Airport Retailing - Europe - June 2008

Abstract

The volume of air travel has grown at a strong pace in recent years, recovering from the impact of 9/11, and this has benefited retailers operating in airports. In Europe, air passenger numbers have been rising at around 4-5% per annum although this rate accelerated to 6.5% in 2007. The opening up of Eastern Europe has been a factor in this growth as has the continuing rise in popularity of low-cost carriers like Ryanair and easyJet.

This does not mean necessarily that airport retailers will continue to benefit from rising passenger numbers. Current economic uncertainty and the high price of aviation fuel feeding through into higher ticket prices/surcharges, suggests that travellers will be watching the pennies on their trips abroad and hence may decide to skip buying things at airports.

Increased security in the wake of 9/11 has led to the need for passengers to spend more time at airports. The airport environment is a vacuum of boredom, where we are vulnerable to spending in a bid to kill time in the absence of other options or distractions. However, the basic retail principle remains that if there is little worth buying then little will be bought.

A great deal of airport development is underway across Europe in order to accommodate continually rising air passenger numbers. Development of new terminal facilities is enabling airport operators to offer more retail/catering facilities. Consumers at airports are looking for something different and special at airports and the coming years will reveal whether airport operators are able to respond to this demand with innovative retail concepts that inform and entertain as well as sell merchandise.

Key themes of the report:

• The value of airport retail sales across Europe is growing faster than all retail sales in the continent. However, much of the rapid growth of airport retail sales has come from new retail space opening at previously under-provided European airports. This is the opposite to the UK where most airports offer little that is not available on every high street. Hence airport sales are growing more slowly than the spending of both inbound and outbound air travellers - it is in effect losing share. Airside retail offers need to become more sophisticated with wider product ranges, better merchandising and improved service levels to actively sell products.
• Consumers are tending to be older, wiser and more affluent. They are flying more helped by the growth of low-cost airlines and hence are spending more time in airports. This should make airports one of the most exciting areas in European retail.
• This report looks at the drivers of airport retail - trends in passenger number growth and their spending, the duty-free market, airport operators and retailers and their plans for the future.