- August 22, 2016
- Posted by: Carlo Artana
- Category: Airport & Travel Retail, Retail Stategy
A new and improved airport experience is coming to the Cayman Islands and with that comes a transformation of the customer experience – including the retail and food and beverage area. The Cayman Islands Airports Authority (CIAA) is close to release the Request for Proposal (RFP) for retail concession space at the Owen Roberts International Airport. This brings a great opportunity to select the highest quality shopping and dining concepts to meet the passenger’s needs.
Travel retail is set to be worth a staggering $125 billion by 2025. With its diverse culture of over 200 nationalities, fast growth in passenger numbers, a captive consumer base and with digital yet to be fully developed, it seems that things are destined to get better and better for the travel retail industry. Airports across the world are home to impressive retail and brand success stories. A channel with exclusive product ranges, incredible retail activations and a generous investment in high-profile promotions.
Of the travelers that do enter the travel retail stores:
- 70% of buyers plan to make a purchase >> 30% buy on impulse.
- 50% buy to treat themselves >> make the retail offer enticing.
- 30% buy a brand for the first time >> give shoppers confidence.
- 30% spend more than intended >> encouraging trade up.
It’s no wonder that many brand owners view airport retail as an opportunity to expose their products to the masses, drive domestic market loyalty and capitalise on the uniqueness of the channel. Be it for one reason or a mix of all, it’s clear therefore that the retail experience needs to be prioritised above all else to fulfill shopper, brand and the retailer requirements. In simple terms, travel retail must put the shopper at the heart of all it does.
In the last 25 years, the economics of travel retail has vastly evolved from a traditional operation under a fixed rental cost agreement to a more dynamic business model where airports operators charge rent as a percentage of sales in addition to a minimum guaranteed. In other words, the relationship between airport operators and retailers radically changed from a simple Real Estate agreement to a Commercial Partnership approach. Under this new innovative model, both retailers and airport authorities need to raise their level of expertise and performance to maximise revenues.
The travel conditions have changed dramatically as well, air passengers must go through long security controls, stress linked to air-traveling (delays, connections, long-flights, etc.). The main focus of travel retailers should be on delivering an exceptional retail experience that can stand up to any other shopping environment – aiming to improve the overall passenger experience. For passengers, shopping in a travel retail environment can and should an enjoyable experience; but to provide an inclusive experience, both retailers and airports managers must consider all travelers.
The opportunity is now! If you are thinking to bid for the chance to be one of the merchants under the new CIAA plan, now is the time to put your best foot forward and consider the following:
- Build efficient operation that combines exceptional service with a positive customer experience
- Make incremental improvements on the retail basics as it delivers lasting base line growth
- Embrace the latest digital advances to make meaningful connections
- Create retail environments that are relevant for everyone, not just the privileged few
- Build business plans that take into account 7/18 business and complex logistics
- Put together an application that will meet the Airport Authority management’s expectations
- Maximise marketing revenues to balance the concession fee costs
- Hire/train/organize staff to run their operations based on the passenger shopping behaviour
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Savage Consulting is the only consulting company in the Cayman Islands with this specific area of expertise in Airport/Travel Retail, helping retailers and restaurant owners to create a winning concept adapted to the specific demands of air travelers. If you want to learn more, please contact us at firstname.lastname@example.org.