Hong Kong International Airport handled around 74.7 million passengers in 2018.

Airport Authority Hong Kong (AAHK) has described 2018 as a transitional year with the main highlight being the successful changeover of its anchor licenses including Duty Zero by cdf (liquor and tobacco) and Beauty & You (perfumes and cosmetics) at Hong Kong International Airport (HKIA).

Another significant change was the introduction of a dedicated confectionery concession for the first time with Gebr. Heinemann operating eight stores under the Sweet Dreams branding.

Currently, the AAHK 2018/2019 Annual Report has yet to be published. But according to the company’s 2018/2019 Interim Financial Report, revenue from retail licences and advertising dropped to HK$3,567m ($455m) in the six-month period ending September 2018. This amounted to HK$4,202m during the same period last year.

POSITIVE RETAIL PERFORMANCE

During the 2017/2018 financial year, AAHK was boosted by a positive overall retail performance. According to figures released for fiscal year ending March 2018, revenue from retail licences and advertising rose by 1.4% to HK$7,909m ($1,009m), representing 36% of total revenue. The increase was driven mainly by a 4.5% surge in passenger throughput in 2017/2018.

Speaking to TRBusiness as part of our Top 10 Airports Report which will appear in the August edition of the magazine, an AAHK spokesperson said: “Both Shilla and CDF-Lagardère have delivered sales performance since their respective grand openings in mid-2018 and they have continued to be among HKIA’s top retail categories, alongside luxury goods.

CDF-Lagardère has delivered ‘outstanding performance’ at Hong Kong International Airport since beginning to operate the liquor and tobacco concession.

“We have also enjoyed a good sales growth so far this year in 2019. The key contributing factors are the two anchor licenses and food and beverage in which we have introduced many new concepts.”

Outlining the reasoning behind the decision to introduce a standalone confectionery concession for the first time, the spokesperson commented: “In view of the high sales productivity and popularity of confectionery in the context of travel retail, we decided to have a concession dedicated to confectionery, welcoming ‘Sweet Dreams’ by Heinemann as the new operator.

“Heinemann has been delivering [a] good sales performance and is operating eight shops at HKIA, each featuring a different theme.”

Beauty & You by The Shilla Duty Free offers “magic mirrors” for virtual makeup to accommodate consumers’ demand for more immersive experiences.

Last year, HKIA welcomed around 74.7 million passengers with passenger traffic up +2.5% to 37.8 million in the first half of 2019. It is currently connected to 220 worldwide destinations and in 2018 added several new locations. These include Dublin, Copenhagen and Davao. Shandong Airlines, Thai Smile Airways and SpiceJet also started operating operating at HKIA, joining more than 100 other carriers. Passengers from Mainland China and Japan recorded the most significant growth.

In terms of AAHK’s overall strategy, which is geared towards accommodating the needs of a wide mix of travellers, the spokesperson remarked: “HKIA is committed to contributing an unrivalled retail experience for passengers.

“At present, there are around 400 shops and restaurants at HKIA, offering a wide range of choices for worldwide travellers. HKIA’s retail outlets enjoy convenient shopping locations with an affluent mix of passengers. Greater China and South East Asia are our important customer segments.”

High sales productivity and popularity of the confectionery segment are among the reasons AAHK implemented a dedicated concession for the category for the first time.

DIGITAL STRATEGY

In addition to trying to create the optimum airport-wide shopping offer for passengers, AAHK is striving to be at the forefront of the industry in terms of  digitalisation. This is because airports no longer just compete on operational efficiency and convenient service, but on retail and dining varieties and experiences as well.

“We believe a seamless retail experience plays an indispensable role in adding delights to the passenger journey. Passengers, in particular tech-savvy millennials, are seeking more engaging and personalised experiences, both online and offline.”

With more and more travellers seeking a seamless online to offline experience, particularly millennials who are always on-the-go and mobile focuses, the spokesperson said: “They expect a unified experience across all touch-points, from mobile apps, e-commerce and social media to physical stores.”

Screens have been implemented in Beauty & You stores at HKIA, as AAHK strives to be at the forefront of the industry in terms of digitalisation.

AAHK has actively launched various digital initiatives to provide a hassle-free retail experience and as part of its development into a smart airport. An example is the HKairport Shop. This is an airport-based online shopping platform offering an array of beauty, wine, packaged food and airport exclusive products. Items can be collected at the airport just 90 minutes after purchase.

“HKIA also introduced the E-coupon in December 2018 to make it more convenient to shop and ensure customers no longer need to bring physical coupons with them to spend. This increases flexibility in terms of being able to use coupons across our brick-and-mortar stores and online shop.”

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