NEW ZEALAND. Auckland International Airport has hailed the quality of the new departures duty free stores, completed in recent days by concessionaires Aer Rianta International (The Loop Duty Free) and Lagardère Travel Retail (Aelia Duty Free). The combined departures offer in the core categories across both retailers amounts to around 3,000sq m.
The completion of the new-look departures duty free zone is part of a wider master plan to enhance the airside offer in the International Terminal. This will feature a +65% increase in net lettable retail space once new luxury, dining and other concepts open by late 2018 (see below).
Auckland Airport General Manager Retail and Commercial Richard Barker said: “We have a 30-year masterplan and what you see with the duty free and destination developments is an early step. It’s a NZ$250 million (US$175 million) investment in and expansion of the International Terminal. That takes in aeronautical, passenger processing and retail. Essentially we are on a journey to become much more customer-focused and this is one element.”
Of the new duty free offer, Barker said: “I want us to grow the pie so that we and our retailers do well. Our success depends on their success. We’ve already seen a step change in sales in the first ten days since both stores opened [ARI for example has reported a +30% surge in the business with new space now fully open -Ed]. People have very quickly picked up that there are new product ranges and wider brand assortments. We think we can grow the overall category of duty free, which had been in decline previously before ARI and Lagardère took over.
“You see it with some leading brands offering their full range or expanded offer. They have extra space and wider ranges and that approach can be expanded to new categories.”
He added: “There is still an opportunity in that people don’t yet quite know the value on offer in the core categories. We will aim to communicate better the value we represent versus our off-airport competition. We have seen examples of other airports communicating that value effectively and we want to ensure people know precisely what value they can gain at Auckland Airport.
“Both have a very good focus on the basics of retail, which cannot be under-estimated. ARI was first to open and we have seen them deliver great service on the floor. People appreciate friendly, efficient service that is not too pushy. They also offer the right language skills at the right time of day, which is important in our diverse airport environment.”
On the dual operator model and competition between the retailers, Barker noted: “Current legislation requires us to appoint two operators competing in the same categories and we know it was frustrating for brands to duplicate their offer, But in some cases they have chosen to pick one partner and execute really well with them. Aelia has MAC and Chanel exclusively, and The Loop Duty Free has Dior and Jo Malone. The extra space makes it easier for the retailers to put together compelling concepts for the brands.
“In this design, the branding of each store is not as strong as it was when they opened originally so it’s not as easy for customers to differentiate between them across a narrow (4m) pathway. But against that you see that the brands themselves stand out far more with their own executions. It’s something we will work through with the retailers to ensure they stand out. People will get used to it and it’s early days. Also, let’s not forget that with competition on pricing the consumer is often the winner.”
On the future of the dual operator model, he said: “Changes in the wider retail landscape will answer that question. The competition authority’s decision was based on offering choice and competition to consumers. Now every retail business knows that those things are on offer to consumers everywhere and that decision was made before the advent of e-commerce, which has changed everything in my view. Today you can stand in the terminal, price-compare on the spot and order your goods with a couple of clicks to be delivered at home, and that will have an impact in the model in time.”
PICTURE GALLERY: AELIA DUTY FREE
The retail offer in the International Terminal will be rounded out in the year ahead, with most of a new luxury offer in place by mid-year and then a major overhaul of food & beverage in place through Q3 and Q4 2018.
Already announced in the luxury zone are Coach, Hugo Boss, Furla and Fossil as well as Rolex and Omega in Partridge Jewellers’ new exclusive watch and fine jewellery store. Some of these stores will be the luxury brands’ only New Zealand airport location, while others will be their first standalone New Zealand store. Several more major luxury brands will be announced soon, as will the final line-up of more than 20 food & beverage concepts, which will include several new partners.
PICTURE GALLERY: ARI’S THE LOOP DUTY FREE
The opening of the new departures duty free stores has been complemented by the recent opening of a series of destination stores (across a coherent ‘destination boulevard’), which aim to bring the best of New Zealand to the world.
These stores include merino concept Icebreaker; Mountain Jade, selling handcrafted greenstone from a series of artists; Merino Collection, offering natural fibres and Beecology, a dedicated premium honey store; health and wellbeing concept TravelPharm and a further store showcasing New Zealand art and gifts. Each of the retailers in this zone is authorised to sell only particular categories to avoid duplication. Several concepts including Beecology and Mountain Jade are new to the airport.
Barker said: “We heard from consumers that they were confused by the proliferation of stores that sold many similar things. Successful retail brands anywhere have a clear value proposition and know their target audience do a lot better. If you are all things to everyone, you are nobody. We applied that logic to destination.
“So we now have category experts, it is more credible and easier to retailers to lift their average transaction values. It makes for a more compelling proposition for the consumer and a stronger business proposition for the retailers. Destination of course is an area you can differentiate versus other airports and bring Sense of Place. It also means you can differ from the e-commerce players, guaranteeing authentic products and showing provenance.
“You have a concept like Mountain Jade, a family business that offers world class jade. But they also support the wider community, carvers and indigenous artists who live in smaller rural towns.”
The new International Terminal environment will offer more light and space than before, with a 9m ceiling and many neat New Zealand design touches.
Barker said: “The design story is from the sea to the land to the sky; that means a journey from the harbour across the country to the air with design touches that reflect this journey. We don’t have the budgets of our counterparts of other airports so we must have subtle design touches, helping people understand that they are in New Zealand. That can be through the use of New Zealand wood and carvings with Maori phrases and proverbs with English translations, or sunken volcanic style seating that breaks up the airside zone but reflects Sense of Place.”
After the major International Terminal project will come a new Domestic Terminal by 2022, with an opportunity to address the “under-developed” retail and F&B offer.
PICTURE GALLERY: THE NEW DESTINATION GOODS OFFER
Barker also commented on Auckland Airport’s new and far-reaching partnership with global technology service provider AOE to create a ‘multi-retailer mall’. This will enable international travellers to purchase airport products and services via mobile and online.
He said: “It is about making life easier for passengers, not technology for its own sake. It’s about the customer. We know that they have an interest in more convenience, and we have already sense that in our online parking business that is very successful. We are building off that. Early steps show that there is a desire for it.
“How do you develop a simple opportunity to put duty free and destination goods in front of consumers, one that it’s really easy and convenient? It also solves some of the delivery problems the e-commerce players have, with airport delivery. It’s going to help our duty free and destination partners remain relevant. That could also open up opportunities for them to sell offshore; if your Chinese traveller loves the Manuka honey they bought, how do we create repeat business and deliver to them?”
By mid-2018, the new system will be in place, including an integrated payment solution with a single check-out covering all retailers.
On the categories that can benefit most, Barker noted: “A big source of volume will be core duty free items such as liquor for New Zealand travellers; they can click in and buy their duty free to save time at the airport. Our duty free partners suggest there is an opportunity and that it can expand the business.
“There is an opportunity to expand P&C sales to New Zealand customers too. If they go in to the cosmetics store and the shade they want isn’t there, they are frustrated. A good range online can help solve that. There is a huge market for online cosmetics and that grow for us too. Then for our international visitors the opportunity will be mainly around destination products.
“In short, by 2022 when our duty free licences come up again, we’ll be asking ourselves what retail platforms and models will prevail. I see a credible virtual mall as an important part of our platform.”
*Further stories and comment on the duty free offer, plus video, will appear shortly.
