Airport Retailing - UK

Published by: Mintel International Group Ltd.

Published: Jun. 1, 2008 - 91 Pages

Table of Contents

Issues in the Market

Key themes and issues

Definition

Abbreviations

Market in Brief

Airports still have untapped potential

Air travel really taking off

Europe dominates inbound and outbound

London dominates airport provision

Economic clouds in the short term

A changing competitive landscape

What does the future hold?

Internal Market Environment

Key points

The UK air travel market

Increased air capacity but increasing constraints

Open Skies agreements

Coming of the super planes

Low-cost, short-haul model lowers visitor spending

Overseas expansion

Figure 1: Visits to and from the UK, 2003-08

Figure 2: Overseas visitors’ and UK residents’ overseas holidays expenditure, 2003-08

Where in the world?

Figure 3: Visits to and from the UK, by geography, 2002-06

Up, up in the air

Figure 4: Overseas visitors to the UK by air, visits and spending, 2002-06

Figure 5: UK residents travelling overseas by air, visits and spending, 2002-06

The UK Airport Market

Europe losing share of duty-free

Figure 6: Global airport duty-free market, 2002-12

Duty free growth picks up

Figure 7: British Isles airport duty-free market, 2003-07

Low-cost and regional hub passenger growth

Figure 8: Passenger numbers at leading UK airports, 2003-07

Broader Market Environment

Key points

The economy hits turbulence

Figure 9: Trends in personal disposable income and consumer expenditure, 2003-13

Consumer confidence at lowest level since the early 1990s

Figure 10: Changes in headline consumer confidence - monthly and 12-month rolling average, 2001-08

Middle-aged retail experience required

Figure 11: Trends in the age structure of the UK population, by gender, 2003-13

We’re all becoming classier

Figure 12: Forecast adult population trends, by socio-economic group, 2003-13

Young and old offset loss of family pound

Figure 13: Forecast adult population trends, by lifestage, 2003-13

The Internet spreads its wings

Figure 14: Internet penetration, by gender, socio-economic group, age, region and working status, 2004-08

Consumer spending priorities

Figure 15: UK spending priorities for year ahead, 2005-08

Exchange rates

Figure 16: Annual average exchange rates for Sterling against the euro and US Dollar, 2003-08

Changing population = changing airport needs

A Singles Society, ME Generation and ME Time

Competitive Context

Figure 17: UK airport retail sales compared to all UK retail sales and overseas spending of UK air travellers, 2003-07

Figure 18: UK airport retail sales compared to all UK retail sales, 2003-07

Strengths and Weaknesses in the Market

Strengths

Weaknesses

Market Size

Key points

Figure 19: UK airport retail sales at current prices, 2003-07

Segment Performance

Key points

Duty-free

Figure 20: British Isles duty-free market, by segment, 2002-06

Figure 21: Sales in British Isles duty-free market segments, 2002-06

Figure 22: Growth in British Isles duty-free market segments, 2002-06

Companies and Products

Key points

Figure 23: Leading UK airport operators’ commercial revenues, 2006 and 2007

Alpha Airports Group/World Duty Free (Autogrill)

Strategic evaluation

Background

Financial performance

Figure 24: Alpha Airports Group, financial performance, 2002/03-2006/07

Figure 25: World Duty Free, financial performance, 2002/03-2005/06

Store portfolio

BAA

Strategic evaluation

Background

Financial performance

Figure 26: BAA: Continuing operations financial performance, 2006 and 2007

Retail revenue by airport

Figure 27: BAA: Retail revenue, by airport, 2007

Figure 28: BAA: Retail revenue, by airport, 2007

Commercial and retail revenue by store type

Figure 29: BAA: UK commercial revenue breakdown, by type, 2004/05-07

Retail facilities

Figure 30: BAA: UK airport retail space, 2005 and 2008

Retail strategy

Birmingham International Airport

Background

Financial performance

Figure 31: Birmingham International Airport, financial performance, 2004/05-2006/07

Retail facilities

Figure 32: Birmingham International Airport, shops and catering outlets, April 2008

Bristol Airport

Strategic evaluation

Background

Financial performance

Figure 33: Bristol Airport, financial performance, 2003-07

Retail facilities

Figure 34: Bristol Airport, shops and catering outlets, April 2008

London Luton Airport

Strategic evaluation

Background

Financial performance

Figure 35: London Luton Airport Operations Ltd, financial performance, 2006 and 2007

Retail facilities

Figure 36: Luton Airport, shops and catering outlets, April 2008

Manchester Airport Group

Strategic evaluation

Background

Financial performance

Figure 37: Manchester Airport Group, financial performance, 2002/03-2006/07

Relative airport size

Figure 38: Manchester Airport Group, share of passengers, by airport 2006/07

Retail facilities

Figure 39: Manchester Airport Group, shops and catering outlets, by airport, April 2008

Newcastle Airport

Strategic evaluation

Background

Financial performance

Figure 40: Newcastle Airport, financial performance, 2005 and 2006

Retail facilities

Figure 41: Newcastle Airport, shops and catering outlets, April 2008

The Consumer: Landside

Key points

Figure 42: Landside purchases at last airport visit, February 2008

Landside purchases by demographics

Figure 43: Landside purchases, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, February 2008

ABC1s most likely to be landside shoppers

The Consumer: Airside

Key points

Figure 44: Airside purchases at last airport visit, February 2008

Airside purchases by demographics

Figure 45: Landside purchases, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, February 2007

Wealthy without kids

Connecting with youth

Landside vs Airside

Figure 46: Landside versus airside purchases, February 2008

Putting some fresh air into ‘Airside’

Figure 47: Airside purchasing as a percentage of landside purchasing, February 2008

The Consumer: Expenditure

Key points

Figure 48: Airside and landside expenditure on previous visit to airport, February 2008

Figure 49: Distribution of spending at airports, February 2008

Expenditure by demographics

Figure 50: Airside and landside expenditure on previous visit to airport, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, February 2008

Abstract

The value of airport retail sales is growing more slowly than the spending of both inbound and outbound air travellers - it is in effect losing share. We believe that this is because most airports have boring retail provision with little to stimulate travellers to spend. With some lessons from Heathrow T5, airside retail offers will continue to become more sophisticated with wider product ranges, better merchandising and improved service levels to actively sell products. More airport retailers will aim to be different to the UK high street, be exciting and challenge customers’ expectations. V Consumers are tending to become older, wiser and more affluent. They are flying more helped by the growth of low-cost airlines and hence are spending more time in airports. This should make airports one of the most exciting areas in UK retail.

This report looks at the drivers of airport retail - trends in passenger number growth and their spending, the duty-free market, airport operators and their plans for the future and how the sector is perceived by consumers.

Key report themes:

• Are airports a place to relax or a place to indulge?
• How have security issues and online check-in impacted upon our time at the airport and our spending habits and intentions?
• Has security boosted airside sales of food/drink/toiletries?
• Has it destroyed landside retailing, or can this retail area be developed further as retail and experience space?
• Do we plan to use airport retailers (for tax-free savings etc) or do we find ourselves giving in resentfully because we are left without any other option?
• Do we buy for ourselves or for others?
• How can the airport retail offering be expanded beyond the traditional reading/fags/perfume/ booze model?
• Is there potential for ‘travel retail centres’ landside?
• Bearing in mind growing pressure on infrastructure, delays etc, is the potential to offer more paid-for ‘experiences/services’ etc: spa, massage, gym, salon, beauty areas?

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