Airports are currently offering a $38 billion bright spot for retailers facing an otherwise harsh market environment, the latest report from GlobalData reveals.
GlobalData’s report shows that spending in airports hit $38 billion globally in 2016 and is set to grow by 27 per cent to $49 billion by 2021.
“Apart from the growing number of air travelers, increased security over recent years delivers a constantly changing captive audience for airside retailers, which claim 83 per cent of all spending in airports,’’ said Maureen Hinton, group research director at Global Data Retail. “This audience has time to kill and, especially when on holiday, is in the mood to spend.”
According to GlobalData, this has given rise to the rapid development of retail space at airports as grateful retailers, who are seeing customers forsake high street shops for online and leisure experiences, welcome the opportunity to get in front of willing customers again.
Hinton said airports appreciate the extra revenue and are willing to invest in creating a more inviting space for travelers.
“For example, in Singapore’s Changi airport you can catch a movie, browse new art, play games, pamper yourself in a spa and entertain your kids – the airport equivalent of a modern shopping center,” she said.
Asia-Pacific airports generated the most spending in 2016, taking $14.8 billion through their tills, the report shows. Chinese travelers were a particular boon to this market, as they seized the opportunity to buy duty free luxury goods.
Europe, meanwhile, ranks second on spending, hitting $10.7 billion in 2016. One benefit of the UK’s Brexit decision was the subsequent increase in tourists to the country, who were attracted by the low value of the pound.
GlobalData stated even the US, which has traditionally offered a poor shopping experience at airports, is cashing in and developing new retail spaces and offers. However, it is unfortunate that this coincides with President Trump’s attempts to curb immigration, which is making regular travelers think twice about visiting the country.
Speaking to Inside Retail, Glyn Williams, GM retail at Sydney Airport, said at a local level, its improvements program that includes the transformation of its retail and dining portfolio, has created a compelling value proposition for global brands to establish a presence at the busy terminal.
“The strong growth we’ve experienced in aviation, coupled with the diverse retail mix we’ve secured, means that we’re delivering a world-class retail experience for customers and setting the standard for airport retail in Australia,” he said.
The terminal’s transformation, with a dedicated fashion precinct, has helped increase traveller spending through its redefined luxury offer, according to Sydney Airport. Ten of the 13 outlets are now open in the new T1 terminal which now includes Tiffany & Co, Kate Spade, Burberry, Max Mara, Hugo Boss and Michael Kors.
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.
