Explaining Airport Retail

Note that these points were made long before the COVID-19 pandemic.

In November 2019 I was invited to speak at a conference hosted by NACAS, the National Association of College Auxiliary Services.

The particular set of sessions I participated in centered around providing university executives who oversee their food and retail programs with a view of emerging trends from other environments. My contribution centered on airports. 

The audience were frequent flyers and were familiar with many airports. Since this group oversees the dining and retail programs of colleges and could thus have an appreciation and interest in the business of dining and retail in airports, they were already aware of the specialized nature of the environment. They were mostly aware of the captive audiences, long operating hours, and often above market pricing. Ultimately it became an opportunity to possibly provide them with ideas that could help elevate their retail programs.

The following were points that I shared that explained airport retail, my view of it’s survival in the internet age, and a prescription for how to solve the encroachment of Amazon.. 

NECESSITY & SCARCITY RETAIL

Airport retail, in its broadest form, is like most retail anywhere and is divided into two categories: necessity and scarcity.

Necessity is the easiest. Simply, this refers to the travel essentials stores that feature products such as snacks, beverages, grab and go foods, small electronics, medicines, magazines, travel products, and some souvenirs. Basically, it’s a convenience store. You’ve seen the Hudson stores as well as the stores branded after popular local neighborhoods or after publications like The New York Times and CNN. Travel essentials had once been called newsstands because they carried numerous publications and books and so the attachment to such recognizable news providers. Over the years the category has evolved as the number of book and magazine titles dwindled as a result of the digital era. For travelers looking to grab something quick, this is the store for them.

The scarcity group refers to specialty retail and is both straightforward and not so straightforward. These are stores, often but not always, attached to a notable brand such as Pandora, Nike, Lululemon, and Tommy Bahama. These are also stores that could be dedicated solely to a product or a category such as sunglasses, technology, or women’s apparel.

Why the term “scarcity”? A non-Webster’s definition: a state of something being in short supply. Or, the way I see it when referring to this type of airport retail: it’s the value of a product or item being determined by its availability, uniqueness, and a consumer’s access to similar alternatives. 

Where necessity retail can be interpreted as a “need”, scarcity retail is about being a “want”. A “want” can be converted into a “need” but requires a high level of consumer coaxing, deep discounting, or an unexpected event for travelers to decide on making the purchase. 

Let’s take a minute to break each one down. Consumer coaxing meaning active selling by the store’s associates. Pretty difficult in an airport when people are on the move and time-starved. Interactions are limited to basic customer service but graduate only when really needed. It really isn’t like walking into a dealership and every salesperson descends upon you. Anything close to active selling is educative selling. This almost always comes in stores with categories where this is expected such as tech and jewelry. I don’t think people need to be told where the Snickers bar was sourced or upsold on the organic Doritos instead of the regular Doritos. Deep discounting? Well, unless it’s to move older and/or excess inventory, the margins are so razor thin that this is extremely rare but an option nonetheless. But is lasts year’s model of some item really that appealing? Perhaps. Unexpected event? Basically this purchase comes at the intersection where something bad happened, you don’t have the time, and a store is right there to bail you out. I spilled food on my tie, I don’t have time to explore the city, and so I’ll run into this men’s store and hope to get one I like. This becomes a question of how often are all of these stars in alignment?

I can’t say it enough that the value or the driving desire of travelers to want to purchase something on the specialty side will be driven by one’s ability to acquire it or a similar alternative. Think of the inverse effect. The harder it is to acquire or the more it is in short supply, the greater its value and, perhaps, its price. This is the future of specialty retail in airports.

It may be a stretch to say you “need” a bottle of water. Travel essential stores fill that space between “Can’t live without it” and having a stop gap solution because you don’t want to take on a full meal as opposed to having lost your earphones and will now be bored for two hours on a plane. You can think of other very similar scenarios. For the most part, specialty stores do not provide the type of draw comparable to travel essential stores because specialty stores are almost always purely a “want”. 

EXCLUSIVITY & EMOTIONALITY

As I mentioned, travel essentials, or necessity retail, needs no further explanation. Specialty retail, or scarcity retail, on the other hand, can be further subdivided into exclusivity and emotionality. Yes, it's my word. Regardless, I’ve used these two categories as a way to describe how a consumer determines their value and how that will drive their purchasing decisions. 

Exclusivity is just that. Can’t get it anywhere else. The mix can range from a simple t-shirt professing your love for a city to crafts made by local artisans and products that a region is known for. Think of the iconic “I love NY” shirt with a red heart in place of “love”. Think handmade pieces of artwork or jewelry. Think BBQ sauces or gumbo mixes from areas like Austin or New Orleans, respectively.

Flight Line is a beer that was crafted specifically for and exclusively available only at Greenville-Spartanburg International Airport. There is a store in Nashville International Airport that sells a wide variety of locally made moonshines, whiskeys, and bourbons. Though I am not much of a drinker, I actually considered buying a bottle of moonshine as a gift for a friend or to have as a decorative piece in my home.

As for emotionality, a few years back my family and I took a multi-city family vacation that ended in Boston. We took the famous student-guided Harvard walking tour at the conclusion of which I purchased my son a Harvard t-shirt. He has an affinity for shirts with colleges on them.

When we were at the airport waiting for our flight to head home, my son realized he didn’t get a Boston College shirt. As any dutiful parent would, we walked around the terminal and found a store with shirts of various professional sport teams as well as colleges. I bought him his coveted Boston College shirt. 

Mind you, there was nothing truly special about the shirt as it was printed on either Hanes or Gildan. It wasn’t any better than what we could’ve gotten from Amazon, which my wife was, phone in hand, at the ready to order from her Prime account. The difference is that it meant a lot to my son to have gotten the shirt in Boston (Logan International Airport). Nobody would’ve known if this was the case nor would, I think, any 10 year old even care to challenge the authenticity of the location of the purchase. But it still had a deeper meaning for my son after an experience-filled vacation. Emotionality. In all the places we have visited, we make it a point to try to find a Christmas ornament to buy and hang on our tree to memorialize our vacations. Emotionality.

One can say that emotionality is almost purely for the leisure traveler or perhaps those who are not likely to make their way back to that destination again. But it has its limits and the principle of diminishing return applies. Disney is a great example. When our daughter was born, my wife and I would make regular pilgrimages to Disney World. The first time we went pretty crazy with the souvenirs. It felt like we had to buy something in every store, pushcart, or street vendor in each section of the theme park. But one thing I noticed is that in subsequent visits the purchases became less and less until finally they were virtually no more. The specialness began to fade and so there was a diminishing return on the emotionality driving the purchases.

Again, this is where scarcity plays a role. The ability and/or want to return to some place may not be so great and so capturing that special moment with a souvenir was a huge driver for us. The same could be said at an airport where it is often the last thing that a visitor experiences of a city before they head home.

FIGHTING BACK AMAZON

It can be argued that the internet hasn’t had much of an impact on airport retail. I can probably debate both sides myself. So when it comes to the future of retail in airports, it will be about the exclusivity and emotionality items that come as a result of the scarcity approach. Will you no longer see Lululemon, Coach, and the like? They’ll still be in some airports because there will be brands or categories that will resonate with folks or have devout followers. But what if you can get it elsewhere, more cheaply, and more conveniently?

In my humble opinion, it is best to find ways to out-Amazon Amazon. You’re probably wondering WTF.

My prescription for airports is to basically offer compelling pieces that are not so readily available or accessible through the retail giant. Offer things that are just out of their reach. It means being hyper local. If consumers are increasingly conscious of where their food is sourced and adamant about supporting those who provide it, then it should be an easy and natural pivot to do the same with retail*.

The other option is to make it easier than Amazon. Wait, how is that remotely even possible against the masters of the One-Click and Alexa voice command ordering and the Amazon Go convenience stores where you just walk out with your purchases? 

Currently, there have been rumors** regarding an Amazon partnership with restaurateur OTG. To date, these have just been rumors that both sides deny. What this means is that it could give retailers a bit of a head start in trying to provide travelers not just compelling items to purchase, but a differentiated way of buying them. Self-checkout units are not yet ubiquitous in the airport space but there are growing instances of their use. It’s shortening the time for us to acquire and enjoy our purchase.

On the street, big box retailers have essentially turned their stores into mini-warehouses that fulfill orders. Is the desire so great that we cannot wait one or two days via Amazon Prime? Well, we have become a must-have-now culture that one or two days is too long. BOPIS (buy online pick-up in store) has, in some ways, extended the useful life of retailers and successfully kept the Beast of Bezos at bay. 

Airports could adopt this approach in a similar way by making it easier for travelers to order ahead and pick up what they want. Mobile ordering company Grab is currently providing this service but is not (yet) servicing every airport. The challenge for this industry is creating an all-in-one app experience. Letting my geek flag fly, the airport industry needs the one app to rule them all due to everything being fragmented and compartmentalized. And kudos if you get the reference.

In conclusion, product mix and offerings will be key for retail in an environment as complex as an airport. I maintain that there should be more items that cannot be found elsewhere in order to make a compelling case to the traveler. I’m not saying to not have big branded stores or products that can be found on the street. These are still somewhat needed because they can move product, they’re recognizable, and often have devoted followers. At the very least they turn your head and get your attention. In essence, they are a rather expensive anchor used much like anchor tenants are in shopping malls and retail centers. Ultimately, I feel that a greater focus on exclusivity and emotionality will be the answer to staying relevant and providing travelers a compelling offer.

*COVID note. I wrote in a previous LinkedIn post that at the rate that many small businesses are going bankrupt, or at best struggling to survive, I predict that there will be a swing towards supporting small, local businesses much in the same way that the country rallied after 9/11 to support products made in the USA.

**Again this was part of a presentation that took place before Amazon’s Just Walk Out technology was officially announced.

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