Nuance officially unveiled its first duty free and travel retail stores at St Petersburg Pulkovo Airport (LED) yesterday – bringing the third largest Russian gateway a much-expanded and highly-segmented retail offer unlike anything it has had before.

Nuance – which last year became the 80% owner of the long-time operator at the airport, Lenrianta, after winning the seven-year retail concession valued at $1.1bn (€800m) – today inaugurated 3,200sq m of space of which 1,900sq m consists of a walk-though store in the new Terminal 1 which was opened to flights at the end of last year.

The large and very long walk-through captures 100% of traffic as passengers exit security and before they enter the departure lounge where a series of other boutiques covering the remaining 1,000sq m have also been opened – among them Burberry’s second manifestation in DF&TR [after London Heathrow] of its new retail concept (below).

Commenting on the main 1,900sq m unit, Andrea Belardini (below right), CEO of Nuance Europe and Global Chief Commercial Officer, says: “This store is all about creating the desire to explore. We developed a bazaar-style environment using different colours, different materials to entice people to go and look at all the categories.”

DISTINCT CATEGORIES

The attention paid to defining the various categories has been detailed and, on first impressions, works very well, pulling the attention of passengers in different directions because each is so distinctive from the moment they enter the shop.

Belardini says: “This store has a very complete approach for every single category. In particular, the beauty development [of which more later]; the evolution of premiumisation but, equally, increasing purchasing opportunities at the entry level. We had the advantage of space here and when we have that, we try and capture the full market potential.”

The entrance features a vodka tasting bar to the left and a sizeable vodka boutique behind it, while on the right there is a stage for multi-brand promotions. Next to this themed space is a narrow open doorway – immediately to the right of the entrance – that takes passengers to a ‘hidden’ tobacco sales area and a Cigar Boutique. After new Russian legislation arrives later this year this tobacco area will be almost entirely hidden from view.

Slightly further into the shop – as the walk-through takes its first bend to the left – is the first of several prominent features designed to get the attention of passengers. The circle-shaped Connoisseurs’ Lounge (below) with its plush décor and seating, targets high-spending shoppers looking to buy cognacs, whiskies, Champagne’s and wines that cost hundreds, and in some cases thousands, of euros.

Liquor sections covering special areas for whiskies, rums, Champagnes and wine follow either side of the walkway which then flow into the large beauty department (left) which, at 600sq m, has the bulk of the central store space.

PUSHING THE BEAUTY BOAT OUT

High-end brands such as Dior Chanel, Lancôme and Yves Saint Laurent appear on the left in their own dedicated spaces, and a mix of the rest is present on the right. On this side too is a men’s beauty area developed in association with P&G Prestige and heralded by a motor bike designed to bring some masculinity to the section.

Global firsts in beauty include the full luxury fragrance line Carré Hermès Parfumeur and Hermès’ Bolduc table as well as a permanent execution of Gucci sunglasses and fragrance. In addition, the P&C section introduces new concepts and brands in Russian travel retail such as Dior’s La Collection Privee and Chanel’s Les Extraits, along with Jo Malone, Benefit, Bobbi Brown, Clarisonic,

A standout feature within beauty is the new format for Haute Parfumerie which was first developed at Antalya Airport in Turkey, but has been refined for LED. “The approach is not about product density, it’s about making each product more iconic,” says Belardini. “You don’t find these brands in other airports. I particularly love this project.” Among the brands are Xerjoff, Join The Club, Penhaligon’s and Sospiro.

So as not to alienate consumers who are not looking for luxury products, further along the store is a section devoted to less pricey brands as well as a highly-visible Victoria’s Secret shop-in-shop. “We have made every possible investment to make sure we capture the full potential of the market from one side to the other. We have developed solutions for the masstige products by emphasising space for brands like L’Oréal Paris, Nivea, Body Shop and Yves Rocher. We have invested across the consumer spectrum,” explains Belardini.

“Our investment in premium has paid dividends but at the same time we still see sceptical consumers and we have to capture them as well. I don’t see any risk of cannibalisation by bringing in masstige products,” he tells TRBusiness.

An extensive Chocolate Boutique sits directly across from the mass beauty brands giving major players like Lindt, Godiva and Neuhaus dedicated back-wall space. “Chocolate is really booming here (and) there is an emphasis on local products,” says Belardini who says that around one third of the space is given over to local brands as a result (right).

A gifting wall is present at the end of the shop where the cash tills are situated. Passengers can pick up a free gift box for presents and have them wrapped. Nuance estimates that gifts account for between 30-50% of sales in the channel.

BOUTIQUES ADD VARIETY

Exiting the DF&TR store into the expansive and airy main departures area, passengers then have access to a number of well laid-out boutiques. The first is Atelier, a premium leather multi-label unit – but both Michael Kors and Longchamp have branded fascias on the store front giving the impression of individual boutiques but in fact linking through the full Aterier shop space where other brand such as DKNY and Guess are also present.

Suncatcher, Nuance’s sunglasses concept is next door, followed by Temptation [called Timebox in Zürich and the name that will eventually be adopted as it rolls out] which presents a full fashion watch offer. Across the lounge, a large multi-brand unit called Master of Time (left) gives high-end brands such as Breitling, Rado, Omega, IWC and Montblanc a spacious and fully open-fronted area where their products can be examined in a leisurely way by passengers.

Straddling either side of Master of Time are luxury boutiques such as Salvatore Ferragamo, Versace and Ermenegildo Zegna which have particular appeal to Russians, as well as previously mentioned Burberry.

Other boutiques include kids store Paper Plane, luggage shop Travel Star, and a Spirit of St Petersburg shop selling souvenirs in another retail section of the terminal past which passenger have to go past to get to the bulk of the gates.

NUMBERS HOLD UP BUT SPENDING SOFTENS

Nuance had the soft opening of its retail offer at the end of March and admits that sales, in early trading have not been at anticipated levels due to the recent unstable political and economic conditions in Russia and due to the country’s falling currency.

Nevertheless, when asked by TRBusiness whether the forecast €800m sales over the contract period remains achievable, Belardini was pragmatic: “It is very early to say. We are still in low season and we have a slowdown in Russian spending in these days. But in the long-term this should be irrelevant. You can’t take a positive or negative element from a temporary situation and make a projection over seven years. Russians still remain one of the highest spending nationalities that we serve.”

Northern Capital Gateway, the airport operator that awarded the concession, is happy with the retail offer given that what was in place before in the old terminal was a disparate collection of stores whose total area was much smaller at about 1,000sq m. Chief Commercial Officer, Evgeniy Ilyin (right) tells TRBusiness: “The stores were not structured logically but then the terminal was not architecturally designed for the modern requirements of travellers.”

Traffic at LED has been growing fast. Last year the airport, Russia’s third busiest, processed almost 13m passengers up by +15%. “This year if things go as expected we should achieve 14m,” says Ilyin who puts year-to-date growth at +13.5%.

TOURISM TARGET

This year, the tourism season – which starts in May and ends in September but has a very high inbound peak at the height of summer – may have a bigger role to play than in the past if the falling rouble continues to dampen spending from outbound Russians.

So far Ilyin says that the airport has not felt any effect yet [with respect to passenger numbers] but there is a fear that it will come. “We expect some changes in the summer but we don’t see a negative trend, more a lowering of growth rates,” he suggests.

Anatoly Shashin (left), Director General of Lenrianta admits that Russians are sensitive to the plight of the rouble but, at the same time, he has high hopes for the new retail offer – not least because it is so varied and targets all consumer segments.

DESIGN CUES

The store concept relies on a strong sense pulled together by long-term partner The Design Solution. The essence of St. Petersburg is distilled through reference points that are interwoven throughout the design with Peter the Great’s vision of creating a ‘Venice of the North’ at the heart of the visual approach.

St. Petersburg’s landmark, St Isaac’s Cathedral (right) was identified as an inspirational focus of the city. The designers took its architectural and opulent qualities and threaded them throughout the store experience. The cathedral’s dome is represented in a variety of ways, and opulent materials synonymous to the building’s interior were translated at the store with a contemporary twist.

Red ribbon, which represents the city’s canals, is also woven across the store ceiling, meandering and guiding customers through the different store sections and categories.

[Main image from left cutting the ribbon: Anatoly Shashin, Director General of Lenrianta; Andrea Belardini, CEO of Nuance Europe and Global Chief Commercial Officer; and Northern Capital Gateway’s Chief Commercial Officer, Evgeniy Ilyin.]

[A full review of Nuance’s impressive new St Petersburg Pulkovo Airport retail offer will be featured in a forthcoming issue of TRBusiness magazine.]