In light of all the recent changes underway at Auckland Airport, we had a chat to its general manager of retail and commercial, Richard Barker. He discusses how airport retail has changed in recent years, why the latest retailers to open there were picked to join its fray and the common misconceptions first-time retailers have.
With 15.8 million passengers passing through Auckland Airport last year, it’s no wonder there’s a few misunderstandings around airport retailing.
Such a large number would make it seem like retailers are guaranteed sales, but Barker says the reality is, they have to fight for them.
“I’ve said this to some of our retailers, I think people were a little bit complacent, they treated customers like a captive market and they didn’t reflect who our key customers were,” Barker says.
“The competition is not just the retailer across the aisle – customers have choices and if they don’t like what they see, they won’t shop.”
He says airport retailing differs quite significantly to retail on strips or malls, and often there’s a few surprises instore for first-time retailers joining the fray.
On the upside, he says, if passengers can afford to travel, they’ve got disposable income and are more inclined to part with their money.
Sales per square metre at Auckland Airport are higher than any mall in New Zealand, he says, but it also means retailers need to understand customers and their needs.
It can also be challenging for new retailers because it’s a long trading day, often ranging from 18 to 24 hours open.
“If you’re a fashion retailer and you’re used to operating eight or nine hours, it’s quite challenging.”
Delivering value is another key aspect, with exchange rates playing a part. Barker says you often see people doing active price comparisons instore, so price competition is high.
Barker is no stranger to retail himself, having worked for 20 years in retail for BP in New Zealand, Chicago and London. Prior to joining Auckland Airport, he also worked for Z Energy, helping lead the company into its new retail proposition.
Now heading up its retail and commercial team, he says the goal is to deliver an outstanding retail experience.
“There’s increasing competition in offshore airports and other key categories. The whole market is changing, so we can’t be complacent. We can’t sit back and assume they’ll shop with us unless we give them an outstanding experience,” Barker says.
The way they’re achieving this is by differentiating their retail proposition, he says.
They want to ensure Kiwis make a conscious decision to come to the airport early to shop in order to access brands and products they can’t get elsewhere, as well as get good value for their money.
Victoria’s Secret, which opened its first and only New Zealand store to date at Auckland Airport last year, is an example of this.
As for international visitors, it’s about offering the best of New Zealand products and food and beverages before they leave the country.
New Zealand health and wellbeing products, for example, are extremely popular with Asian visitors, Barker says.
Though no sweeping changes have taken place to Auckland Airport’s retail, there has been a bit of a reshuffle in the past year: Aelia Duty Free and The Loop Duty Free replaced the longstanding duty free retailers DFS and JR Duty Free, while New Zealand brands Saben and Ruby moved in, as did watch label Casio G-Factory.
Barker says the duty free changes were a little bit controversial at the time, but one of the reasons why they chose The Loop and Aelia is because they can bring new brands into New Zealand.
“They’re two retailers who can help us deliver our vision, and as we move into the expanded terminal, they can bring new brands into the New Zealand market. They also get the fact that the retail landscape is changing and omnichannel is going to be an important part of the future. There’s a shared vision,” he says.
Aelia delivered on its promise last year in September, bringing Victoria’s Secret into New Zealand market. It has also brought a range of other new brands in the cosmetics and perfumes department.
The duty free retailer also recently introduced a robot that packages click-and-collect items to its store.
Barker describes it as “retail theatre” which draws people into the shop.
As for Ruby and Saben, Barker describes the New Zealand brands as “accessible luxury”.
He regards them to be on the higher end of quality spectrum, but says the airport is also looking at market segments like fast fashion.
“We want to make sure there’s something pretty much for every customer to buy. Some airports have made the mistake of going too high end and alienating customers,” he says.
A lot of works goes on behind the scenes to analyse data on who is buying what, as well as what’s missing from customers’ experiences.
Auckland Airport can’t see customer data on an individual basis, but it can look at spend data by flight, see where the planes are going and piece two and two together.
“Direct flights to China spend two to three times more than a flight to Australia, for example,” Barker says.
The airport also gathers data through exit interviews at the terminals, as well as through its social media channels and apps.
It’s this information that has helped form a clear picture of what consumers want from the international terminal upgrade, which will be finished by 2018.
Keep an eye out for part two of this interview, which discusses the incoming changes to Auckland Airport’s retail sector and its 30-year vision, in the coming days.