Research For Travel: White Paper 19. How Airports Can Improve Revenue & Profitability from Retail and F&B

Transcription

1 : White Paper 19 How Airports Can Improve Revenue & Profitability from Retail and F&B 2012

2 How Airports Can Improve Revenue & Profitability from Retail and F&B Introduction is the world s leading market research agency working in the Airports sector. We have over 25 years experience of conducting F&B and Retail surveys for airports based in Europe, US, Asia- Pacific and India and the Middle East. In this White Paper we show how research can be used to boost revenue and profitability from Retail and F&B at airports. These surveys also reveal how Airports can increase passenger satisfaction. Airports should be aware that most passenger research undertaken today is simplistic and naïve and as such often provides misleading data. To obtain accurate and reliable information on passenger behavior requires intelligent, sophisticated research. Our 25 years experience and our advanced methodologies enables us to provide such research and to offer strategic insights and recommendations. 1. Identify Your Potential To Improve Revenue & Profits Every airport has significant potential to improve revenue and profitability from its F&B and Retail operations. Our research shows that many passengers at airports spend nothing at all on food or drink or on buying products from a retail store. Certain category of stores achieve low incidence of shoppers and average spend can vary enormously by type of outlet and passenger nationality. Therefore the first thing an airport should do is to measure the potential for improved sales from F&B and Retail. To do this we allocate passengers into five important categories. Dedicated Shoppers passengers who plan to buy a product at an airport and who do buy something Failed Shoppers passengers who plan to buy something but fail to do so Window Shoppers passengers who visit shops but who do not buy Impulse Shoppers passengers with no plans to purchase but who are persuaded to actually buy something Non- Shoppers passengers who do not intend to buy and who do not purchase anything We then measure the size of each category and also provide recommendations on how you can improve your F&B and Retail performance among each of these important sectors. 2

3 2. Convert Non- Shoppers into Shoppers The following charts show that in Asia- Pacific an average 46% of passengers do not buy anything when they visit an airport, either because they are non- shoppers, failed shoppers or window shoppers. The equivalent figure for Europe is 54% confirming the massive potential to improve revenue. Converting just a small percentage of these passengers into shoppers would have major impacts on revenue and profitability. Research can identify why people do not shop and highlight the things you need to do to convert these people into shoppers. Certain airports attempt to convert passengers into shoppers by providing special offers and attractive discounts in the stores. This doesn t really work as many passengers don t visit any stores at all. Special offers have to be made available in different ways. 3

4 Frequently we find that passengers don t shop as they don t want to carry any more bags & packages. That s why some leading airports today are investing in You Shop, We Drop systems whereby the airport delivers purchase to the passenger s home address. 3. Get More People to Visit Shops and F&B Outlets Surveys can identify where passengers shop, and which outlets are failing to attract sufficient shoppers. Incentives can be used to lure more people into the under- used outlets. The following chart shows usage of retail outlets in a major Asia- Pacific airport. Surprisingly only 4.2% buy at a Healthcare/Pharmacy at this airport, these outlets are normally well patronised by passengers. (In this case we found the Healthcare/Pharmacy units were very poorly located). The opportunity at this airport is to improve number of passengers shopping at Luxury Fashion Boutiques; Jewellery/Watch/Accessories; Fashion, Casual & Sports; Perfumes/Cosmetics and Computers/Electronics/Photo. 4

5 3. Increase Average Spend The above table shows the dramatic differences in how passengers spend money at airports. At this Asia- Pacific airport increased spend is required at Books & Magazines; Souvenirs/Gifts/Toys; Healthcare/Pharmacy; Chocolate & Confectionery and Liquor & Tobacco. 4. Don t Treat Passengers As All The Same Passengers at your airport comprise very different segments and it is vital that you offer the appropriate products and services to each relevant passenger sector. You need to understand your passengers in terms of the products they want, their attitudes to pricing, the brands they like etc You also need to segment by sex, age, purpose of travel and, of course, nationality. For example Chinese passengers go for well- known brands e.g. Johnny Walker Red Label while UK shoppers tend to look for niche brands e.g. Laphroaig 18 year old Whisky. The table below shows marked differences in passengers usage of F&B outlets and reveal where improvements can be made. Visits to retail outlets also vary by nationality 5

6 5. Find Out Where and How You Need to Improve Surveys can identify the key improvements you should concentrate on to improve spend on F&B and Retail. The chart below shows what is required at the international terminal of a South East Asia airport. Improvements required often relate to staff employed and here Mystery Shopping exercises can prove particularly useful. 6

7 6. First & Business Class Passengers Don t Miss Out Research shows that premium passengers spend more than any other segment, not surprising as these are usually affluent people. The problem is that first/business class passengers frequently spend most of the time in the airline lounges where food and drink is provided so there is no need for them to visit F&B outlets. Also it is difficult to persuade them to venture out to the shops. If they won t go to the shops, you have to bring the shops to them. There are successful examples of shops being opened in the lounges. Other approaches involve online and catalogue shopping and a trolley service. 7. Maximise The Transfer Passenger Opportunity Transfer passengers represent a major opportunity. Many airports today handle very large numbers of these passengers and they can be big spenders on F&B and Retail - they often have a long time to kill. However we find that airports fail to take maximum advantage of the transfer passenger. You have to understand that these passengers do not know your airport, and specifically they have no knowledge of the range and location of the F&B and Retail outlets you offer. You have to provide them with this information on arrival at your airport. Also make sure your outlets are open when these passengers deplane this can often be in the middle of the night. 7

8 Experience & Expertise in Aviation Research We specialise in market research and marketing consultancy for the Aviation industry. Over the past 25 years we have carried out projects throughout Europe, US & Canada, Asia- Pacific, Middle East, Africa, South America and Australasia. We conduct surveys amongst the many customer groups that are important to Airlines - business & leisure travellers, corporate travel departments, OTAs, travel agents, airports, F&B operators, retailers etc. We also undertake research for airports and have 25 years experience of interviewing key decision- makers in airlines worldwide, and also passengers and customers of Retail and F&B at airports. We also undertake cargo surveys. Our airline clients include Cathay Pacific, Emirates, Thai Airways, BA, Lufthansa, KLM/Air France, SAS, AA, Delta, Continental etc With offices in Europe, China, Hong Kong and Singapore we are ideally placed to meet your research needs. For more information please contact Roger Thomas or David Dower at:- Whitegates, Dalwood, Axminster, Devon, EX13 7ED United Kingdom Tel: +44 (0) E- mail: roger@researchfortravel.com or david@researchfortravel.com 8