Guest Post: How technology is ensuring airports are the shopping malls of the future

Guest Post: How technology is ensuring airports are the shopping malls of the future

By Bojan Jokic, co-founder and chief executive of Epteca.

In the latter half of the 20th century, the world experienced a love affair with enclosed shopping malls and shopping centres, which popped up all over the United States and Europe.


The shopping mall was the mecca of baby boomer consumerism; a symbol as much as a place to shop, as can be seen in any number of teen movies from decades past.


But these days, more and more malls are either sitting empty or shutting their doors.


No new fully-enclosed mall has been in opened the United States since 2006, and experts predict that as many as half of all existing malls will shut down in the next ten years.


In China, one of the largest shopping malls in the world sits mostly empty, with a vacancy rate near 99% since it opened in 2005.


Even as malls and shopping centres across America, the UK, and Europe shut their doors or convert into mixed-use spaces, however, there is one place where the retail opportunities that were once offered in shopping malls are not only still present, but growing every day: airports.


Airports are the new malls, and offer retailers new opportunities to reach audiences that they might otherwise miss. Luxottica, an Italian maker of sunglasses, refers to airport sales as “the Formula 1 of retail”.


According to an article in the New York Times, retailers say that sales per square foot are higher at airports than they are in street locations or shopping malls and retailing is the second-biggest source of revenue for the airports, and the leading source for London’s Heathrow Airport.


Sales at airports are expected to increase by 73% from 2013 to 2019, predicts Verdict Retail. According to Datamonitor Retail, the global airport retail market will grow by more than 60% to worth US$44.1 billion by end of 2015.


With global airport retail sales set to surge over the next six years there are huge opportunities for retailers to grow their presence.


The NET Factor (No Extra Time) and Dwell Time Opportunity


Airport retail is expanding from magazines and souvenirs to luxury goods and brand experiences as retailers take advantage of the captive audiences they have during that NET (No Extra Time) between security, boarding and layovers.


An increase in travellers has resulted in more and more people subject to delays and layovers, leaving them bored and wandering the concourse.


According to a DKMA report, passengers who spend more than 60 minutes at the airport are 33% more likely to buy food and beverages, 27% more likely to buy retail and 13% more likely to buy duty free than passengers who spend fewer than 60 minutes at the airport. This is extremely important, especially for leisure travellers.


Not too long ago, retail space was an afterthought in the airport design. Over the last decade, the retail trend has accelerated and retail space is in high demand, so airports are including shopper-centric elements including attractive concourse layouts and storage facilities.


Airports with modern retail management and configuration earn 80% or more of their retail food and beverage income airside.


The most common retail conveniences available to travellers at airports include automated retail, carts and kiosks, duty free shops, fast food, news and gifts, sit down bars, specialty coffee and specialty retail outlets. 


Design the path from customer check-in to boarding as a shopping experience


Airports may put potential shoppers right in the midst of stores and restaurants, but there are other considerations when it comes to capturing the dollars of today’s travellers to win them over.


Unlike malls, airports already have a built-in user base, and a captive audience. Once you’ve gone through security, you’re stuck with whatever services, amenities, and retail options that the airport provides.


Ensuring the processes go smoothly and do not eat up too much of the time passengers have at the airport and increasing dwell time as much as possible has a big impact on the retail potential.


There has been a direct correlation between the best rated airports and those offering the best shopping experience, making more money derived from retailing activities.


If passengers are satisfied with an airport experience they are more likely to view it as part of their trip and change their travel habits to spend more time there, the survey showed.


Like any other industry, airports are seeing mobile devices becoming the most important digital gateway. Passengers can now navigate and shop through airports on the go, to make those tight connections.


GPS technology, iBeacons, and services like Yelp, finding what you’re looking for is no longer the guessing game it once was, so it’s important to design an engaging shopping experience at the airport that takes advantage of every opportunity.


Top brands like Starbucks and American Airlines have already heavily invested, and are seeing the power and benefits of proximity-based marketing.


With major players pushing the technology, we can soon expect to see more features added, such as on-the-spot mobile payments, making purchasing even easier for customers and driving more sales for airport businesses.


Travellers have a spending mindset


The experience of traveling inspires people to shop and spend money. For leisure travellers, it is all about creating memories or milestone experiences, so they may be in the mood to splurge on items they wouldn’t usually buy.


For business travellers, it is about convenience of an expense account or the opportunity to shop, which is something they may not have that time to do on a regular basis.


To reap the benefits of this expanding traveller population, airports need to provide the type of experience that puts passengers in the mood to shop. In short they need to focus on making passengers happy.


One of the big selling points of malls was that everything you needed was in one spot. There was no need to drive around looking for a shoe store, then an electronics store, then find a restaurant to have lunch.


Many airports are now focusing on being more creative in maximizing non-aeronautical revenue opportunities and more proactive in ensuring a welcoming experience with things like short check-in lanes, a fast, smooth security process and ease of navigation.


Improving dwell time and offering broader choice and value are among the keys to driving airport non-aeronautical revenue, according to Swiss airport market research firm DKMA.


The survey showed that an airport’s most satisfied passengers are twice as likely to shop and spend 7% more than the average on retail and 10% more on duty free.


The retail opportunity in travel is massive and surging. 1.087 billion people travelled internationally in 2013, equivalent to approximately 15% of the global population, with Europe as the most popular region for global tourism, attracting over 52% of all international tourists.


Tourists contributed an estimated $1159 billion to various local economies, purchasing accommodation, food and drink, local transport, entertainment and shopping in destination countries (UNWTO).


There’s an old saying that you can lead a horse to water, but you can’t make him drink. Airports may already have brought the customers to the storefronts and restaurants, but getting them to buy requires an approach that appeals to their shopping habits and meets their changing needs.


The best way for brands to capitalise on the strong correlation between travel and retail opportunities is to leverage the plethora of data to engage with consumers using more relevant communications.


The communications must be inviting, timely and contextualized for the traveller profile, preferences, location, destination points, history, devices and yes, even the weather.

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