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“Creating an effective retail experience”

8-10 November 2010 Riga, Latvia. “Creating an effective retail experience”. “Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”. Alan Bork Airport Retail Consultant High Street retailer Copenhagen Airport (privatized in 1994)

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“Creating an effective retail experience”

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  1. 8-10 November 2010 Riga, Latvia “Creating an effective retail experience” “Innovative design and constant reinvention are the two key ingredients to turn travellers into spenders”

  2. Alan Bork • Airport Retail Consultant • High Street retailer • Copenhagen 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

  3. “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

  4. An effective retail experience 4 elements The dynamics of the Retail Business Getting the Timing Right Terminal Planning and Space Allocation Conceptual Planning and Retail Lay-Out

  5. What are the factors driving retail spending? The “formula” for SPEND PER PASSENGER Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax

  6. What are the factors driving retail spending? The “formula” for SPEND PER PASSENGER Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax #pax Spending Money? #pax= How Much Money? Per pax

  7. What are the factors driving retail spending? The “formula” for SPEND PER PASSENGER Passengers x Penetration (%) x Average Transaction Value (€) = Spend per pax • Volume • Nationality • Destination • Demographics • Travel purpose AIRPORT • .....Footfall (how many in retail zone?) • Terminal flows • Location • Shop Fronts • Signage & communication • .....Conversion (how many actually spend money?) • Accessability • Product offer • Pricing • In-store promotions AIRPORT OPERATOR AIRPORT & OPERATOR • Transaction Value (how much money do they spend?) • Attraction of product & price (Value For Money) • Tax regulations & allowances • Intra-EU vs. Non-EU

  8. Understanding the business dynamics 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

  9. Understanding the business dynamics The business model and the players Landlord = Airport Supplier / Brand Retail operator Food & beverage operator

  10. Understanding the business dynamics The business model and the players Landlord = Airport Supplier / Brand Retail operator Food & beverage operator The airport “owns” the customer…..this is very much setting the agenda

  11. 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

  12. Understanding the business dynamics The role of the airport…. quotation from article in Travel Magazine

  13. Understanding the business dynamics The operator's success criteria… 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 • 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 Common interest, or ..conflict of interest

  14. Getting the timing right The passenger mindset How long are the queues? When is my flight leaving? Where is my gate? Do I have time for shopping?

  15. Getting the timing right Maximising the passenger journey Maximum Passenger Receptiveness - The excitement / stress factor A I R P O R T E X P E R I E N C E Window of opportunity Excitement Stress Airside Dwell Time Leaving Office or home Security Check TIME Boarding Check In Parking

  16. Getting the timing right Maximising the passenger journey Maximum Passenger Receptiveness - The excitement / stress factor A I R P O R T E X P E R I E N C E Airside Dwell Time Leaving Office or home Security Check TIME Boarding Check In Parking

  17. Getting the timing right Maximising the passenger journey Maximum Passenger Receptiveness - The excitement / stress factor A I R P O R T E X P E R I E N C E Window of opportunity Excitement Stress Airside Dwell Time Leaving Office or home Security Check TIME Boarding Check In Parking

  18. Conceptual planning and Retail Lay-Out Mapping the RETAIL Low Market Mid Market Top end Market Price pointing Appeal High Medium Low

  19. Conceptual planning and Retail Lay-Out Mapping FOOD & BEVERAGE Short Medium Long Price pointing Dwell time High Medium Low

  20. Terminal Planning & Space Allocation Terminal footprint Pax out Objective: to maximise footfall Pax in Pax out

  21. Terminal Planning & Space Allocation Terminal footprint Pax out Objective: to maximise footfall 100% footfall Walk Through Pax in 5 simple principles: Retail before F&B Lounges after commercial Maximise exposure Clear overview Simple flows Retail Food & Beverage Pax out Seating Lounges

  22. Different airports deliver different spend levels Retail efficiency: Frankfurt versus London Heathrow 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

  23. Different airports deliver different spend levels Airside sales per departing pax VS. Retail/F&B space per million pax LHR €24 1.400 M2 FRA €8 850M2

  24. Different airports deliver different spend levels Frankfurt T1 and T2 Landside Airside 1200M

  25. Different airports deliver different spend levels Heathrow T3 Retail F & B Services

  26. Different airports deliver different spend levels Heathrow T5 Upper Level Departures Retail F & B Lounges Services

  27. Different airports deliver different spend levels Heathrow T5 - lower level gate areas Retail F & B Services

  28. Heathrow T3

  29. Heathrow T3 – orientation zone

  30. Heathrow T3 – dynamic flows

  31. Heathrow T3 – clever location of toilets

  32. Frankfurt – duty free & travel value

  33. Frankfurt – branded luxury shop

  34. Frankfurt

  35. Frankfurt

  36. Thank you

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