Global Airport Retailing: Market Size, Retailer Strategies and Competitor Performance

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Following a drop in sales in 2009 the global airport retailing market has bounced back. However, growth is being driven predominantly by passenger volumes, which are increasingly rapidly in emerging markets, rather than an increase in spend per passenger. In 2011, Europe was the largest airport retailing market, however Verdict forecasts that it will be overtaken in size in 2012 by Asia Pacific.Inform your international expansion strategies using our three year regional forecasts of sales, passenger volumes, and spend per passenger.Select the most suitable products for your retail operations by using our regional category sales data and our three year product category forecasts.Benchmark your company's performance by accessing profiles of ten key airport retailers including details of their global market share.Maximize sales at your airport by uncovering how walk through formats, arrivals stores, and online and m-commerce can boost sales.Prepare your business to exploit the changing airport retailing market by learning how airport passenger compositions are forecast to change by 2030.The global airport retailing market is forecast to expand by 44.5% from 2010 to 2015 with most of this growth coming from emerging economies especially in Asia Pacific, which is forecast to grow by 76.2%, and the Middle East and Africa which is forecast to grow by 40.0%.Fashion and accessories is the largest product category accounting for 25% of global airport sales in 2010. Sales of fashion and accessories have increased rapidly in recent years driven by the strong appetite for luxury brands in Asia Pacific. In 2010 this region was responsible for 45.6% of fashion and beauty sales at airports.Walk through stores in airport terminals are growing in popularity. The format enables retailers to create an environment through which all consumers must pass to reach their departure gate. The shops, which tend to include flight information screens, are effective at targeting time scarce consumers.Which product categories are forecast to deliver the most robust growth? Which outlet operators are focused on developing these product categories?What product, marketing and channel innovations and strategies should my company consider in order stay on top of market developments?How did the largest airport retailers perform in 2010, where are their operations located, what are their main retail formats and plans for expansion?Where are passenger volumes increasing most rapidly, and how will this impact on regional passenger compositions arriving at retail destinations?Which regions have the highest appetite for beauty, fashion and accessories, electronics, food and confectionary, alcohol and tobacco?

OVERVIEW•Introduction•SummaryKEY FINDINGS•Emerging markets have driven the recovery of the global airport retail market in 2011•The power shift toward emerging markets is in full swing•Asia Pacific is set to become the largest airport retailing market in 2012 •In 2011, the Middle East and Africa overtook the Americas to become the third largest airport region for retail•Fashion and accessories is the largest product category•Beauty and fashion and accessories are growing extremely rapidly•Dufry will overtake LS Travel Retail and Autogrill to become the largest airport retailer•Downtown duty free shopping is growing rapidly in Asia Pacific•Digital strategies will become much more important STRATEGIC ACTION POINTS•Luxury fashion and accessories brands should expand in Asia Pacific and the Middle East•North American airports should prepare for a growing volume of Latin American tourists•European airports should increase the presence of mid-market brands in regional terminals•European airports should introduce walk-through stores to target time-scarce shoppers•Airports should give more space over to airside retail •Airports should offer collect on arrival services•Retailers must enhance their e-commerce and m-commerce operations•Airports should use online and m-commerce •Entice customers to spend with enhanced retail environments that are easy to shop•Offer convenience services such as collect on return and home deliveryMARKET CONTEXT AND OUTLOOK•Market Definition•Global airport sales continue to grow, driven by passenger volumes•In 2011, the Middle East and Africa overtook the Americas as the third largest airport retailer•The Americas has the highest volume of passenger numbers•Spend per passenger has recovered to 2008 levels•Regional passenger spend is impacted by the composition of travelers•Global airport retailing outlook, 2011–15- Global airport retail sales to reach $39.1bn by 2015 - Passenger numbers will increase globally by 2015- Spend per passenger will increase globally by 2015•Airport retailing sales by category- Fashion and accessories is the largest product category in global airport retailing- Fashion and accessories is the dominant product category in Asia Pacific and the Middle East- Fashion and accessories will remain the largest retail category up until 2015STRATEGIC ISSUES•Airport footfall - The economy is reshaping global airport footfall- The cost of travel determines passengers' ability to fly and is linked closely with consumer disposable incomes- Flight routes determine passenger volumes at each airport- Regardless of passenger demand, airport and airplane capacity caps footfall- Alternative transport grows in importance for short haul business travel in Europe- Safety considerations remain a deterrent to air travel•Barriers to passenger spending- Worries over baggage allowance dampen passenger expenditure- Shortened shopping times decrease the time available for consumers to make purchases- Low disposable incomes reduce customers' ability to shop- Security processes aggrieve consumers, putting them in a bad mood- Competition from alternative retail destinations can deter passengers from making purchases •Strategies to drive passenger spending- Arrivals stores offer a new growth opportunity for retailers- Offering a home delivery service can combat luggage restrictions- Online duty free sites can drive sales from time-scarce consumers- Collect on arrival assists passengers affected by baggage restrictions to shop with confidence - Enforced footfall of walk-through stores creates major opportunity- M-commerce enables passengers to browse and pre-order on the move•Future growth strategies- The drive to expand is consolidating the airport retail market- Making airports destinations in themselves attracts non-travelers •Future focus: retailing actualities- North American airports could capture higher Latin American travelers' spend- Latin American passengers are growing in number- European airports can capitalize on the growing number of Asia Pacific passengers- Regional travel is booming in Asia Pacific- Middle Eastern air travel is dominated by passengers from Asia Pacific- European travelers dominate African air travel COMPANY COMPARISONS•LS Travel Retail is the largest global airport retailerLS TRAVEL RETAIL•LS Travel Retail is undergoing structural changes as it prepares to step up its global presence- Lagardère Services has integrated its travel retail subsidiary Aelia into LS Travel Retail- LS Travel Retail's airport operations are predominantly European- LS Travel Retail's EMEA operations specialize in multi-brand duty free retail- LS Travel Retail ASPAC specializes in entertainments-based travel retail stores- LS Travel Retail North America specializes in entertainments-based travel retail stores•Recent key events – LS Travel expands in Europe- Aelia announces plans for expansion in the Czech Republic - LS Travel retail buys out Nuance's shares in Duty Free Paris- LS Travel Retail ASPAC creates dedicated fashion and accessories role•Financial results – continued strong recovery in 2011- LS Travel Retail reports strong H1 2011 results•Outlook – concentration on mature markets means LS Travel Retail will be overtakenAUTOGRILL•Autogrill has refinanced its debt as it prepares to free up capital for expansion- Autogrill has grown through acquisition - Autogrill is one of the world's leading airport retailers - Europe dominates Autogrill's retail turnover- Autogrill's retail operations are managed by Aldeasa and World Duty Free•Recent key events – Autogrill has invested in its existing airport locations- Autogrill has refinanced in preparation for expansion - Autogrill sells Alpha Flight Group to Dnata •Financials – Heathrow success boosts revenue growth - Airport sales drove Autogrill's H1 2011 results•Outlook – Autogrill needs to find a way to capitalize on growth in emerging markets DUFRY•Dufry's recent acquisitions have consolidated its leading position in South America- Dufry's has over 60 years of experience in airport retailing - South America dominates Dufry's retail turnover - Dufry's airport retail operations revolve around four store concepts•Recent key events – Dufry has increased its presence in emerging markets- Dufry has expanded its retail presence in South America through acquisitions •Financials – Dufry profits from its focus on emerging markets- Swiss francs dampen the extent of Dufry's success - H1 2011 results – organic growth exceeds growth in passenger numbers•Outlook – South American expansion is a bold moveGEBR. HEINEMANN •Gebr. Heinemann has increased its European presence - Being a family-owned business facilitates long-term strategic thinking - Focuses on price competitiveness and breadth of range- Heinemann uses a variety of contractual models- It also offers online and delivery services- Distributes to 70 countries•Stores – encouraging results from new format•Recent key events – Gebr. Heinemann has made key moves to expand globally- Gebr. Heinemann has expanded its dominance in Europe- Gebr. Heinemann gears up expansion in Asia Pacific- Gebr. Heinemann has launched a smartphone app to drive loyalty•Financials – Gebr. Heinemann has enjoyed steady growth•Outlook – operating flexibility will assist further growthNUANCE GROUP•Nuance Group has a strong presence in Asia Pacific and Europe- Half of Nuance is now owned by a private equity group - Joint ventures are integral to the company's retail operations- Nuance operates a wide portfolio of store fascia•Recent key events – Swiss arrivals store gives Nuance a boost in a critical market- Nuance names Andreas Rudolf as CFO- Nuance inaugurates new Zürich arrivals store- Private equity firm PAI Partners acquires 50% stake of Nuance- Appoints new CEO to Australia operations•Financials – Nuance's revenue rebounded in 2010•Outlook – Hong Kong renewal is critical to Nuance's future growth in AsiaDUBAI DUTY FREE •Dubai International Airport is on the brink of major expansion- Dubai Duty Free is the world's largest airport-based retailer by sales- Dubai Duty Free has emerged rapidly onto the airport retailing market- Sponsorship has built Dubai Duty Free's international recognition and status- Dubai Duty Free is expanding outside of retail •Recent key events – Dubai Duty Free is looking to expand outside Dubai International - Dubai Duty Free will open its first travel retail operations outside of Dubai International Airport•Financials – Dubai Duty Free continues to achieve substantial year on year growth- Dubai Duty Free posted a record H1 2011•Outlook – future growth guaranteed by Dubai airport expansionAER RIANTA INTERNATIONAL•Aer Rianta International has built a major global presence from its Irish base- ARI is considered to be the founder of duty free retailing- DAA is state-owned but not state-funded - ARI operates lots of stores as partnerships•Recent key events – ARI takes control of DAA's Irish operations - ARI has sold its interests in the Russian airports Domodedovo and Vnukovo - ARI is set to enter China- ARI has undergone major management upheavals - ARI takes control of DAA's Irish retail operations•Financials – ARI has achieved a major profit increase•Outlook – major changes lay ahead for ARISHILLA DUTY FREE•Shilla Duty Free is the second largest airport retail operator in South Korea•Recent key events – Shilla has expanded its luxury formats with Louis Vuitton partnership- Shilla Duty Free opens Louis Vuitton's first ever airport store- Luxury brands have retaliated over Shilla's Louis Vuitton store - Shilla has been awarded a contract from a domestic South Korean airport - Shilla used Korean pop culture in a marketing campaign •Financials – Shilla is the fastest growing airport retailer•Outlook – the LVMH win was a major coup, but was handled badly LOTTE DUTY FREE•Lotte Duty Free has embarked on international airport retailing- Lotte Duty Free is the dominant duty free player in South Korea- Lotte positions itself as a premium duty free retailer- Propositions vary to reflect an individual store's customer base•Stores – Lotte operates a mix of airport and downtown locations- Lotte expands its Korean airport retail operations through acquisition•Recent key events – Lotte commences international expansion- Lotte to expand its retail operations to Indonesia- Lotte uses Korean culture as a marketing strategy•Financials – Lotte has outperformed expectations•Outlook – Lotte has succeeded in growing beyond its home marketDUTY FREE SHOPPERS GROUP•DFS is a key player in South East Asian airport retailing- DFS is the airport travel retail division of LVMH- DFS's main duty free retail concept takes place in non-airport locations•Recent key events – DFS wins new retail space- DFS partners with Victoria's Secret in Honolulu - DFS wins concession in Singapore Airport- DFS has restructured its senior executive management team•Financials – DFS drives growth through its non-airport duty free shopping centers•Outlook – DFS is strong in Asia, but needs to make a bigger push in ChinaAPPENDIX•Further reading•Ask the analyst•Global Retail FreeView•Verdict consulting•DisclaimerTABLES•Table: Airside and landside definitions•Table: Global airport retailing growth and market size, 2008–11e •Table: Global airport retailing market size ($m) and year-on-year change (%), by region, 2008–11e•Table: Passenger numbers (millions) and growth rate (%), by region, 2008–11e•Table: Sales per passenger ($) and year-on-year change (%), 2008–11e•Table: Regional airport retailing market size ($m), by region, 2008–15e•Table: Passenger numbers (millions) and growth rate (%), the Middle East and Africa, 2011e–15f•Table: Passenger numbers (millions) and growth rate (%), North America and Latin America, 2011e–15f•Table: Passenger numbers (millions), 2008–15f•Table: Sales per passenger ($), 2008–15f•Table: Global airport retailing market size ($m) and year-on-year change (%), by category, 2008–11e •Table: Category sales ($m), by region, 2010 •Table: Proportion of regional spend per product category (%), 2010•Table: Global airport retailing market size ($m), by category, 2008–15f•Table: Regionally significant LCCs, 2011•Table: 10 largest airport retailers, 2010•Table: LS Travel Retail company overview•Table: Geographic distribution of LS Travel Retail's operations 2011•Table: LS Travel Retail EMEC and Aelia's European retail store concepts, 2011•Table: LS Travel Retail ASPAC retail store concepts, 2011•Table: LS Travel Retail North America retail store concepts, 2011•Table: LS Travel Retail consolidated sales (€m and $m), 2007–11e•Table: Autogrill company overview•Table: Aldeasa retail store concepts, 2011•Table: World Duty Free UK main retail store concepts, 2011•Table: Autogrill airport retail trading record (€), 2007–10 •Table: Autogrill airport retail trading record ($), 2007–10•Table: Autogrill airport retail sale (€m), by market, 2009–10•Table: Dufry company overview•Table: Dufry global presence pre acquisition August 2011•Table: Dufry's European retail store concepts 2011•Table: Dufry company trading record (CHF) 2007–10•Table: Dufry company trading record ($) 200–10•Table: Turnover, by region, 2009–10•Table: Gebr. Heinemann company overview•Table: Location of Gebr. Heinemann stores, 2011•Table: Gebr. Heinemann main retail store concepts, 2011•Table: Nuance company overview•Table: Nuance's airport store fascia, 2011•Table: Nuance's online retail operations, 2011•Table: Nuance's trading record (CHF and $) 2007–11e•Table: Dubai Duty Free company overview•Table: Dubai Duty Free trading record, 2005–11•Table: ARI company overview•Table: ARI airport store fascia, 2011•Table: ARI airport retail trading record (€) 2007–10•Table: ARI airport retail trading record ($) 2007–10•Table: Shilla Duty Free company overview•Table: The Shilla Group trading record, 2009–11e•Table: Lotte Duty Free company overview•Table: DFS company overview 2011•Table: Location of DFS's Galleria stores 2011•Table: Airport location of DFS 2011•Table: LVMH Selective Retailing trading record (€) 2005–10•Table: LVMH Selective Retailing trading record ($) 2005–10FIGURES•Figure: Global airport retailing market size, 2008–11e•Figure: Growth rates in global passenger numbers and passenger spending (%), 2008–11e•Figure: Airport retail expenditure, by region, 2008 and 2011e•Figure: Share of global airport sales, by region, 2008 and 2011e•Figure: Passenger numbers, by region (millions), 2008–11e•Figure: Sales per passenger ($), by region, 2008–11e•Figure: Passenger growth versus sales growth, 2008–11e•Figure: Airport retail expenditure ($bn), 2008–15f •Figure: Share of airport expenditure, by region, 2008, 2011e, and 2015f•Figure: European airport retailing market size ($bn) and growth rate (%), 2008–15f•Figure: Asia Pacific airport retailing market size ($bn) and growth rate (%), 2008–15f•Figure: Middle East and Africa airport retailing market size ($bn) and growth rate (%), 2008–15f•Figure: Americas airport retailing market size ($bn) and growth rate (%), 2008–15f•Figure: Passenger numbers (millions), 2008, 2011e, and 2015f•Figure: Sales per passenger ($), by region, 2008–15f•Figure: Airport retailing sales ($bn), split by product group, 2008–11e•Figure: Global airport retailing, by category, 2011e•Figure: Regional airport sales ($m), by category, 2010•Figure: Regional contributions to category sales ($m), 2010•Figure: Category share of airport sales, 2008, 2011e, and 2015f•Figure: Strategic issues impacting airport retailing, 2011•Figure: World real GDP and passenger traffic•Figure: Emerging market and mature economies growing at different rates, real GDP growth (%) •Figure: The relationship between fuel prices and average airline fares, 2011•Figure: Crude oil prices and forecasts 2007–12e•Figure: Distribution of high-speed rail in Europe, 2011•Figure: Barriers to passenger spending and their solutions, 2011•Figure: Zürich A irport arrivals duty free advertising, 2011•Figure: Nuance 's second Zürich arrivals duty free store•Figure: Zürich arrivals duty free store•Figure: Amsterdam Schiphol Airport smartphone app •Figure: Frankfurt Airport smartphone app•Figure: Airport services operated by top 10 airports by passenger volumes, 2011•Figure: Consumer attitudes to shopping and airport retailing solutions•Figure: Dublin Airport Terminal 2, The Irish Whiskey Collection•Figure: Aerotropolis, 2011•Figure: Airline traffic distribution, by region, 2010 •Figure: Airline traffic distribution, by region, 2030•Figure: Passenger composition, 2010 and 2030•Figure: Airport retailers' market share, 2010•Figure: Airport retailers' revenue growth, 2010•Figure: Top 3 airport retailers, by region, by revenue, 2010•Figure: Top 3 airport retailers, by category, by revenue, 2010•Figure: LS Travel Retail EMEA duty free formats Buy Paris Duty Free and Aelia Duty Free, 201 1•Figure: Discover Glasgow LS Travel Retail EMEA gifts and souvenir format, 2011•Figure: So Chocolate, Singapore LS Travel Retail's luxury confectionery format 2011•Figure: Watermark book store, 2011•Figure: Autogrill's main markets, % of sales FY2010•Figure: The Shop, Palma de Mallorca Airport 2011•Figure: Dufry's main markets (% of sales; including new acquisitions), fiscal 2010•Figure: Walk-through duty free store, Oslo•Figure: Frankfurt regional produce store•Figure: Gebr Heinemann online duty free store•Figure: Watsons your personal store, Zhuhai airport 2011•Figure: World of Wine, Sydney Airport departure shop opened in 2010•Figure: Dubai International Airport, 2011•Figure: Dubai Duty Free, Dubai International Airport 2011•Figure: Dubai Duty Free, Dubai International Airport 2011•Figure: Dubai Duty Free, Dubai International Airport 2011•Figure: Dubai Duty Free, Dubai International Airport 2011•Figure: Runway duty free, Kosovo 2011•Figure: Beauty store, Cyprus 2011•Figure: Delhi duty free, India 2011•Figure: Shilla Duty Free fashion and accessories store in Incheon International Airport, South Korea•Figure: Louis Vuitton store in Incheon International Airport, South Korea•Figure: DFS Galleria, Guam, 2011•Figure: DFS Duty Free 2011•Figure: Victoria's Secret, Honolulu International Airport, 2011

Airports of Thailand PCL, Auckland International Airport Limited, Autogrill S.p.A., Aviva Plc, British Broadcasting Corporation, Christian Dior S.A., Compagnie Financiere Richemont AG, ERGO Versicherungsgruppe AG, Gucci Group, Hutchison 3G UK Limited, Imperial Tobacco Group PLC, Lotte Group, LVMH Moet Hennessy Louis Vuitton SA, Metro International S.A., Nestlé SA, Net Holding AS, Random House, Inc., Samsung Group, Schindler Holding Ltd., South African Airways, TDC A/S, Tommy Hilfiger Group, VF Corporation

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