In the last two years London’s fastest growing airport, Stansted (STN) has invested £80m ($115m) in the redevelopment of its one-terminal building, growing its retail space by 60% by relocating security and reducing check-in space.

As Stansted posted a double-digit increase in traffic for 2015, the airport’s owner Manchester Airports Group (MAG) is driving forward in its ambition to attract a greater mix of airlines, including long-haul connections to serve its region and the London, Stansted, Cambridge economic growth corridor.

The airport’s three-phase project was finally completed at the end of last year and last month TRBusiness enjoyed an exclusive tour of the 18 new retail units at London Stansted Airport led by MAG’s Head of Retail, Steve Foster.

During the first phase of the major project, the check-in area and security areas were transformed completely – with swathes of space for check-in minimised and replaced with small ‘cul-de-sacs’, in response to the changing face of travel, which means that the majority of passengers now check-in online.

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One of the biggest retail changes for STN was the opening of a mammoth new WDFG walkthrough store – which replaced two smaller ones – nearly 25,000sq ft (or 3,000sq m) in size; at the time of opening it was the largest WDFG walkthrough store.

In the second phase of the development Stansted opened/reopened 13 new F&B outlets, last spring, including five airport firsts such as a restaurant by popular British chef, James Martin.

And in part three STN unveiled 18 retail units, which opened in phases last year, for which 80 brands showed interest during a competitive tender process launched in July 2014.

Perhaps this is no surprise, considering the airport’s commitment to retail/F&B prowess and its rapidly growing passenger base. 2015 was London Stansted Airport’s busiest calendar year since 2007, as 22.57m passengers travelled through the terminal, an increase of 2.6m passengers (13%) on 2014.

Although Manchester remains the busiest airport in the Manchester Airports Group (MAG) estate – recording 23.12m in 2015 – Stansted’s total pax number is closing in on its sister airport. [It is important to note that non-EU passengers make up 45% of the total traffic at MAN, including many Chinese, giving it the most diverse passenger base of all MAG airports].

“What’s really intriguing about Stansted is the catchment area that we cover,” says Foster. “I think within two hours we’ve got 25m passengers that we could capture. We’ve got passengers that travel from central London and from Cambridge, so it’s a very different passenger base really here who use the airport more often.

“So when creating the retail mix here, we’ve tried to focus on having something different all the time, including product ranges, pricing and promotions. We work very closely with retailers to make sure there’s something new happening all the time; that the merchandising is changed regularly; that the shop windows are changed regularly as well, because Stansted’s got a large frequent traveller base.”

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Importantly Stansted has the capacity to continue growing and attracting more passengers –especially as new commercial developments in east London gather momentum – and that includes those on new long-haul routes too.

Although STN currently serves all passenger through one terminal building it did announce, back in February 2015, a £8m ($11.5m) upgrade of its Satellite One departure gate area, which the Airport’s Managing Director, Andrew Harrison said was being driven by the airport’s ambition to attract more passengers, airlines and long-haul services.

“Having successfully returned Stansted to growth, making it once again London’s fastest growing airport, we’re driving forward our ambition to attract a greater mix of airlines, including long-haul connections to serve our region and the London – Stansted – Cambridge economic growth corridor,” said Harrison last year.

Both passengers and airlines will surely be attracted to the £80m transformation of the main terminal building’s retail and F&B offer too. In September 2015, Stansted Airport unveiled the brands moving into the remaining 18 outlets.

As reported, 80 brands, from high street and global airport retailers, showed interest in the outlets at STN – which MAG bought from Heathrow Airport Holdings (HAH) in 2013.

The airport believes its newly refurbished one-terminal layout presents its retail partners with a unique proposition, as all travellers are forced to snake through over 10,000sq m of shops, cafés, bars and restaurants, via a navigable walkway.

“When we launched the food and beverage we opened five airport firsts with the likes of Harris + Hoole and the James Martin Kitchen,” says Foster. “That was really important to us for the final phase of the programme as well.

“It’s really exciting when a passenger comes who sees a brand they’ve never seen before, because you know we’ve got a lot of regular travellers. What we do realise is when it’s the first time in an airport for a retail/F&B partner, you have to work a little bit harder with them from a relationship point of view.

“You have to share the trading patterns of the airport and help them where you can because they’re new to everything. But actually the response you get back from these guys who do things slightly different to what our current airport operators do, that’s when you get a real reward and you see the delight on the customers’ face.”

The way the airside space is designed, leads passengers into an orientation area immediately following security. The snake walkway through the terminal means that passengers can’t actually see their final destination immediately.

“You don’t actually know where you’re going, so the snake walkway we’ve created is very different to Gatwick and other airports where you can actually see the end of it.”

 

In this respect Foster says it was of paramount importance to make navigation clear at all times, through large and effective signage, and to make flight/gate information available within every store via flight information displays (FIDs).

It wasn’t so easy making all of these changes whilst the airport was still functional and Foster admits that operating during months of construction was testing. However, building over 10,000sq m of new retail and F&B space during opening hours was not the only challenge Stansted had to contend with last year.

Back in August last year, well-known UK High-Street retailers and global DF&TR retailer World Duty Free, came under attack from the UK press for allegedly ‘ripping off’ customers at UK airports and banking ‘millions’ in the process. At the time TRBusiness obtained statements from WDF and Boots in defence of their positions.

 

Soon after these revelations surfaced, social media forums began to bristle with criticism for Boots, Dixons and WH Smith, creating ill-feeling towards airport retailers from customers.

We asked Foster how Stansted reacted to the scandal and how its retail partners interacted with difficult customers: “I think it’s fair to say that when this story first broke there was some challenges in the units,” he says. “I think the media was balanced in different ways; clearly the trade press was very accurate.

“We know that the majority of stores here operate at airport price, where there’s a genuine saving to the passenger, and that kind of got missed in reports. And we know that the duty free stores are working hard to demonstrate that they offer 20% cheaper than high street prices.

“There’s some real, genuine, strong savings here. Unfortunately some of the coverage picked up on the negative points and obviously we’ll wait to hear what comes from the Chancellor’s review. We need to have a conversation with our retail partners to understand their view on it and we’ll wait to see what comes from that.”

 

The much-publicised UK HM Treasury review into airside VAT-free shopping at UK airports is now well underway, with airport retailers already meeting with the Treasury’s ‘review team’ as part of this process.

This review is expected to be ready by UK budget day – 16 March – although most of the actual interviews taking place now looked set to be complete by the end of January.

Foster says that the most important lesson to learn from this episode and consequential review is that the retailers’ communication with passengers has to be very clear; whatever the outcome.

“There are different options on the table,” he says. “I think the Chancellor is talking about dual-pricing. But what’s important is how it’s implemented and that it’s very clear, if that’s the case, or whatever other option it happens to be. We need to make sure the customer isn’t confused.

“Price is really important for airport retailers. Whether you use the high street or do your shopping online, or on a tablet, there are many avenues now for passengers to purchase items. So I think having a strong price message is really important for an airport, of course to have differentiation as well, to give people an incentive to shop at airports and make a fair purchase.”

However, as Foster proudly points out, every one of the airport’s 18 retail units is already offering ‘airport prices’ or tax free pricing, which represents a saving of between 15-20%, on average. The airport and its retail partners aren’t shy about communicating this to customers either.

“We’ve got the constant reinforcement of the savings here up on various screens; you can see that throughout the terminal,” adds Foster.

As previously reported, the new retail line-up at STN includes, fashion clothing brands, popular on the UK High-Street, such as Lacoste, Joules, East, Oasis and Superdry. Footwear and accessories have been ‘enhanced’ by the arrival of popular affordable luxury brand Dune London; a new specialist shop, Sunglasses Boutique run by World Duty Free Group; as well as Parfois – a Portuguese brand offering a host of fashion accessories, handbags and jewellery.

Hugo Boss, Ted Baker plus accessory specialists Mulberry, Swarovski and Accessorize also made a return to the departure lounge following the major £80m terminal development.

 

New arrivals to the UK retail travel market include Joe and the Juice, a Danish coffee and juice concept; Hema, a Dutch retailer offering own brand products in stationery, children’s games, toys, homeware and a host of other novelty items.

Securing the ‘prime island locations’ in the new development will be Cloud Spa, supposedly the ‘first ever’ beauty salon at Stansted; Red 5 – a one stop gadget shop and finally, Best of the Best (BOTB), offering passengers the chance to win ‘amazing’ cars with its weekly ‘Dream Car Competition’.

 

Partnering with a four-airport group is obviously a big deal for any of these new brands entering STN, says Foster. “So with all these airport firsts, if it works and it’s successful then clearly we want to grow that brand. It also gives these guys a chance to understand airport retail and see if it works for them, and then obviously we can look to expand that out further.”

Although Stansted Airport has a long-established partnership with World Duty Free, Foster reveals that 80% of the brands it works with, it does so directly. This ratio is turned on its head for food and beverage for which MAG says it works with groups like TRG, SSP, HMSHost for around 80% of its portfolio.

Foster also says that the big retail income driver is obviously through duty free, but by bringing more high street brands to the airport, the balance is tipping.