airspace

Brandweek, March 22, 1999 by Gerry Khermouch, Chuck Stogel, T.L. Stanley

Although he doesn't think of himself as much of a shopper, Richard Cohen, a corporate lawyer in Columbus, Ohio, can track his frenetic business itineraries in part by the merchandise and services he picks up along the way: sports memorabilia and Beanie Babies in Orlando, a backrub in Tallahassee, fresh bread and an $80 leather belt in Pittsburgh. "I needed a belt, but would I have normally paid what I did?" Cohen said. "Probably not. But I was there, and captive, and had time to kill, and started identifying things I need. At a mall with my family, I might have looked at it, but I wouldn't necessarily have bought it." But buy it he did.

Cohen may typify the "new" shopper at the nation's airports: well-heeled, discriminating road warriors too overscheduled to spend much time at the shopping mail back home, and a tough sell even when there. For marketers, they are a tempting demo to reach, both for the purchases they make at airports and for the chance that they might enjoy the store experience enough to want to visit a mall- or street-based store. That makes them a prime reason behind the mailing of the tarmac.

New and refurbished airports in Pittsburgh (above), Denver, Portland, Ore., San Francisco, Cincinnati and many, many other cities are becoming the new Gallerias, designed specifically with these patterns of high-traffic affluence in mind, Stampeding onto this developing real estate are blue-chip brands like The Gap, Victoria's Secret, Disney Store and California Pizza Kitchen, with more entering the fray almost monthly. Newcomers range from catalog giant Lands' End and apparel retailer Brooks Brothers to niche players like The Dogs and Cats Store, The Magnet Store and Ranch 1 restaurants, some of them making airports an integral part of their expansion strategy. The underlying message, said Gwen Morrison, vp/managing director of retail design consultant Frankel Brand Environments, Chicago: "We are everywhere you are."

For one, Wilsons the Leather Experts, a Brooklyn Park, Minn., retailer, now operates 32 airport stores and kiosks, with four more on the way at a regenerating Chicago O'Hare alone. Wilsons has found the venue an effective one for reaching the narrower but harder-to-reach segment of busy travelers, versus the broader I 5-to-50s sought by the mall stores. "It's a perfect showcase for establishing a brand, and bringing those travelers back to the mall stores," said Lisa Stanley, marketing vp at Wilsons.

Atlanta-based Paradies, a newspaper and candy concessionaire since the 1960s, has used the venue to branch out into branded specialty retail, starting with a 400-square-foot PGA Tourbranded display within a store in the Jacksonville (Fla.) Airport in 1990 and a freestanding PGA Tour Shop at Pittsburgh Airport in 1992. Paradies now operates the golf stores in 34 airports worldwide, past which 180 million travelers stroll annually, by estimates of Rick Lillie, vp of merchandising/operations. Paradies also has PGA Tour units in train stations and conventional malls, as well as an expanding portfolio of licensed shops that bear such brands as Sharper Image, Heritage Booksellers, DKNY, Country Stores, The Nature Store and, soon, Brooks Brothers.

"It took awhile, but the airport industry finally realized it had a tremendous potential retail market just sitting there, an average of 35 minutes per passenger waiting for an airplane,' said Lillie. "Twenty years ago, there wasn't much to offer the passenger. Mostly just a snack bar and a newsstand. Most airport terminals looked like bus stations. Airport authorities were narrow-minded, with rentals for retail space that were prohibitive. Now, rentals have come down and companies such as ours can make a go of it. For the airport, by lowering the rent, retail shops have blossomed and provided tremendous extra revenue. And there's more growth to come."

True, for retailers eyeing a move into airports, there are sacrifices. Logistics are painfully difficult, particularly for restaurants trying to get both perishable ingredients and a large staff through security, and rents can exceed those on luxurious center-city shopping streets and regional mails. At a low-unemployment period, the often onerous commute and odd hours make it difficult to recruit and retain staff. The licensing arrangements that are common to many of these deals risk putting the brand in the hands of an operator that may not have its longterm interests at heart. And for many retailers, smaller stores, airport design criteria and ruthlessly edited product offerings can dictate the compromise of brand standards rigorously adhered to elsewhere.

But, managers of scores of national brands see these liabilities as far outweighed by the benefits. In contrast to the vagaries of predicting mall or street pedestrian traffic, the departure schedule makes it a cinch to plot how many well-heeled consumers are likely to troop past the store each day. "It's almost formulaic, in contrast to street leasing," said George Giaquinto, senior consultant at transportation consultants Frasca & Associates, N.Y