London Heathrow Airport (LHR) is seeking to widen its merchandise assortment across different price points in response to shifting passenger demands, TRBusiness has learned.
In an wide-ranging interview available in the August Top 10 Airports report, Fraser Brown, Retail Director, Heathrow Airport speaks at length about the evolving commercial proposition, particularly at Terminal’s 3 and 4.
“While we continue to meet the needs of the luxury market, we are now looking at broadening Heathrow’s appeal by providing choices for more value-conscious passengers (mainly UK residents),” said the former Heathrow Express Chief, who as revealed earlier this year replaced Chris Annetts who has moved to a new role.
“Wider partnerships with aligned brands provide the opportunity to offer products to our passengers that aid their journey and enable them to take a piece of Britain home, such as the exclusive Royal Botanic Gardens, Kew shopping bag available in all terminals,” said Brown.
MORE POP-UPS EXPECTED
“We will continue to experiment further with pop-up spaces this year, responding to global events, trends and seasons,” confirmed Brown.
Terminal 3 has broadened its retail selection recently to cater for a number of new British Airways’ short-haul flights, introducing Superdry and upgrading Ted Baker to a larger unit.
Additionally, LHR is witnessing continued appetite for British retail, especially among Chinese and US passengers.
However, luxury is – and will continue to be – an important fixture of the retail mix serving international customers at the Skytrax award-winning airport, which broke the 80 million passenger mark last year.
“In 2018 we enhanced our luxury retail to meet the demand from emerging markets and we have been keen to articulate their success through premium products,” stressed Brown.
“ We were delighted to bring a third Louis Vuitton store to Terminal 3, completing upgrades to the terminal and enhancing our offer across the airport with more pop-ups, similar to the success of Aspinal and Anya Hindmarch in 2018.
“We continually look for new brands which are rising in popularity to ensure we are giving our passengers the brands they love. While new brands are important, many established brands such as Rolex, Chanel and Louis Vuitton also continue to maintain their status as popular luxury brands for passengers.”
‘SEAMLESS DIGITAL STRIDES’
As reported, total retail revenue, which includes income from retail concessions, leaped to £716m/$952m (+8.6%) year-on-year in what the airport has dubbed an ‘outstanding’ performance.
At £323m (+6.3%) retail concessions accounted for the bulk of total retail revenue. Meanwhile, retail revenue per passenger achieved a solid result at £8.94 (+5.8%).
LHR attributes the returns to higher pax, a strong response to new retail initiatives and greater participation in the offer.
Asked how Heathrow remains competitive in a climate of mounting pressure on airport retail from online commerce, resulting in cost pressures and squeezed margins for retailers and brands, Brown answered unequivocally.
“Heathrow strives to remain at the cutting edge of airports on a global scale by identifying trends ahead of the curve and investing in premium surroundings for our customers.
“We are making strong strides towards providing seamless digital technology that supports customers from the moment they choose to fly through Heathrow. Our digital services enable passengers to plan and book ahead to ensure they have the best possible journey.
“Improving pre-awareness of our services, such as Reserve and Collect, and developing our pre-booking tools will give passengers enhanced convenience, choice and peace of mind that they will receive an experience tailored to their specific preferences.”
Retail revenue climbed by 3.4% in the first half of this year to £339m/$421.4m, outstripping pax growth of +1.8% to 38.8m. The airport is tipping total passenger numbers to rise to 80.9m by year-end.
“We are continuing to see strong retail growth at Heathrow and we hope this will continue throughout the year as we look to further optimise our retail offer, from smaller pop-ups to more significant developments,” added Brown.
Read the full interview with Fraser Brown in the August Top 10 Airports report, available now. Click here to subscribe to TRBusiness.