Maximising sales of

retail, F&B, car

parking &
advertising

EAS 415 Airport Planning &

Management
January 2022 Semester

www.cranfield.ac.uk
 Intended learning outcomes

By the end of this learning exercise you should be

able to:
• Identify and understand the key drivers that affect sales of duty-free /
retail, F&B, advertising & car parking

• Understand the important business drivers in managing duty-free / retail,

F&B, advertising & car parking

• Understand how changing consumer behavior affects sales

• Understand in broad terms the role of digitalisation in the context of

airport retail development

2
 Terminal F&B Sales

How different is the

airport retail center from
the shopping mall?

3
 Traffic defines the
market Multiple of spending of average
passengers at Frankfurt airport
2019

12
Volume
10
Outbound /
Nationality inbound 8

O-D / Economy 2
Transfer Traffic & Currency
0

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Age &

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demo Destinat’n

Journey
purpose Source: Fraport 2019 Fact Book

4
 Muscat International Airport airside
Design and commercial zone
Location

• Visibility of commercial units

• Consolidation of commercial
space

• Location of duty-free relative to

F&B

• Walk through duty-free stores

• Focus is departures airside

5
 Design and location

London Stansted Airport airside commercial zone

6
 Design and location

Singapore Changi Terminal 3 airside commercial zone

7
 Terminal design &
maximising sales

• Orientation zone

• Which design is better for sales?

Source: Bébé Branns

Gebr Heinemann duty-free store design

considerations
Design A Design B

Source: Bébé Branns

Source: Bébé Branns

8
 Airport experience &
maximising sales

• Passenger emotions when travelling

• Way-finding & signage

• Atmosphere & aesthetics

• Customer service / shopping assistance

9
 Dwell-time and
maximising sales Time spent at the airport – recent
survey of Asian travelers
Outside In smoking
Departure hall-pre
• Dwell-time is time available to shop security
airport lounge
1% 1%
6%
• Optimal is 90 minutes Walking to
gate
• Impact of security and call to gate 7%
Sitting Business
7% Lounge
% of passengers by length of dwell time Zurich 26%
Airport Security
8%
Shopping
2019 2020 21%
12%
Eating
40% 13%
Boarding
60% gate
10%
88%
Source: Peter Mohn Mind-set

Source: Zurich Airport Fact Books 2019 and 2020

10
 Regulations and
maximising sales “Reducing the allowance of duty
free alcoholic beverages by half
will strike at the root of the
• Liquids restrictions business of concessionaires at
the airport and reduce the
profitability of the airport
operators.”
• Local planning regulations “Reducing the duty-free
allowance by half will reduce the
importance of Indian duty free
and make Indian duty free less
• One-bag rule attractive than competing
airports.

• Maximum allowance
ISWAI Executive Chairman
Amrit Kiran Singh

11
 Duty-free & other retail Duty-free sales by category Dubai
airport
2019
• Retail exempt taxes
Leather
exclusive to international flights 3% Others
14%
maximum allowance Alcohol
Fine 15%
duty-free core of terminal commercial offer Food
4%
40% of passengers make a duty-free Confecti
Perfumes
purchase onery 15%
6%
states determine what can be duty-free Gold
6% s
c he Tobacco
• Importance of non-duty / other retail at

cs
W 7% 12%

troni
7%
news and books

Ele c
gifts and souvenirs
Consmetics
pharmacy 11%

travel
Source: Moodie

12
 Demographics and retail

Millennials
Global airport duty-free sales data Generation Z
2018

Age Footfall Purcha Conve Average

Group rate se rate. rsion spend of
rate. Duty-free
% of % of
buyer Middle-Aged
visitors out buyers % of
of out of buyers Generation X
passengers passeng out of
ers visitors

Millenials 47% 34% 72% $240

Middle-
42% 28% 67% $167 Seniors
Aged
Senior 34% 20% 57% $115

Total 41% 27% 66% $179

Source: Peter Mohn

13
 F&B trends Bespoke “coffee
“classy” “café” and
”baguettes,
breads, / wraps”

• Lower transaction values compared to Trendy

street food-truck”
retail

• But quality, diversity and spend is rising

Re-assuring
• Very important function in delivering global coffee
brand
“sense of place”
”celeb chef” fine-
• Supply-chain challenges dining full service
restaurant
• Strategic use of F&B to maximise dwell-
time in retail/ duty-free
Health /
organic

Global value
fast-food offer

14
 Branding &
maximising sales
This duty-free shop is in which airport?
• Passenger mix drives brand mix

• luxury, premium, mid-market,

budget brands

• Brand adjacencies

• Global, regional & local brands

• How important is “sense of

place”?

• Consumer comfort in “global

brands”

15
 Current & emerging trends
in consumer behaviour

• Growth in pre-planning

• Search for meaningful experiences

• Purchase anytime, anyplace, anywhere

• Digitally comparing prices

• Constantly online / social networks

• Strong influences from peers and social

media

16
 Current & emerging trends
in consumer behaviour

Ray Hernan Airside retail sales per passenger

CEO, ARI (€) at Schiphol
2009 – 2020

• “Dwell time is a huge challenge for us, and we 20

Retail / Duty-free
must ensure that we enrich that time through 16
being much more innovative around our
entertainment offer…. 12
8
• There are lots of distractions now in airports. We
are competing with Wi-Fi, with people on their 4
phones and F&B has certainly upped their game.. 0

20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
20 8
20 9
20
0
1
1
1
1
1
1
1
1
1
1
• So we are competing for that time-poor-

20
passenger, and certainly our own experience is
Source: Schiphol Group Annual Reports
that the amount of time spent in terms of retail
spend, the time in our shops is continuously
declining”

17
 Emerging proposition

Duty-free
Personalised
Exclusive

Limited editions Customised

Exclusive sets Order and Pick-up
Premium / Luxury Loyalty scheme
VIP services

New Ethical
experiences

Trendy / luxury Low carbon foot-print

environment Natural / local
Interaction with Sustainable / recyclable
celebrities
High tech immersive /
interactive
Tasting events
Beauty care lecture

18
 COVID-19
effects % change in sales in Denver Airport
Sept 2020 v Sept 2019

0
• Lower volumes
-10

• Shop / restaurant closures -20

• Reduced demand for Forex -30

-40
• Focus on social distancing and
hygene -50

-60
• Longer dwell-time / Lower
crowds -70

H ent rew 's

r
nd on ut
xp 's
se l M ery
un r et

lo Sn 's
ui s
D ry
C res ts

M za s

in fs
Ba
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Q r es
o
a ald
KF F onu

W ar
Pa cD H
n' e
D & B ark

/ P he
ho er C ge Jer

zn
ki ew
• Fewer physical touch points –

e
r C nv rid &

E
ou ra
etc Try-on
ve De en en
k B

Vo
Source: Denver
Airport

no
ec

Vi
• Accelerating use of digital
p
Br
en
D

19
 Advertising

Quality
• Airports are attractive sites for of space
brands

• 5% of commercial revenues
come from advertising
Quality
Significant at Chinese airports Pax Mix Sales of media
• Use of both static and digital
assets

Exclusiv

20
 Advertising

Large format digital Banners

Source: Phil Weake

Exhibitions

Source: Phil Weake

Source: Phil Weake

21
 Advertising

Experiential Trolleys Interior light boxes

Source: Phil Weake Source: Phil Weake

Source: Phil Weake
Sponsored TV Sponsored internet

Source: Phil Weake Source: Phil Weake

22
 Car parking

Car parking financial performance at

Important source of revenue for airports
– (average 23% of commercial) selected Australian airports
2018-19
Under-developed as a revenue
generator Car Revenue Car
parking per car Profit parking
Very profitable activity revenue park Margin profit as %
as % of space (%) of airport
total ($) profit

Brisbane 12.7 6,314 67% 15%

Melbourne 14.3 5,458 53% 13%

Perth 12.5 2,795 58% 15%

Sydney 8.3 7,351 68% 10%

Source: ACCC

23 23
 Car parking
• O&D passengers
• Residents rather than non-
residents
Distance
from • Business travellers
airport
• Leisure travellers
Drop-off / public
culture transport

Space

Airport Car Pax

Range of parking
products volume
demand and mix

Supply
Car Off-
owner’p / airport & Capex Municipal
income Uber Costs control
Driving
Costs /
risks

24
 Car parking

• Mid-Market • Economy

Medium Stay
Short -stay

Long-stay
• Premium • Business- • Leisure
Leisure passenger
• Business passenger
passenger • Long-distance
• Intermediate to the
• Short-walk to distance to terminal
terminal terminal
• Bus Shuttle
• High price • Bus shuttle every 30 mins
every 15
minutes • Low prices
• Medium price

25
 Car parking business proposition

Pre-booking online

Yield management systems to set prices

Automatic car registration recognition

Multiple car parking products

Car parking as platform for further e-

commerce potential

Multi-channel distribution

26
Any questions?
[email protected]
www.cranfield.ac.uk
T: +44 (0)1234 750111