MAHB plans ‘new nexus of shopping delight’ at KLIA

By Andrew Pentol |

Hani Ezra Hussin, Senior General Manager, Commercial Services, Malaysia Airports Holdings Berhad.

Malaysia Airports Holdings Berhad (MAHB) is to introduce Sense of Malaysia stores in all its international airports this year as part of the next phase of its commercial reset strategy.

Beginning in 2018, the aim of the commercial reset strategy was to revitalise the retail experience across MAHB’s Malaysian international airports (Kuala Lumpur, Kota Kinabalu, Kuching, Langkawi and Penang).

As of March 2021, 475 outlets in airports across Malaysia had been successfully tendered under the commercial reset strategy and 350 stores had been awarded.

MAHB manages 39 airports in total across Malaysia (and Sabiha Gökçen International Airport in Istanbul) of which 16 are domestic and 18 are STOLPorts (airports designed with short take-offs and landings in mind).

Store operations including those managed by wholly owned MAHB retail subsidiary Eraman Malaysia, are guided during the pandemic by the Standard Operating Procedures issued by the Malaysia authorities. The procedures were released after a Movement Control Order was issued by the Malaysian government on 18 March 2020 in response to the coronavirus (Covid-19) pandemic.

SENSE OF MALAYSIA

Speaking exclusively to TRBusiness, Hani Ezra Hussin, Senior General Manager, Commercial Services, Malaysia Airports Holdings Berhad, who assumed the role in March 2021 having previously served as Acting Senior General Manager Commercial Services since June 2020 said: “The Sense of Malaysia concept stores will showcase the best of Malaysia by offering unique local products such as delicacies, crafts and premium souvenirs.”

An artist’s impression of a Sense of Malaysia store which will be introduced at Langkawi International Airport later this year.

In addition, MAHB is planning to showcase the central court of the Kuala Lumpur International Airport (KLIA) Satellite Building in a new light as part of its commercial reset strategy. Hussin who replaced outgoing Senior General Manager, Mohammad Nazli, Abdul, Aziz enthused: “The centre court will be revitalised as a premium hotspot. It will be the new nexus of shopping delight and experience.”

At the time of interview earlier this month, the prolonged impact of Covid-19 was continuing to affect overall passenger traffic across the MAHB network. Continued restrictions on local and international travel meant the Group’s passenger traffic fell by 76.9% to 5.9 million passengers in Q1 2021.

Last month, however, there was a glimmer of hope across MAHB’s Malaysian airports, which handled 630,000 passengers in April. This represents an increase of 365% year-on-year. Most duty free stores remain temporarily closed as international travel is restricted, but fortunately for MAHB commercial occupancy rate in 2020 remained above 75%.

Despite the continuing closure of duty free stores and minimal international passengers, sales from duty free items contributed 30% of total commercial sales in Q1 2020.

“This indicates a positive outlook when passengers return,” Hussin remarked.

In the meantime, MAHB says Sabiha Gökçen International Airport (ISG), a wholly owned MAHB subsidiary since 2015, continues to be the main contributor to total passenger traffic. This is hardly surprising since the airport showed positive recovery signs in Q1, recording 4.2 million passengers and surpassing the monthly average of 1.3 million passengers over the past 12 months.

Sabiha Gökçen International Airport showed signs of recovery in the first quarter of 2021, recording 4.2 million passengers. Source: Istanbul Sabiha Gökçen International Airport.

On the importance of ISG to MAHB’s portfolio, Hussin commented: “Dubbed as ‘Istanbul’s City Airport’, IST has been named one of the busiest airports in Europe. It is a popular airport for domestic airport travel and connectivity to European destinations.

“Turkey is projecting to welcome double the number of tourists this year compared to 2020 which will help spur non-aeronautical revenue growth.”

Not only is ISG among the busiest airports in Europe it also welcomed Dufry Group as incumbent duty free operator last year. As reported, Dufry manages 3,900sq m of retail space comprising eight retail lots and offers an attractive assortment of core travel retail products including liquor, tobacco, perfume and cosmetics, accessories and confectionery.

“In addition, a refined selection of local food and souvenir brands reflecting Turkey’s cultural heritage, further completes and enhances the shopping experience at ISG,” Hussin remarked.

On the digital front, the introduction of ISG’s ‘shop@saw’ e-commerce platform (www.shopatsaw.com) enables passengers and non-passengers alike to purchase food and beverage and travel retail exclusive products whether at home or at the airport.

Sales from duty free items contributed 30% of MAHB’s total commercial sales in Q1 2021.

Hussin explained: “Like the Malaysian ‘shopMYairports’ e-commerce equivalent, an online shopping platform expands the reach of airport retailers beyond the brick-and-mortal set-up and provides a more accessible and safe airport retail experience.

“Passengers can now conveniently order online for products to be quickly collected at the airport, thus minimising unnecessary physical contact.”

FIRST MALAYSIAN TRAVEL RETAIL E-COMMERCE PLATFORM

Providing more information on the success and implementation of the ‘shopMy airports’ e-commerce platform in Malaysia, Hussin, who revealed the platform was set-up in just one-and-a-half months and is the country’s first travel retail e-commerce platform recalled: “Airport tenants were enticed to come onboard the platform and showcase their products with competitive rates while we provided the necessary advertising and marketing support to ensure maximum reach.

“Online sales have grown more than 50% month-on-month since the launch in September 2020, supported by aggressive promotions. The online campaign on Boxing Day alone resulted in sales increasing by 58 times compared to the daily average.

“We are working closely with our tenants to enhance offerings particularly in e-commerce by curating exclusive products and services to target a larger audience beyond the usual travellers.

“An expansion of our [home] delivery concept beyond Malaysia to serve global shoppers is also in the pipeline.”

Since the onset of the pandemic, MAHB has implemented several relief programmes to assist and support its tenants. These include deferring rental payments, extending credit terms, extending the tenure of newly signed contracts and deferring commencement of business.

As of March 2021, 475 outlets in Malaysian Airports had been successfully tendered and 350 awarded under the airport company’s commercial reset strategy, which commenced in 2018.

The KLIA Crazy Sale is another element introduced to assist retailers while international borders remain closed and the two events last year.

“Last year, the two KLIA Crazy Sales events received positive feedback as we made airport shopping accessible to the public without the need for a boarding pass. We welcomed more than 20,000 visitors and helped retailers clear off stocks worth RM4.8 million/$1.1 million.”

This March another KLIA Crazy Sale event took place which generated even greater response from the public. Daily sales transactions value doubled in value compared to the previous events.

“This is a testament to the wide offerings at our airports,” Hussin remarked, “as well as the great deals the public can continue to expect from us. This is also in line with our commercial reset strategy to transform our airports into more than just transportation hubs, but also shopping and lifestyle destinations.”

Moving forward the commercial reset strategy will continue focusing on optimising revenues and create ‘valuable and unique propositions’ through partnerships with established brands. Retail zones are also being reformatted to maximise their full potential.

IMPORTANCE OF CATEGORY PLANNING

“The value of these prime locations will be further enhanced through this exercise. Quieter zones will also be turned into hot spots with the right category planning.”

During the commercial reset, MAHB has welcomed notable firsts at airports, elsewhere across the country and in the region. Langkawi International Airport was the first to undergo the reset and according to Hussin is a live showcase of what a complete reset can do for airports.

“Many Malaysian firsts were introduced at the airport and on the island [of Langkawi], reflecting the booming opportunity to attract travellers and those living near the airport,” Hussin commented.

Langkawi International Airport was the first to undergo the commercial reset.

“The airport now hosts a number of food and beverage and retail outlets which cannot be found anywhere else on the island such as Burger King, Costa and Charles & Keith. As a result, sales at Langkawi Airport grew by 77% after the reset was completed.”

While focusing on the commercial reset, MAHB has also been implementing new revenue streams to mitigate against the impact of the pandemic. One example is the introduction of the Business Traveller’s Centre (BTC) at KLIA to facilitate the entry of business travellers into Malaysia.

“This is a collaboration between Malaysia Airports and the Malaysian Investment Development Authority to revive and pave the way for the country’s economic rebound,” Hussin explained.

An artist’s impression of how the revitalised Kuala Lumpur International Airport Satellite Terminal central court might look once work is complete.

“The BTC aims to ease the movement of business travellers from entry to exit point, so Malaysia remains an attractive investment destination for foreign business.”

Business travellers can take Reverse transcription polymerase chain reaction swab tests in the comfort of the dedicated Covid-19 laboratory within the BTC and can be assisted by a special liaison officer throughout their journey.

“The BTC has hosted business travellers which have generated around RM15 billion,” she concluded.

See the June edition of the TRBusiness e-zine for more from our exclusive interview with Hani Ezra Hussin.

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