Airport Shopping 2025
Constant Growth? The Only Winning Retail Location?
Airport Shopping 2025, GDI Study No. 24
Part I of Future Shopping Locations 2025
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Daniel Staib, Erin Hunt
Research Board: David Bosshart, Karin Frick, Chris Luebkeman, Duncan Wilson
GDI Study No. 24
© 2006
31.8.2006 13:29:56 Uhr
Imprint
GDI Study No. 24
Airport Shopping 2025
Author: Daniel Staib, GDI and Erin Hunt, Arup
Research Board:
_GDI: David Bosshart, Karin Frick
_Arup FII: Chris Luebkeman, Duncan Wilson
© GDI & Arup 2006
ISBN 978-3-7184-7033-4
Address for orders
Gottlieb Duttweiler Institute
Langhaldenstrasse 21
CH-8803 Rüschlikon / Zurich
Phone + 41 44 724 61 11
studien@gdi.ch
www.gdi.ch/studies
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Content
Content
Executive Summary
1. Introduction
11
1.2 What is special about airport shopping?
13
1.3 Airport evolution
15
1.4 What’s next? Continuous growth?
21
23
2.1 Overview
24
2.2 Social drivers
28
2.3 Technological drivers
31
2.4 Economic drivers
34
2.5 Environmental drivers
37
2.6 Political drivers
39
3. Four opposing futures
43
3.1 Scenario axies
44
3.2 Technopolis (A)
46
3.3 ChIndia world / Wal*martization (B)
50
3.4 Stay-at-home world (C)
54
3.5 Grey days world (D)
58
3.6 So, where are we heading?
62
4. Theses and strategies for the next twenty years
65
4.1 Will all airports be shopping malls in the future?
66
4.2 Polarisation
67
4.3 Escaping the global trap of sameness
71
4.4 The airport evolves into a destination
73
4.5 The future: Modular and flexible airports
75
5. Annex
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11
1.1 Why airport shopping?
2. Driving forces of change
GDI Study No. 24
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77
5.1 Preface
78
5.2 Project overview and partners
78
5.3 Methodology
79
5.4 Workshop facilitation
81
5.5 Workshop delegates
81
5.6 Sources
82
5.7 Imprint
83
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Executive Summary
Executive Summary
Airport shopping – a success story since the inception of
commercial airports
Airport shopping is a classic example of high-frequency retail. Airports provide a captive audience with known retail demographics and increasingly
large volumes of customers. The exponential growth of customers is naturally driven by the exponential growth in air traffic and passenger numbers.
Sales at airports seem destined to keep on expanding in the future.
The captive clientele has been established due to the rules and regulations
imposed by aviation industry. Check-in times, security checks, gate arrival
times, transferring passengers etc. all define the buffering and movement of
people through a completely secured and closed environment. The 24 hour
nature of global travel also means that people are travelling through the airport machine at all times of their daily cycle: Breakfast, lunch, dinner, travel
goods, health products, grooming services, leisure activities are available at
all times. Airports are becoming like cities, both in size and complexity.
Security is paramount at airports to both the traveller and operator of the
system. There is an increasing expectation that authorities know who is in
the airport and where at all times. A culture of fear is resulting in it being
easier to track customer behaviour in the airport context, which is creating
an increased level of knowledge about the airport retail experience. Airport
authorities know who is there, where they are and, increasingly what they
want.
Thus, airport retailing is special due to the unique environment, the well
defined customer base and the regulations that define airport operations.
The challenge
The challenge of the aviation industry is limitless growth. It is assumed that
there will be more and more of everything everywhere, including travellers
of all kinds. Will the global fleet grow to 35,300 passenger and cargo jets as
projected? As an industry can we assume constant passenger growth? Or will
growing anxieties about terrorism and epidemics reduce passenger numbers
to a few at the very top who can afford luxurious and hyper-secure circumstances? These and other polarised drivers of change are included in the
scenarios constructed and examined by a joint GDI-Arup workshop held
on 23 March 2006 to challenge the conventional wisdom of the future of
airport retailing.
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Executive Summary
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Four scenarios and key drivers that will affect change
Desk research showed that two of the most important issues for the future of
airport retailing were passenger numbers and anonymity. A matrix of four
scenarios was set up to describe possible models of our future world. One
axis defines a continuum in which passenger levels increase at one end and
decrease at the other. The second axis defines the level of anonymity in the
retail experience from completely tracked and known at one end to totally
anonymous transactions and individuals at the other. Each was developed
to a certain degree of plausibility; each could be our future business environment.
strong
steady
increase
A) Technopolis
B) ChIndia
n Globalised economies induce ever more real and virtual business travel
n Technological innovation drive global growth
n Renewable energy sources fully tapped, energy efficiency is key
for success
n Mass migration has necessitated higher levels of security and
identity screening
n Asian influence; a shift in the world’s mental picture of east,
west, north, south, developing and developed
n The environment is in a bad state
n Multiple identities to create a new anonymous
n Increased global homogeneity increase demand for authentic
cultural experiences
State of the world
State of airport and aviation industry
n Air travel is a necessity. Not only flying is highly differentiated
between low cost and premium offers, but so are the retail offers
n Airports run at capacity limits: streamlined passengers flows, Fast
track or no retailing at all
n Personlised retail offers, experience and advertising
total
tagging
and global
digital
avatars
State of the world
n A world governed with and by fear of terrorist attacks and the threat
of another pandemic
n The age of genetic incubation
n Tracking welcomed and encouraged
n Travelling has become a pleasant experience because there is
plenty of room; no more queuing
State of airport and aviation industry
State of airport and aviation industry
n
n
n
n
More airports rather than bigger (point-to-point traffic increases)
Flying is more expensive and a mass affair
Overcongestion of airports: lots of waiting, but little space for retailing
Preorder, inflight and selling to passengers in lines win
anonymity
passenger
personal
C) Stay-at-home
n
n
n
n
numbers
State of the world
Virtual Business travel has 75% of the market
Leisure travel strong, but reduced (fewer, but longer trips)
Heightened security reassures those who do travel
More one-to-one airport «desire based» transactions
individual
personal
identity
control
D) Grey days
State of the world
n Climate change related emissions taxes and the exorbitant cost of
oil have dramatically altered the airline industry
n Lobbyists for privacy have won the day
n Primarily the aged, the wealthy, the extremists who want to
see the world through young eyes
n Global marketplace continues to shape the world economy
State of airport and aviation industry
n Flying has become exclusive... again
n Exclusivity: Super rich in private jets, mass travel in big planes
n Big shift from airside to landside retailing
slow
global
decline
In addition to the known trends that continue to influence the daily business of airport retailing there are a number of macro and wild card drivers
that will probably impact the world and airports (and travel) in the medium to long term. The trends are grouped using a STEEP framework (Social,
Technology, Economic, Environment, Political).
Ageing population – Demographic change is a huge trend everywhere in
the world. In the western world the number of older citizens, shoppers and
travellers will rise dramatically in the next 20 years. The newly retired "baby
boomers" will keep shopping and travelling after retirement age. The current
advances in the health sector will help keep this group going in the future.
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Executive Summary
A high percentage of "baby boomers" are very wealthy. For example, the
"over 50s" hold 80% of Great Britain’s wealth. Travelling is increasingly
recognised as a human right. More physically challenged or handicapped
people travel as services and special products cater for their needs. "Design
for all" is a business opportunity rather than a regulatory requirement.
Other social drivers include: Increased self-indulgence, new family patterns,
growing cultural diversity and an increased culture of gift giving obligation.
The internet of things – Radio Frequency Identification (RFID) is an automatic wireless identification method, which stores data on devices called
RFID tags. An RFID tag can be attached to, or incorporated into, a product,
animal, or person...essentially anything. Such technology is driving an increasingly tracked world where physical and virtual worlds (and your persona in
them) become blurred.
Other technology drivers include: Changes in aircraft technology, people
moving machines (e.g. walkways), personalisation and customisation and
intelligent environments.
Energy resources – The world will not run out of oil soon, but can annual
production keep up with demand? The high oil prices of recent years are
here to stay. For aviation there is no real substitute for petroleum. Efficiency
will happen across the entire aviation industry, but fuel prices could drive up
airfares resulting in fewer passengers.
Other economic drivers include: The rise of Chinese tourism, increased disposable income, unequal distribution of income and the continued rise of
low cost.
Climate change – The big challenge for aviation is global warming (CO2
emissions). The share emitted by aviation is 3% today but growing fast.
High-altitude emissions appear to be more harmful (Economist 2006), and
as concern about global warming is growing, aviation fuel could be taxed to
limit air traffic.
Other environment drivers include: Fewer or no new airports, carbon trading and modular expansion / refurbishment plans.
Immigration / security / terrorism – Security will become the airports’ most
central concern due to terrorism and potential health hazards. Regulations
will affect passenger numbers, as well as operations within the airport retail
environment.
Other political drivers include: Regional vs. national development, taxation,
public vs. privately held airports and the creation of “airport states”.
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Executive Summary
The central challenges to airport retailing in the next 20 years
These drivers of change raise a series of potential challenges that may be
faced by the airport retail community. Key themes are listed below.
Polarisation of passenger and customer profiles – The premium and discount segments of the aviation market may continue to grow over-proportionally in coming years. More of the very affluent will travel the world as
incomes continue to polarise on both a national and global scale. Private
jets, regular business class only, long-distance flight schedules and, at the
other end of the scale, low cost, no-frills, short and medium distance travel
will continue to increase.
Polarisation of traffic – Globalisation, liberalisation and privatisation continue to drive the consolidation of the airport and aviation industry in coming
years. We have already seen the consolidation of flag carriers beyond national boundaries. This will have an impact on the structure of traffic. Long
distance traffic will be consolidated into very large hubs, while smaller hub
airports will become less economically important. Smaller, specialised highend airports close to preferred destinations will divert a slice of the ultrawealthy from large-hub connections. Airports and their shopping will have
to adjust to this shift and attract other customers when passenger numbers
are no longer growing.
Global hubs as the ultimate shopping malls – The shopping areas within
these airport cities will become the shopping areas of the world. Major brands
will build flagship stores at these hubs. As passenger numbers increase, these
hubs will have to fight congestion on their shopping areas. Passenger / shoppers will get lost while shopping. Thus, the management of customer flows
emerges as the central issue for maintaining both a streamlined and pleasant
shopping experience and the operating efficiency of the hub. Shopping evolves continuously from today. Continuous growth, leading edge exclusivity
and product range will be the key.
Specialist airports – Focus and specialisation will be all-important for the
smaller airports: Focussing on a specific customer need and setting up the
corresponding shopping environment. The entire airport shopping landscape will become more driven by these specialised and probably very highend offers (gifts, but also personal luxury items). Examples include: the
super-luxurious airport experience, the no-frills airport shopping malls or
the fast, comfortable, convenient frequent fliers airport.
The global trap of sameness – Airport shopping around the world is the
same everywhere, regardless of airport location. One-time travellers want
something different than frequent travellers. Putting the thrill back into airport shopping will be the constant challenge of the global market place. Every
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Executive Summary
successful new retail format will race around the world at jet speed. This will
make it more difficult to escaping the trap of sameness in future. But some
of the items travellers buy will be just the same. Here, the best response is to
offer the best-selling global travel-related products.
The airport as a destination – The airport is a destination rather than transit point. The role played by services in airport shopping will dramatically
increase. The relatively new airports in Asia and the Middle East demonstrate this trend. Large scale airports are becoming destinations themselves,
the leisure hub Dubai is inseparably connected to the airport feeding customers
into this tourism hot spot.
Smaller scale destination concepts – Airports become more like destinations on a smaller scale through the clever introduction of a service or a
very specific and more exclusive focus on retailing. For example, health and
beauty services, personal or collective events such as weddings and business
collaboration environments.
Future focus
Constant growth of airline traffic and passenger numbers is the official future of the industry but should not be taken for granted. Many drivers exist
that could derail predicted growth patterns. So which is the most likely scenario for 2025? The qualitative results from the study are shown in the figure
below.
Which is the most likely
scenario for 2025?
Number of votes of the
workshop delegates
strong
steady
13 09
06 01
numbers
increase
personal
anonymity
individual
personal
identity
control
passenger
total
tagging
and global
digital
avatars
slow
global
decline
Source: Arup & GDI-Workshop
Airport Retailing 2025
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The technology driven optimistic view of an expanding industry was most
popular, but it is important to note the blurred boundaries between the quadrants. The ideas expressed in each quadrant are not exclusive to that category.
Whether airport retailing in the future is about selling ever larger volumes
of the same goods as today or implementing dynamic shopping strategies to
reflect waves of customers arriving from different destinations, customers'
expectations of products and services in airport retailing will continue to
increase.
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