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How airports compete with shopping centres

  • Opinion
  • February 24, 2016
  • Paul Keane
How airports compete with shopping centres

The airport experience has changed markedly since the New York World Trade Centre disaster of September 2001. As a result airport security has tightened around the world, and taking a flight now means you have to allow much more time to ‘get through’.

Rapid increase in passengers

Regardless - for New Zealand at least - there has been a significant increase in the volume of passengers over the last 15 years. Auckland International Airport now boasts 16.3 million passengers per annum, almost twice the figure of 8.4 million in 2001.

As passengers, we seek entertainment while waiting for our flights; so the longer wait period is a key driver behind retail growth. There has been a substantial increase in retail activity both in domestic and international environments.

Without question, airports are becoming an important stronghold in retail sales, and are certainly competitive to traditional retail environments – shopping centres, high streets and the like. So to what extent is one affecting the other?

Airports Vs shopping centres

Auckland is a typical case in point. Over the next 6 to 12 months, Auckland Airport will considerably increase its retail space, and relocate both its duty free stores to allow for an improved customer flow. This is all part of their 30 year plan.

In some ways, airports are just like any other merchandising environment: stores need to be exposed to the customer traffic flows to maximise the potential retail sales. As a result, new retailers will emerge at Auckland with a focus on local and international offerings. This will be a true retail experience ensuring that all passengers will be captured and exposed to retail spend.

Airport retail competes very favourably

So what about the local retailer? There is little or any impact on domestic retailing through airport competition. Sales per square metre at Auckland Airport, however, compete very favourably with domestic shopping centres.

The airport surpasses most shopping malls on a sales per square metre basis, which is the traditional retail barometer for tracking retail store performance.

However, airports are open for longer trading hours than a typical domestic shopping centre, and passengers are the main customers. Many of these passengers would not normally be exposed to our local retail environments, particularly international travellers who would be traditionally exposed to major NZ tourist locations.

A beneficial effect on our local economy

It is apparent, therefore, that the increase in tourist numbers has had a major effect on our international airports. More customer dwell time has encouraged passengers to avail themselves of the significant retail offerings. In turn, the demand for retail outlets has grown appreciably. We can only encourage more retail spend from tourists, which has a beneficial effect on our local economy.

Rainbow’s End makes a statement

We recently were asked to support Rainbow’s End, the theme park in Auckland, by improving their entry statement and the retail hub’s environment. The result is excellent, and  should see a marked improvement in shoppers and retail spend. The reason for the refurbishment and new entry statement is increased visitor numbers, with the goal being to expose those visitors to commercial environments.

In summary

Tourism benefits more than just accommodation providers. Auckland Airport and Rainbow’s End are a couple of examples that demonstrate the rippling effect an increase in visitor numbers can have. We can expect further benefits to our arise over the months and years ahead, as our country continues to appeal to international tourists. May we as a result continue to improve our offerings and maximise the tourist spend, Auckland International Airport and Rainbow’s End are a couple of excellent examples.

 








 Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This post originally appeared on RCG's blog.

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