Airport Authority Hong Kong (AAHK) has declared itself ‘satisfied’ with the performance and shop design of its new concessionaires following an extensive overhaul of the commercial offer at Hong Kong International Airport (HKIA).

This followed the exit of DFS Group, which decided not to extend its loss-making liquor and tobacco, general merchandise and perfumes and cosmetics concessions at the airport in 2016.

Last year, AAHK welcomed two new anchor licensees, Duty Zero by cdf (the joint venture between China Duty Free Group and Lagardère Travel Retail) for liquor and tobacco and Beauty & You, operated by The Shilla Duty Free for perfumes and cosmetics.

BREAK FROM TRADITION

In a break from tradition, AAHK also introduced a separate concession for confectionery, won by Gebr. Heinemann in September 2017, which took over two of its eight Sweet Dreams by Heinemann shops last December.

HKIA, which celebrates its 20^thanniversary this year, reported retail licenses and advertising revenue of HK$3.6bn ($460m) for the six-month period ended 30 September 2018.

As reported, HKIA registered a 1.4% rise in retail licenses and advertising revenue to HK7.9bn in the 12-month period ended March 2018, driven by passenger growth of +4.5% to 73.6m.

An AAKH spokesperson, who pinpointed Greater China and South East Asia as its most important customer segments told TRBusiness: “The performance and shop design of all the new concessionaires has been satisfactory. This includes the pop-ups and a broad range of customer engagement activities which have driven penetration and sales.”

According to the spokesman, it is important to engage passengers with new experiences at HKIA, which boasts around 400 shops and restaurants.

Examples include ‘Magic Mirrors’ for virtual makeup, a ‘New Generation’ zone featuring emerging Korean and Japanese beauty brands along with tasting-bars and in-store VIP lounges in the new outlets.

DIGITAL AND INTERACTIVITY

A strong emphasis on digital and interactivity is also evident, indicated the spokesperson. “In our recent round of shopping experience enhancement, omni-retailing, digitalisation and customer engagement through interactive features are important elements in our planning of the airport’s retail development.”

Giving the confectionery category more exposure was another key element in its plan to develop the airport’s retail offer. “Confectionery is an important and popular segment in travel retail hence our separate concession dedicated to this category.

“The new Heinemann shops, operating under the trade name ‘Sweet Dreams by Heinemann’ are equipped with different design themes, which provide passengers with interactive games, 3D chocolate and candy printing.”

Aside from the traditional core duty free retail, HKIA has expanded the commercial mix to include new categories. These include athleisture, kidswear, entertainment, express hairdressing and lifestyle.

The luxury offer will also evolve once the remaining winners of the recent 36-licence luxury tender are announced. TRBusiness can confirm the evaluation remains in progress and that the results are set to be announced next month.

Earlier this month, King Power Global Development Company, a joint-venture between KingPower Thailand, and King Power Group (Hong Kong) was awarded luxury concessions at HKIA.

King Power will operate five luxury watch and jewellery concessions, all belonging to the Richemont Group. The brands concerned are Cartier, IWC Schaffhausen, Piaget, Panerai and Jaeger Le Coultre. The concessions will commence in August/September 2019.

The opening of the Hong Kong-Zhuhai-Macao Bridge in October, should see more passengers use HKIA as a hub for travelling to and from the Pearl River Delta and provide fresh impetus for retail growth across the board.

PROMOTIONAL EMPHASIS

Should this be the case, the importance of promotions will inevitably increase. “HKIA [already] conducts regular point-of-sale thematic promotions, integrated marketing campaigns and cross-promotions across its various outlets.

“The aim is to drive sales and draw traffic to its retail and catering shops,” emphasised the spokesperson.

Passenger convenience is also vital, which is why HKIA is offering a free delivery service to travellers spending certain amounts. The spokesperson explained: “We offer free delivery to 15 destinations, covering most of Asia, Australia, Canada and USA.”

A new Shopping Ambassador Programme was also launched in October. Shopping ambassadors are deployed at key locations to provide practical help, shopping assistance and recommendations to time-pressed passengers.

With more and more passengers turning to online so they can purchase anytime and anywhere, a one-stop, airport-based shopping platform was unveiled last year to accommodate their needs.

The HKairport Shop offers various products including beauty items, packaged food and airport exclusives. Passengers can collect orders at the airport three hours after confirmation, before or after flights. Orders can also be delivered to a local Hong Kong address.

“Together with the ‘HKG My Flight’ mobile app and beacon technology, HKIA can offer shopping and dining options and promotions more easily,” acknowledged the spokesperson.

STRATEGIC PROJECTS

Meanwhile, HKIA has been implementing a series of strategic projects which will integrate the airport’s development with broader regional economic activities. These include the Sky City complex adjacent to the airport’s passenger terminals.

Last year an open tender was issued for the development of 350,000sq m of retail, dining and state-of-the-art entertainment facilities. The spokesman commented: “Scheduled to open in phases from 2023 to 2027,  facilities will be tailor-made for visitors and local residents of different ages.”