Retail sales slide, but store penetration ‘is up’ for VIE

By Charlotte Turner |

Julian-Jager-and-Char-leadCOO and board member of Vienna Airport Julian Jäger tells Charlotte Turner that while it’s been a challenging year for duty free and specialty retail in 2016, the airport has managed to improve its penetration levels. He also says that the company wants to assess its traditional concession model in the next few years and isn’t ruling out JV opportunities. 

 

During the video interview (below), Jäger also answered questions sparked by recent local news reports about an attempted attack on the company’s computer network. He also addressed the airport’s recent low transfer traffic, but pointed out that the number of local passengers are still growing.

 

“It just shows that there is a lot of competition for transfer traffic within Europe and now obviously there are these challenges outside of Europe too. In 2016 this is something that we felt in the duty free sales as well.”

 

Like many other airports in Europe, Jäger admits that the fall in Russian traffic has significantly impacted the business.

 

“So obviously Russia was always an important market, if not the most important market. We had in the past nearly one million passengers from Russia, now we have less than half of that, so the effects of this is obviously being felt.”

 

This was perhaps exacerbated by the fact that the airport enjoyed a record 2015 in terms of retail sales.

 

 

“We had a record year in 2015 in terms of retail sales and revenue and this year we are slightly down and the reason is mainly – apart from the Russians – most of the other people spend less as well. So it will be a good year, but not as good as 2015.”

 

Vienna Airport says it traditional concession agreement – MAG plus concession fee – with its retailers and up until now has not entered into any joint ventures. “This is something we want to assess in the next couple of years,” he says.

 

As reported, Gebr Heinemann opened what was ‘Austria’s largest duty free shop’ at the airport in 2014.

 

heinemann vienna opening

Julian Jäger says that Vienna Airport is going to assess the current ‘traditional’ concession model it has with its partners in the next few years.

 

Despite the fact that it has been a challenging year for duty free and specialty retail, Jäger says that F&B outlets are still performing well and, encouragingly [up until this year] the airport has seen a steady improvement in sales per pax and penetration.

 

“Up until this year, we had seen an improvement in sales per pax.” In the short-term this has been boosted by offering sales incentives to staff and in the mid-to-long term Vienna Airport has been and continues to upscale its retail environment with significant investment.

 

“We are investing €500m in our terminal environment to improve dwell time, to improve the passenger flow. We are adding 15,000sq m, general lounge space, business lounge space, retail, F&B.”

 

Globally, low levels of penetration have been blamed for falling DF&TR sales (-2.7% in 2015), however, Jäger says that Vienna Airport is bucking the trend. “Actually we are doing quite good with penetration this year so it’s more the average ticket which worries us. So the penetration is up, but everyone who is spending is doing just a little less than before, so this is our challenge.”

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