What you're up against as a duty-free airport retailer

  • Opinion
  • July 7, 2015
  • Paul Keane
What you're up against as a duty-free airport retailer

How long does a lease need to be, to give retailers enough time to recover their development costs and make a profit? These dual questions emerge from the change of duty-free operators at Auckland Airport; DFS and JR Duty Free have been replaced by Aer Rianta (trading as The Loop Duty Free) and LS Travel Retail (Aelia Duty Free).

Airport retailing would be one of the most difficult environments for retailers to trade from, or for that matter to obtain an opportunity to trade from.

Airports generally take the view that there are no long-term friendships. It’s all about dollars and what retailers will pay to have the opportunity to trade. It’s a tough market.

Percentage of future forecast sales are generally the key benchmark to achieving a site, so the higher one bids, the more the opportunity for acquiring a site. One assumes that the two existing operators simply didn’t offer enough return to AIAL, and so they missed out. Going forward, the two new operators will be under the cosh to achieve sales that generate profit.

The competition is intense. Hence the fact that international duty-free operators with the ability to bulk buy are the only true retailers who have the capacity to fulfil the tough economic benchmarks set by airport owners.

So let’s revisit the intensity of occupation and the fact that the last operators had just 7 years each to satisfy their occupation. Creating a new store is an expensive exercise. This can amount to hundreds of thousands of dollars dependent on the quality of design, and customer experience expected. And airport stores are at the higher end. So are retail stores at airports all they are cracked up to be?

Pedestrian traffic is significant. However, the number of actual customers and what they purchase are the key drivers to success.

Since airlines demanded passengers to check in earlier for flights, exposure to retailers and time to spend has increased the sales opportunity. However, in days past, 80 percent of total sales were in liquor and tobacco.

Today that has changed, given the decline of tobacco sales and the increase in the price of liquor. Cosmetics, electronics, some apparel and general merchandise have therefore had to replace those lost sales volumes.

Add to that the fact that specialty retailers who focus on just one or two merchandise categories, are going into airports in increasing numbers. The pressure on traditional duty-free stores to perform is becoming increasingly difficult.

Can duty-free retailers survive?

Not in their present form or with the tough economic standards currently set by airport owners. Eventually it will come down to tenants negotiating harder and leaving if the negotiation proves too tough. Incidentally specialty store owners have declined airport occupation simply because the returns do not match the cost of occupation. Remember passengers have money to spend at their destinations not as they leave the airport!

A good move by Briscoe Group

The potential takeover of Kathmandu by Briscoe Group has not altogether been met with a great deal of joy by Kathmandu shareholders. Is this a good move by Briscoes? It certainly adds to the company’s list of brands and whether one accepts it or not, both are discounters, so the sales performance will be the key ingredient for success. Forget the idea that Briscoe are not up to it, the skills they have in merchandising are more than enough to make a success of the Kathmandu brand.

Sharewatch | Foodstuffs

The Foodstuffs-Progressive battle for our food dollars has been one to watch, and based on the last year, it seems like Foodstuffs is in the lead.

For the year to February, sales for Foodstuffs South Island rose 3.9% to $2.72 billion. Foodstuffs opened four new supermarkets in the North Island during the year, and none in the South Island. However, four will start trading between August and October this year – Foodstuffs put this down to “delays in gaining building consents and the need to prepare sites with piling”.

Nationwide, Foodstuffs “had a particularly good year with nine out of every ten sales dollars in scanned sales growth coming to Foodstuffs”. Put another way, these supermarkets did much better than their competitor in growing sales, according to Nielsen sales tracking.

On the other hand, Foodstuffs has recently been lagging behind Progressive in new openings. This could well translate into higher growth for Countdown supermarkets in the future.

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.


Military-style semi-automatics ban announced

  • News
  • March 21, 2019
  • The Register team
Military-style semi-automatics ban announced

As of 3pm on March 21, a wide range of semi-automatic weapons have been reclassified under section 74A(c) of the Arms Act as requiring an E endorsement on a firearms license. This means they can no longer be sold to those with A-category gun licenses, and their purchase now requires police approval.

Read more

Retailers gather for insights at NZ Retail and The Register's breakfast

  • News
  • March 21, 2019
  • The Register
Retailers gather for insights at NZ Retail and The Register's breakfast

NZ Retail and The Register’s sales and marketing breakfast saw dozens of Kiwi retailers come together to network, sharing tips and tricks and absorbing expert advice.

Read more

Who stole Christmas?

  • News
  • March 21, 2019
  • Kelly Withers
Who stole Christmas?

Results are starting to trickle in from Christmas 2018/2019, and for many retailers, they're a little disappointing. Paydar chief executive and co-founder Kelly Withers explores the data.

Read more

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...

Chinese businesspeople raise millions for Christchurch victims

  • News
  • March 21, 2019
  • Radio New Zealand
Chinese businesspeople raise millions for Christchurch victims

A group of visiting Chinese businesspeople have raised $2.35 million for victims of the Christchurch mass shooting.

Read more

The Retail NZ Awards: What does it take to be a winning retailer?

Take this time to shine with the upcoming Retail NZ awards, a chance to show the retail industry what makes your business stand out. No ...


Hunting & Fishing New Zealand voluntarily pulls military-style assault weapons from sale

  • News
  • March 20, 2019
  • Sarah Dunn
Hunting & Fishing New Zealand voluntarily pulls military-style assault weapons from sale

In the wake of the attack on Christchurch’s Muslim community on March 15, strong calls for changes to New Zealand’s gun last have been made. Trade Me was the first retailer to act, halting the sale of all semi-automatic weapons on its platform, and it has now been joined by Hunting & Fishing New Zealand.

Read more
Next page
Results for
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

The Register

Content marketing/advertising? Email or call 022 639 3004

View Media Kit