Melbourne Airport is reporting growing duty free sales to local and overseas passengers following the opening of the first phase of the airport’s international terminal new departure shopping area at the end of 2010. Gilly Gray, Melbourne Airport’s Retail and Car Parks General Manager says this growth should be aided by more retail changes this year, as more Chinese and high-end Australians use the airport.

In addition to increasing the number of flight gates and reconfiguring departure security inspection facilities, Melbourne Airport’s ambitious international terminal (T2) expansion programme has involved expanding total retail space to around 6,000 square metres.

This exciting new retail development marks the first change to the airport’s duty free shopping layout since Melbourne Airport was privatised in the late 1990s. The departure hall area allocated to duty free sales has been increased by more than 50%, expanding the range of goods and outlets in the terminal at a time when foreign passenger numbers are growing each month.

Nuance runs all the duty free shops in the international terminal which are operated under the retail brand name ‘First’.

The main duty free shop is a mixed category outlet located in the T2 central departure hall that has been expanded to 2,100sq m in area from 1,330sq m previously as part of the duty free retail redevelopment.

MORE REFURBISHMENT AHEAD
With more products on display in the walk-through main store, Nuance’s landside duty free pre-order shop in the international terminal check in area also has been expanded in area to cover 500sq m from 300sq m previously to accommodate larger shopper numbers and showcase a wider range of goods.

In the arrival baggage collection area, space allocated to duty free arrivals shopping remains unchanged at 900sq m, though the outlets have been upgraded in line with the overall upgrade of facilities in the terminal.

“Our duty free shopping area has seen a lot of development and shops are now trading in new spaces,” commented Gilly Gray, Melbourne Airport’s Retail and Car Parks General Manager. “Business is doing well but the Aussie Dollar is a challenge as it is at a 40-year high.

“The dollar is a challenge for trading here but we know that duty free is not just about price. It’s about having the right products, sales service, incentives like gift with purchase, and price.

“Our departure sales concept is a department store experience. People have time to dwell and to see the brands,” she explained. “Arrival sales are to long haul passengers with a lot of pre-order business. It’s a faster service with more of a discount store feel.

“We are also refurbishing our satellite area departure shops for the end of this year or the start of 2012. These are for last-minute shoppers.”

MORE HIGH-END CUSTOMERS
Departure shops include James Richardson’s 160sq m stand alone JR Watch boutique, which is anchored by Omega. Opened in March, JR Watch sells various Swiss and other brands. According to the company, JR Watch is offering the Tiffany range for the first time in the Asia-Pacific region.

The shop also features the first airport shop presence in Australia by IWC. “JR Watch has top watch brands including mid-to-high-end brands from Tissot to Omega,” Gray said, noting the shop has opened at a time when high spend passenger numbers are growing at the airport.

“More recently there are many Chinese passengers using the airport and high-end Australians. About 20% of travellers are business travellers.”

Another 200sq m or so of retail space is available in the departure hall for which negotiations are underway with several brands and other retail offers.

The actual area of each remaining shop has not been decided with the eventual shop and kiosk sizes expected to range anywhere from 25 to 80sq m each. Two larger and three smaller outlets is one possible configuration.

“Not all these shops will be luxury brands. We are not aiming for luxury brands based on our current passenger profile,” Gray commented.

SATELLITE AREA REMODELLING
Retail facilities to be remodelled in the satellite area later this year include Nuance’s 330sq m last minute mixed category shop. Other facilities to be renovated include a magazine and book store, and an F&B outlet.

“We are seeing a growth in business, but the Australian Dollar has affected sales” Gray said. “Sales currently are in line or above 2010 for different categories. We are seeing a growth in speciality shops and F&B revenue.”

Although international luxury brands form a modest part of the airport’s current duty free collection, Gray pointed out that more luxury brand concessions could be granted in future if the Melbourne Airport duty free market moves in that direction when the current concessions expire in eight years’ time.