME
A I
R P
O R
T
E X
P E
R I E
N C
E
Excitement
Stress
Getting the timing rightMaximising the passenger journey
Low Market Mid Market Top end Market
High
Medium
Low
Price pointingAppeal
Conceptual planning and Retail Lay-OutMapping the RETAIL
Short Medium Long
High
Medium
Low
Price pointingDwell time
Conceptual planning and Retail Lay-OutMapping FOOD & BEVERAGE
Pax in
Pax out
Pax out
Terminal Planning & Space AllocationTerminal footprint
Objective: to maximise footfall
RetailFood & BeverageSeating
Pax in
Pax out
Pax out
Wal
k T
hrou
ghLounges
Objective: to maximise footfall
Terminal Planning & Space AllocationTerminal footprint
5 simple principles:1) Retail before F&B2) Lounges after commercial3) Maximise exposure4) Clear overview5) Simple flows
100% footfall
FRA LHR
51 mill.pax 66 mill.pax
Lufthansa British Airways
Major HUB airports
Function as main HUB for major national airline
Western Europe
Serving major metropol and financial power centres
High share of transfer & long haul
High share of business travellers
Spend per passenger € 8 € 24
Retail efficiency: Frankfurt versus London Heathrow
Different airports deliver different spend levels
800 900 1000 1100 1200 1300 1400 15000.00
5.00
10.00
15.00
20.00
25.00
30.00
Retail Efficiency FRA vs. LHR
M2 per million pax
Spen
d pe
r pas
seng
er €
LHR
FRA€8
€24
850M2
1.400 M2
Airside sales per departing pax VS. Retail/F&B space per million pax
Different airports deliver different spend levels
1200M
Landside
Airside
Frankfurt T1 and T2
Different airports deliver different spend levels
Heathrow T3
Retail
F & B
Services
Different airports deliver different spend levels
Heathrow T5 Upper Level Departures
Services
F & B
Lounges
Retail
Different airports deliver different spend levels
Heathrow T5 - lower level gate areas
Retail
F & B
Services
Different airports deliver different spend levels
Heathrow T3
Heathrow T3 – orientation zone
Heathrow T3 – dynamic flows
Heathrow T3 – clever location of toilets
Frankfurt – duty free & travel value
Frankfurt – branded luxury shop
Frankfurt
Frankfurt
THANK YOU