How retailers are using travel hubs to get ahead.

By Robin Bevan, Director of Locations & Analytics at Javelin Group.

Robin_BevanWith high footfall from often affluent, international and influential travellers, airports and other major travel hubs provide a unique environment for retailers and a useful test bed for trialling new concepts and formats, and reaching a new audience of overseas consumers.

Airports, for example, deliver the highest sales densities of any shopping environment due to strong footfall from an international, cash-rich, captive audience, who are time-poor and likely to buy on impulse.

Testing new concepts and reaching a new international audience through major travel hubs

A trial of a new concept or format at an airport can rapidly deliver useful insight to the retailer, and learnings can be applied to the high street and across the store estate, especially as retailers are now more likely to explore different store formats and sizes, from large flagships to technology-led convenience stores.

For retailers with international aspirations, an airport store can build brand awareness, drive website traffic, as well as test the appetite of highly valuable overseas customers. The insight gained can be fed into future expansion decisions.

From our work on commercial retail planning for major airports and travel hubs across Europe, we have seen a number of retailers exploring new formats, concepts and digital opportunities, as well as embracing the international audience. The following ones attracted our attention.

Dixons is using its Dixons Travel format at UK airports to test new store concepts such as flexible point of sale, greater digital signage, and an increase in free flowing use of space alongside a focused and edited range, all supported by greater integration to online sales and services. The time poor, impulse driven environment allows Dixons to test a more customer-, convenience- and omnichannel-centric approach that can also be applied to the wider estate.

John Lewis has recently opened its first airport store in Heathrow’s Terminal Two with a 3,600 sq ft store, which is considerably smaller than the typical full line 132,000 sq ft department store. The format has a highly edited range of fashion, homewares, gifts and seasonal, and provides a showcase to the full range which is available via in-store ordering, click & collect, and customer services.

The new store will help to raise brand awareness among the 20 million passengers travelling through Terminal Two each year, which could lead to further online sales and potentially, in the future, international expansion. In addition, the smaller concept could provide the retailer with new high street store opportunities across the UK, based on edited ranges supported by online services.

To continue the expansion into travel hubs, John Lewis is also opening a 3,000 sq ft convenience store in St Pancras station, which will offer a highly edited range and click & collect services for commuters, and act as a test for a new convenience format. And again, the St Pancras location will offer an opportunity to raise awareness among international shoppers.

Tesco used Gatwick Airport to trial interactive digital shopping walls to allow people to scan goods that are then delivered to their home at a convenient pre-arranged time. Tesco used the experience to test how technology can further transform shopping.

The Tesco trial shows that retailers are not only testing products ranges and formats in airports but also using technology savvy travellers to evolve their omnichannel reach, using the mobile phone to fuse together an omnichannel retail experience.

Enhancing the passenger experience through use of the mobile phone

The mobile phone is starting to play a key role in creating an enhanced passenger experience in airports and travel hubs, and is responsible for bringing the passenger and the commercial offer together. App-based platforms that converge geo-location with targeted time specific messaging and mobile payment can help the passenger take advantage of the commercial offer whilst also being provided with information on their journey and way-finding.

St Pancras International, for example, has recognised this with its recent installation of very high speed Wi-Fi, just one of a series of digital innovations planned for the station. An app offering consumers special offers and local information is also planned for the near future.

In an airport, a mobile app can not only guide the passenger through the airport processes (parking, check-in, security, flight and gate information) but provides a platform for retail tenants to drive footfall into stores by sending targeted promotions to passengers at the right place, at the right time in their customer journey.

Combining geo-location technology with customer information to provide targeted offers alongside travel information

For example, information that is collated during sign-up to the app alongside geo-location technology can allow the airport and retailers to target, say, women aged 25-44 with a perfume offer as they pass within a couple of metres of the Duty Free store. The app can also provide a mobile payment option on the phone to speed up the payment process.

One example currently deployed is Lufthansa’s ‘Miles & More’ app, which allows selected third party brands to send messages to Lufthansa’s affluent passenger base. Customers are prompted to “earn/redeem airline miles” with participating retailers. The scheme now has around 400,000 users (launched 2010), or 14% of all Miles & More members. Around 12 million targeted promotional messages are delivered per annum, achieving a 30% click-through with a further 30% of click-throughs redeemed.

Such app promotions can be run by airports for the benefit of its retailers who upload targeted promotions based on set rules, this can either be financed by the marketing budget or a closed loop on the promotion can allow for the airport to revenue-share with retailers. Retailers also benefit from the fact that passengers who take up the promotion often buy other items in the same store.

A mobile app providing a targeted mix of information and offers delivers a seamless customer journey to the benefit of the passenger, airline or travel operator, the travel hub, and the retailers.

First published in: Essential Retail

For further information, please contact Robin Bevan.

Find out more about our Airport & Travel Retail service line.