Boom in airport retail spend and design

There has been a marked growth in retail spending at airports, according to research published this week. This trend is set to continue, and offers potential for global design opportunities in retail spaces, which will grow concurrently.

The data, published by Verdict Research, shows that, despite a downturn in consumer confidence, retail spending in airports has continued to grow. The report forecasts an 11 per cent rise by the end of 2008 to $30bn (£16bn).

Nick Gladding, lead analyst for the study at Verdict, says, ‘I’m in no doubt that airport operators are keen to increase retail space. There is limited growth determined by passenger trends; the income stems from fees from airlines. Retail can expand, though. Airport operators look at other airports and build retail space to attract similar aspirational retailers.’

The results suggest a global year-on-year growth in retail spending at airports, which globally remains unaffected by the slowdown in the UK and North America. Gladding adds, ‘The long-term drives point to regular and frequent air travel.’

The predictions were made by looking at airport passenger forecasts of spending per head, broken down against information on different regions’ growth rates.

Portland Design is currently involved in two airport retail projects in India, at Hyderabad and Bangalore, highlighting another trend in the results – growth in emerging economies. European projects include Bologna, Hamburg and Charles de Gaulle airports.

Alan Thompson, director of developments at Portland Design, says, ‘There are loads of opportunities for airport retail developments. Increased security means people are in airports longer, and spend their time and money when they’re airside. So from a design point of view, understanding the customer profile is what is needed.’

Thompson sees the key to designing successful retail space at the research stage. He says, ‘Airport operators need to be made more aware of the marketplace, and considered research is required on customer-flow.’

Commenting on the forecast for increased retail spending – and retail space – in emerging economies, Thompson says, ‘In India, two airports have been built this year. Airports are being built to facilitate the flow. Local people are understanding brands, too. There are opportunities for design layout and signage out there.’ While in the UK there may be fewer cheap domestic flights, fewer passengers and, therefore, fewer design opportunities in airport retail, Thompson is sure that ‘there will [still] be great opportunities in UK train stations’.

The Design Solution is currently involved with several airport retail projects. Robbie Gill, the consultancy’s managing director, says, ‘We’ve been working on Barcelona, Heathrow, Mumbai and Delhi.’ He agrees with Verdict’s forecast and dismisses the view that airport retail space developments will be threatened by people taking fewer cheap flights in the future.

‘They’re long-term projects,’ he says. ‘In terms of opportunities, there is demand to fund more commercial space – it’s actually getting harder and harder to find space in existing airports and the only way to satisfy growth is expansion.’

At the moment, the market for airport retail is dominated by a few consultancies, Gill concedes. ‘Worldwide, there aren’t that many that specialise,’ he says. ‘We work in North America, Australia, Asia – where there are low-cost carriers – and we’re quite mature in Europe. The Middle East is a whole new region and it’s doubling in airport capacity.’

Global Airport Retail Spending 2002-2007

2002 $14.3bn (£7.6bn)

2003 $15.8bn (£8.4bn)

2004 $19.0bn (£10.1bn)

2005 $21.2bn (£11.3bn)

2006 $24.0bn (£12.8bn)

2007 $27.1bn (£14.5bn)

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