Airport retail has a long runway — for the right brands

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Originally published on Retail Dive by Lara Ewen

If airport retail continues to develop at the breakneck pace it’s currently keeping, airport shopping corridors may become tourist destinations in their own right.

According to The Washington Post and the Airport Experience News Fact Book, U.S. travelers in 2017 spent more than $1.7 billion at airports’ newsstand and travel convenience stores. And a report released in 2017 by GlobalData estimated that spending in airports could reach a global total of $49 billion by 2021, representing a 27% increase over 2016 numbers.

It’s not just about dollars, either. A recent Supply Chain Dive article noted that North American travelers wait an average of 90 minutes between airport security and boarding at medium to large hubs. Furthermore, “Between 76% and 90% of concession space is after the security lines, in the “airside” part of the airport (versus “landside” before security).”

Then there’s the uptick in passengers, all of whom are potential retail customers. The International Air Transport Association (IATA) reported 3.8 billion global air travelers in 2016. That number is expected to double to almost 7.2 billion passengers by 2035. It’s not surprising, then, that the retail race to get in front of this captive, experience-hungry market is fiercer than ever.

How airport retail is changing

Over the past decade, the number of companies vying for square footage in the airport retail arena has increased exponentially, which has in turn made the space extraordinarily competitive, according to Brian Levin, VP of sales and co-founder of Swyft, an automation technology company that works with brands such as Benefit, Dollar Shave Club, Best Buy, and Uniqlo.

Shopping corridors have also been reconfigured, which has impacted the space. Levin said that while food, retail and beverage were always a focus, airports have been reconfigured to essentially force consumers to walk directly through concessions on their path through the airport.

“Government officials are now seeing the revenue that can be generated in airports, but also, it’s not necessarily what’s best for the customers,” he said. “[An airport is] the last time a city or state can push its desires and dreams on travellers, but they still need to cater to the traveling customer. And there’s public data around this. A great example is that some airports are looking at how they can retail CBD products. It may embrace the city’s culture and who they are, but it’s not always best for the customer. Or [an airport] may say, ‘We want a vegan concept’ instead of ‘a food and beverage concept that caters to vegans.’ But that may not cater to the larger public.”

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