PHLAirline.com
News Article - December 10 2006

Airport retail sales soar

  Feeling tired, stressed out, in need of a vacation?

  Travelers headed for a flight from Philadelphia International Airport now can relax before they even leave the ground: XpresSpa is one of the airport's newest retail tenants. What you get at XpresSpa depends on how much time - and money - you want to spend. Sitting in a massage chair for 15 minutes is only the start. The services range from a few minutes of nail buffing for $6, to manicures, pedicures, body waxing and foot massage, all the way to a full-body massage that takes an hour and costs $110.

   Once a wasteland of bad, expensive food and dusty souvenirs, Philadelphia's airport is among the national leaders in keeping travelers fed and occupied with a growing variety of restaurants, shops and services. Shopping and eating at the airport have been improving for a decade, but retail sales really took off after Sept. 11, 2001, when new security requirements made travelers arrive earlier for their flights. With the end of airline meals, they needed to buy food before taking off, airport officials and retailers say, and had more time to shop.

   Vendors of men's shoes, casual clothing and accessories, jewelry, electronics, and other gifts have learned to operate profitable airport stores at one quarter the size they would be in a mall. Among the leading national retailers here are Gap for Women, Johnston & Murphy shoes, the Body Shop, Bose, Brookstone and, as of this fall, Brooks Brothers. This month, Brian Swanson, a banker and frequent flier from Matthews, N.C., was using one of the airport's Christmas-season, mall-style services - free gift-wrapping - for a toy he purchased for his 8-year-old son, when he spotted the Johnston & Murphy shop a few steps away.

   "They will ship them to your home or even to a hotel," Swanson said knowledgeably. "And it's boom, you're in and out. It takes six-and-a-half minutes, and that's if the credit-card machine is slow." Men's shoes are an easy sell in an airport, Swanson noted: The products are mostly black or brown, and styles don't change much from year to year.

   But women's shoes are hard to accommodate, and the airport doesn't sell them - one of the few products a mall offers you won't find. "I'd love to sell shoes here," said Clarence LeJeune, vice president and general manager of Redwood Airport Management Inc., the airport's retail landlord. Women shoe-buyers "require too many sizes, colors and styles. It has to do with space requirements."

   What suits the space well is Brooks Brothers, another retailer with appeal to airport customers. "It adds a category we've not had," said city aviation director Charles J. Isdell, "and that is quite fitting for the business travelers we have going through the airport." Philadelphia International retailers have been helped by the surge of travelers since Southwest Airlines began flying here in May 2004, and US Airways and other carriers matched the discounter's fares. Total retail and food-and-beverage sales at the airport have gone from $76.3 million in 2000 to $122.4 million last year, according to airport data. The number of departing passengers was a record 15.7 million in 2005, compared with 12.4 million in 2000.

   Pittsburgh International Airport was the first to try increasing sales by creating retail zones, designed to look like a neighborhood mall and featuring well-known restaurants and brand-name stores selling products consumers knew at reasonable prices. When Pittsburgh built a new terminal in 1992, it created a central core that all passengers go through, concentrating half the shops in the core and others along four concourses leading to the gates. Other airports, including Philadelphia's, joined the retailing trend in the late 1990s but had to add restaurants and shops within the existing terminal layout. A shopping mall was created when Terminals B and C, used by US Airways, were overhauled, but three-quarters of the retail locations are spread throughout the airport's six concourses.

   The airport's pricing policy has also helped sales. Vendors must use "street pricing," meaning they can't charge more than they do in their off-airport stores, the airport officials said. Their prices are monitored by Redwood Airport Management, with a money-back guarantee, featured prominently on the airport's Web site, www.phl.org, if a customer finds a policy violation. Despite diminutive size, airport shops and restaurants can be highly profitable because they have more foot traffic and longer hours than the typical mall store does, the officials said.

   Sales per square foot, a key measure in retail, is expected to be about $1,176 this year at the airport, 10 percent ahead of 2005, said James Tyrrell, deputy director for properties. That compares with an average of about $700 per square foot in a successful non-airport store, he said. Total sales this year are expected to be flat compared with 2005, mostly because several retail locations and restaurants were closed for weeks at a time between tenants, said Paul McGinn, president of Boston-based Marketplace Development, the Philadelphia retail manager's parent company.

   Besides sellers of women's shoes, a few other retailers have determined that the airport isn't a good location for them. LeJeune said Staples Inc. came and went after it found that although electronic products sold well, other office supplies did not. Brooks Brothers took over space formerly occupied by the Discovery Channel store, which closed because its parent company wanted to get out of retailing, Isdell said.

   Other businesses have found airports an ideal place to offer services. XpresSpa appeals to well-heeled vacationers in the mood to indulge and business travelers in need of rejuvenation. XpresSpa spent $500,000 to turn an unused area in Terminal C into a 1,000-square-foot sanctuary that looks as classy as anything at an upscale resort. The brightly lit space has no doors, inviting passersby to stop and look around. The spa keeps two shifts of at least six employees working at all times, said XpresSpa chief executive Moreton Binn, so no customer has to wait more than five minutes.

   Binn said the service offered by his New York-based company, which has seven other locations in four U.S. airports, is popular for three reasons: "It's different, it's needed, and travelers are willing to pay for it." Like many retailers, who make their annual profit between Thanksgiving and Christmas, airport stores also do well in December. But, airport data show, they usually do even better in March, July and August because of heavy vacation travel.

   The high sales volumes are among the reasons that retailers and restaurateurs now compete vigorously when a retail site is available at Philadelphia International. The airport has a total of 160 retail locations, divided roughly in half between those selling food and beverages and those selling other products. Before he got a lease this fall in the food court in the Terminal B-C Philadelphia Marketplace mall, Todd Chusid, a Wayne-based entrepreneur who owns Johnnie's Hot Dogs, was told he was competing with 10 or 12 other food vendors.

   Chusid, whose first two Johnnie's Hot Dogs are in Wayne and Manayunk, thinks he was successful because he not only presented a good business plan but also brought samples of the dozens of varieties of hot dogs he sells. "I think what they liked about us is that this type of food wasn't available at the airport... and we're a local Philly company," he said. John F. Fisher, who opened a branch of his Wynnewood-based Quaker Coffee Co. a month ago in Terminal E, said he's discovered that 60 percent of his customers are among the 20,000 people who work at the airport.

   "Business is up at least 30 percent from what I expected," he said. "At the airport, there's no ramp-up period. You open, and the spigot is on." Some travelers who were strolling the Terminal B-C mall early this month gave Philadelphia's retail offerings favorable reviews.

   "It's pretty good," said Swanson, the banker, who makes business trips regularly through airports nationwide. "Pittsburgh's mall is awesome. Between here and the Miami airport, it's a tie for second." Another traveler, Andy Argyris of Montreal, who was changing planes en route to Orlando, Fla., with his wife, Nadia, and son, Jorda, discovered another benefit to having an array of merchandise to peruse between flights. "It's a way for my wife to pass the time," Argyris said as he waited for her to emerge from another store. "And shopping usually makes her sleep on the plane."

Source - Philadelphia Inquirer

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