As they reduce their dependency on airline fees in favour of non-aeronautical sources of revenue, airports are becoming increasingly reliant on retail and F&B sales to boost their balance sheets.
However, to ensure that they continue to reap the rewards of this strategically important source of income in the future, airports will need to strive to improve their performance and optimise the manner in which they manage their concessions.
With this in mind, it is surprising to learn that most airports still don’t do their own commercial research and/or leave the management of retail operations up to concessionaires.
The lack of research and knowledge on passenger needs is reflected by the current opinion passengers have of airport retail. Satisfaction levels with airport F&B and shopping ranked 29th and 30th respectively out of the 34 service items covered in ACI’s 2011 Airport Service Quality (ASQ) Survey.
Furthermore, the survey results indicate that on average only 70% of passengers are even aware of an airport’s commercial outlets (restaurants & shops).
So there is still room for improvement and airports wanting to maximise the potential of their retail offering need to implement research in order to better understand who their passengers are, what they want and how to provide it to them as efficiently as possible.
ASQ Retail, the new commercial benchmark offered as part of the Airport Service Quality initiative, was launched in 2012 to help airports answer these questions.
Currently Dubai, Delhi, Oslo, Montréal–Trudeau, Tampa and nine other airports from Europe, Asia and North America take part. ASQ Retail aims to help airports improve their commercial offering by benchmarking passenger satisfaction levels, sales performance, KPIs and consumer purchasing patterns.
So after one year, what has ASQ Retail taught us about how passengers are shopping at airports worldwide, and how are airports using this knowledge to improve their retail offering?
Here are four key findings that will help you improve the performance of your commercial outlets:
1. Passengers want more choice, not necessarily more service
The first step in improving airport retail operations is having a strong understanding of what your passengers want from the retail offering at your airport.
Passengers expect more from airport retail and are no longer satisfied with standard offerings. Satisfaction data from ASQ Retail shows that the choices of shops/restaurants as well as the choice of products, are the areas where airports taking part in the programme receive their lowest satisfaction scores.
In addition, choice of shops and products are the areas that have the highest impact on overall satisfaction with the airport retail. So, finding the right mix of brands and products to offer is one of the main challenges facing airport retail managers.
It is made even more difficult by the fact that most airports are not shopping malls and only have a limited number of areas to put stores.
Service, on the other hand is not an issue, since friendliness of staff is the area in which passengers are most satisfied.
The best airports try to improve the perception of choice through the use of a central commercial area where passengers can instantly see all shops and brands available.
And they are increasingly diversifying the mix of brands they provide so as to not only offer high end luxury brands but also high street brands that have a higher appeal to their average passenger, increasing the perception of choice.
2. Most passengers don’t view the airport as a place to shop
When asked, only 35% of passengers say they came to the airport with the intention to purchase F&B, 14% non-duty free retail and 25% duty free retail.
Increasing this proportion should be one of the key goals for airports since the potential benefits of doing so are quite important.
Indeed, over 90% of passengers who came to the airport
with the intention to buy F&B end up purchasing, 70% buy non-duty free retail and 60% buy duty free. On the other hand, only 30% of the passengers with no intention of buying F&B change their mind and consume, and this figure drops to 10% for retail (both duty paid and duty free).
So it is much more complicated to convince a passenger to buy than it is to sell to those who have already decided to buy and are easy targets for an airport to sell to.
These figures suggest that airports wishing to increase their retail/F&B sales should focus on two main areas. Firstly, on increasing communication with passengers before they start their journey to ensure they are informed of the airport’s retail offering.
Examples of this type of upstream communication include the use of shopping guides on airport websites as well as newsletters and social media to inform passengers of new retail developments and provide them with very specific and targeted offers.
Finally, by improving the choice of brands offered as discussed in point one, airports will be able to improve their conversion rates. This will not only help airports become more effective at convincing passengers who had no intention of buying to purchase something, but also will help them sell to the 40% of passengers who intended to buy duty free but ended up leaving empty handed!
3. To increase sales, increase footfall in outlets
Once you have convinced passengers that they should buy something at the airport the key to success is to actually get them into the shops. Globally, 50% of passengers who enter a retail outlet purchase something, and this figure rises to over 90% of passengers entering a restaurant.
The walk-through duty free store is arguably the most visible way of doing this, but airports are also exploring other means such as ensuring that must-buy products are placed close to security (so that passengers complete their pre-planned purchases as quickly as possible) or positioning last minute offerings near gates to intercept passengers who spend a minimum of time airside.
Ensuring that your airport has effective processes also has a direct influence on the number of passengers entering shops. If passengers are stuck at check-in or immigration, for example, they are very unlikely to have the time to visit the airport retail.
Keeping passengers informed by communicating the distances between commercial areas and gates and by including FIDS in outlets are also helping airports maximise the time passengers spend in shops.
4. Passengers need to be able to find products quickly
Getting passengers into the shops does not necessarily guarantee that you will be able to sell them something. Most passengers only have a limited amount of time to shop (20 minutes on average), and so need to be able to find the product they are looking for quickly or they will simply not make the purchase.
Indeed, over 30% of passengers who had planned to buy something at the airport but ended up not doing so, claimed that the inability to find what they wanted as the main reason for not making a purchase.
To overcome this difficulty airports are working to implement better communication to inform passengers of available products before they travel, making sure key products are located near store entrances and are clearly visible as well as ensuring sales personnel are on hand to quickly guide passengers to the product they are looking for.
Taken together, these four findings represent the main levers airports have to increase commercial sales.
Working with them, however, remains a complex process and focusing on one or the other may result in fleeting success, but will not produce a steady increase in sales performance.
Airports that succeed in improving their retail performance year-over-year are likely to be those that are most systematic in identifying and implementing best practice through regular use of customer research and benchmarking with competitors around the world.