The hardships that brick-and-mortar retail has experienced over the past decade are well-documented. Many traditional retail stores continue to struggle to retain old customers and attract new ones, due in part to the success of online retailers.
Not all retailers are losing ground, however. With access to an abundance of foot traffic — billions of air travelers annually — many airport retailers are booming, enjoying significantly higher sales per square footage than traditional retailers. As the types of stores and products offered in airports have shifted toward luxury and locally produced goods rather than basic traveler convenience products, there has been a meaningful change in consumer perceptions as well — an increasing number of consumers view airports as retail destinations.
Airport retail, however, has its own set of challenges to address. Digital signage provides the dynamic, flexible tool that can help attract and engage customers and move them quickly through the sales funnel before they dash off to their departure gates.
The airport retail landscape
Worldwide airport retailing revenue is expected to reach $49 billion by 2021, with an average annual growth rate of 5 percent. This level of sales growth is being fueled in part by a surge in passenger volume, and that’s a trend that will continue. The International Air Transport Association forecasts an average annual air travel growth rate of 3.6 percent over the next two decades. A whopping 7.8 billion passengers will travel by air in 2036, nearly doubling the 4 billion travelers who flew in 2017.
Advantages
The growth in the number of potential customers passing through airports tells only part of airport retail’s success story. Retail is thriving in airports for a variety of reasons. Airport retailers enjoy several built-in advantages over brick-and-mortar stores, including:
- Plenty of foot traffic
In most airports, all passengers walk through retail corridors on the way to their gates. Although some passengers may not give airport stores a glance as they rush through concourses to make their flights, many passengers proceed at a more leisurely pace.
- A captive audience with time on their hands
Due to early check-in times mandated by airlines and the risks of security lines delays, passengers are arriving at airports earlier than ever and spending a longer time airside. The average post-security wait time in North American airports is now 90 minutes.
Once passengers have made it through security, they’re a captive audience for everything that modern airports offer. And when missed connections or weather delays occur, passengers have even more time to kill. Plus, airlines are serving fewer meals and drinks on flights, and liquid restrictions limit what passengers can bring through security, incentivizing passengers to make purchases before their flights.
All of these factors provide retailers an opportunity to provide experiences to travelers — from the chance to sample new cosmetics and enjoy a meal at a celebrity-chef restaurant to buying local products from artisans.
- Potential customers with disposable income
Airline passengers are typically more affluent than general populations. Also, plenty of high-net-worth individuals pass through airports. As an over-the-top example, Stores magazine reports that a wealthy international traveler bought $150,000 of French wine at a Paris airport.
- Longer hours of operation
Most airports are busy from early morning to late at night, providing about 16 hours of productive operation — 365 days a year. Airport traffic also typically doesn’t drop off on weekends and holidays.
- Located beyond the reach of e-commerce
If a passenger forgets to pack something — their noise-canceling headphones or phone charger, for example — they may either need the item on the flight or may not be able to find what they need at their destination or be able to have Amazon deliver it to them. Airport retailers are there to help out passengers.
- Customers who need to buy gifts
Some passengers who are traveling for business, to visit friends or family, or returning home to their spouse and kids are often expected to show up with a gift. Airport stores provide easy, last-minute gift-buying opportunities.
Trends
When passengers think about airport retail, duty-free shops quickly leap to mind. The first duty-free shop opened at Ireland’s Shannon Airport in 1947 (and it’s still operating). Duty-free shops have traditionally offered passengers deals on items, particularly alcohol and tobacco products, which are subject to high excise taxes in that locale. Beauty and cosmetic products are currently the leading duty free products. Duty-free shops have always been located airside, but landside duty-free shops have emerged in several countries, offering arriving passengers the convenience of not having to carry their duty-free purchases onto their flights.
Outside of duty-free shops, airport retail has moved far beyond magazines, snacks, travel pillows and souvenirs. Today, global retailers and big-brand stores offer air travelers a wide variety of high-end products, fine dining and even spa services. Traversing many terminals now feels more like strolling in an upscale mall than trudging through an airport.
Luxury retail is flourishing at airports, particularly international airports. Fashion and accessories account for more than half of all revenues in the airport retail market worldwide, and jewelry and upscale dining are other growing segments of the market. Spa services are a budding trend in the airport retail luxury category. For example, XpresSpa offer massages, manicures and other spa services in 24 airports.
Air travelers are also increasingly looking for local flavor in airport retail. To address passenger expectations, airport authorities are granting more concessions — or offering pop-up store opportunities — to local operators who sell local products. Large travel retailing companies are also partnering with local enterprises to create community-inspired specialty retail concepts, such as Paradies Lagardère’s Churchill Downs retail store in the Louisville International Airport.
Challenges
Beyond the unique business requirements of operating in an airport— including navigating the concession bidding process, vendor access issues, the necessity to tear down at the end of a lease term, and attracting and retaining employees — airport retailers face a wide range of sales challenges. Their key obstacles to overcome include:
- Competition
Better dining options and updated airline lounges — as well as personal entertainment via smartphones and other devices —now provide passengers with alternative ways to spend their time at the airport, diverting potential customers away from retailers.
- Passenger motivation
Air travel is stressful, and stress can have an impact on a passenger’s mood to shop. Plus, unlike shoppers visiting a mall, passengers are in an airport to travel. Motivating travelers to shop is a key issue for retailers.
- Improving footfall and the in-store experience
Because airport retailers often have only one opportunity to appeal to passengers — while they’re walking by the store on the way to their flights — they need effective strategies to attract passengers into their stores and to provide unique in-store experiences or products that customers can’t easily get elsewhere.
Digital signage
From customer demographics to the products offered, retailing in an airport is much different than in typical brick-and-mortar stores. To help airport retailers meet some of the challenges they face, digital signage provides innovative and effective tools to transform passing passengers into customers. Digital signs are already a familiar technology in airports. Interactive kiosks streamline ticketing and check-in and provide terminal maps and other wayfaring and information assistance. Large format displays give passengers up-to-the-minute information on departures and arrivals. Displays also deliver ads for airport retailers, and video walls provide an immersive wow factor to promote the airport and locale.
Benefits
Digital displays are particularly well-suited for use in retail environments, providing flexibility and ease of integration. Their most basic benefit — in airports or elsewhere — is avoiding the hassles and high costs of traditional printed posters. Retailers can program digital displays to present ads or engaging slide and video content. A single digital screen can showcase many more products than a non-digital display, and airport retailers also don’t have to worry about access for third-party print vendors.
Digital signage helps move customers along the sales funnel. Its key benefits include:
- Catching eyeballs
Because of the physical space in which they operate, it’s particularly important for airport retailers to attract the attention of passengers walking by their stores. Digital signage is uniquely effective at attracting attention because it lets you leverage the captivating power of images, video and music to grab and hold attention. An Intel study found that digital displays capture 400 percent to 600 percent more views than static displays. By using digital signage — either a single screen or a bright LED video wall — retailers can create eye-catching content that will drive sales and increase revenue.
- Boosting interest and easing evaluation
Large-screen displays on walls or end caps can provide ads that showcase offerings or content that educates visitors about product lines — both of which promote product engagement and drive demand. Because content can be programmed and changed quickly and easily, retailers can run relevant ads depending on the time of day, day of the week or season. Digital displays allow retailers to provide high levels of detail, which improves the personalization of the customer experience, increases brand engagement, and frees employees to focus on other aspects of customer service and satisfaction.
- Increasing average in-store visitor times
Large screen displays and video walls allow retailers to create an immersive shopping experience that will increase dwell time. Interactive touch-screen displays and kiosks allow customers to browse catalogs, giving them access to more granular details of specific products and enabling them to view available inventory or, for example, see an article of clothing in various color options.
- Leveraging the latest data technologies
Smart digital signage, which incorporates facial detection technologies and anonymous analytics, enables retailers to engage customers with highly relevant content. Retailers can personalize and improve customers’ in-store experience and gather data in a business intelligence platform to build a better understanding of customers, determine which content works best and gain insights into which products appeal to different types of customers.
- Creating conversions
Digital signage is also valuable because of its ability to drive decisions among shoppers. One study found that digital displays can alter purchase decisions for 40 percent of shoppers.
Driving higher ROI
Airport retailers are no longer focused solely on providing traveler convenience products. Through offering a carefully curated mix of products and creating exciting retail experiences, retailers can showcase their brands and broaden their customer bases. By using digital signage in innovative ways, airport retailers can pull in customers and provide memorable, immersive experiences while meeting their ever-evolving needs. These enhancements will also help them attract new customers and build enduring relationships. Digital displays integrated with new business intelligence tools that manage data and provide rich analytical information will also help retailers better understand customers and boost revenue.
Paul Redding is a Senior Account Manager for transportation displays at NEC Display Solutions, serving as the company’s expert in transportation solutions and implementation. Paul has over 15 years of experience within the AV industry, including roles with Milestone and the 3M Visual Systems Division.
