SRR Exclusive-Airport Retail: Business as Usual, or Better!

by Bernadette Starzee

For liquids-only retailers like Duty Free shops, it may be the end of an era, but for many others, it's business as usual—or better, thanks to longer dwell times. Airport retailing was flying high, with an endless stream of high-end customers hanging around post-security with nothing to do but shop and eat, when along came last Thursday's shock to the system. All carry-on liquids were banned from flights after it was learned that terrorists in Britain planned to blow up planes with liquid explosives. Overnight, new Transportation Security Administration (TSA) rules were imposed that had a dramatic effect on retailers who sell products like alcohol, cosmetics and cologne. But the vast majority of airport retailers were unaffected, and even those who were, didn't let the new rules get them down. Instead, they adapted. Lush, an in-line skincare boutique in Orlando International Airport, began offering free delivery to customers' homes Thursday afternoon.

Sales rose almost immediately, with the average customer spending $48, up from $33, said Kelly Price, vice president of airport management for Westfield Concession Management, which runs retail operations at eight airports, including Orlando. Westfield has specialty retail programs at four airports, and according to Price, only one specialty tenant has been challenged by the new security measures. Attitude Line, which sells Dead Sea lotions at Newark International Airport and Washington Dulles International Airport, has been given the option to close if necessary (they're weighing their options now). "But a lot of our other retailers have benefited from passengers spending more time at the airports," said Price. Bruce McCorvey owns Better Vision Group, which sells reading glasses on three airport carts: two at Ronald Reagan Washington National Airport and one at Washington Dulles International Airport. "I can't say I've been adversely affected," he said.

In fact, Better Vision Group plans to go ahead with its plan to open a fourth cart at George Bush Intercontinental Airport/Houston in October. The retailer's sole setback was that it had to stop selling a liquid spray cleaners for glasses, which retailed for $4.99 to $6.99. "People loved it," said McCorvey of the product. But the cleaner represented a very small portion of the retailer's sales, with only about four units sold per day. In contrast, Better Vision Group's eyeglasses sales exceeded $350,000 in its top airport location in 2005. In the days following the new security measures, In Motion Entertainment, which rents DVD players and DVDs for in-flight usage and provides other entertainment products, has seen a positive bump in business, buoyed by the fact that 39 of its 51 airport stores are located post-security.

"Friday was our biggest day of the year, and we had our best Saturday and Sunday ever," said Eden Goldberg, vice president of marketing and business development for the company. Airport security personnel have "done a good job of funneling passengers through security and there's more dwell time once they're past security." Sales have been up, Goldberg adds, because In Motion provides "an entertainment oasis in an otherwise humdrum experience." However, In Motion's 12 stores located in front of security screening areas have not fared as well, because travelers have been focused solely on getting through security rather than renting a movie for the flight, Goldberg said.

But the dip in sales at the pre-security locations has been more than offset by the success of the others post-security, he added. Bico Pacific, the North American arm of Bico Australia, remains undeterred from its plans to open 10 US post-security airport locations within the next two years to sell Bico jewelry, a pewter and silver line featuring symbols that have special meanings in different cultures. Company president Joseph Nahum says his product can only benefit from the new climate, with its increased dwell times. "It takes more time to buy jewelry than other gifts," he said. "Since our items have special meaning, it takes even longer for people to shop for them. I believe the concept will benefit from people coming to the airport earlier and spending more time past security."