Owais Crawford
Airports have become hotspots for luxury retail outlets, with brands like Gucci, Hermès, and Louis Vuitton vying for space in terminals across the globe. The rise of luxury stores in airports can be attributed to a variety of factors, including the captive audience of wealthy travellers, the unique experience it offers, and the opportunity to engage younger generations of luxury buyers. The success of airport luxury retail is evident when compared to the decline of high-end department stores, with airports providing an experience that cannot be found on high streets. Additionally, the constant renewal associated with airports may encourage travellers to indulge in luxury purchases. With high sales per square foot, luxury brands have been important tenants for airports, contributing significantly to their revenue.
| Characteristics | Values |
|---|---|
| Opportunity to meet luxury buyers | Luxury retailers can meet their target customers where they are. |
| Targeting young buyers | Airports provide luxury brands with an opportunity to connect with younger buyers who may feel intimidated by physical retail stores. |
| High sales per square foot | Luxury brands generate high sales per square foot, an important metric in airports where space is tight. |
| High-spending customers | Travelers, especially those flying for a holiday, often have money stashed away and are willing to spend it. |
| Unique experience | Airports are creating unique experiences by positioning themselves as luxury destinations, with some offering services like bottle engraving and custom gift wrapping. |
| Growth potential | Luxury retail in airports is growing, with sales increasing by 7% in 2018, while department store sales fell by 4%. |
| Less competition | Airports provide luxury brands with an opportunity to stand out, as many high-end department stores are closing due to the rise of online shopping. |
| Convenience | Airports provide a convenient location for travelers to access luxury brands, especially those who may not have access to luxury stores in their local areas. |
Explore related products
What You'll Learn
Luxury brands can connect with younger generations of luxury buyers
Luxury brands are increasingly opening stores in international airports to connect with younger generations of luxury buyers. Airports are viewed as "in-between spaces of constant renewal", where consumers are more likely to be open to new experiences and purchases. This presents a unique opportunity for luxury brands to engage with younger buyers who may feel intimidated by traditional brick-and-mortar retail stores.
Gen Z and younger consumers have largely deviated from physical retail experiences, opting for online shopping. However, airports offer a chance for these consumers to experience luxury brands and their products for the first time. Pop-up stores and innovative engagement strategies, such as those seen in Changi Airport and the KrisFlyer lounge for Singapore Airlines, are particularly effective in attracting younger buyers.
Airports are also an ideal location for luxury brands to meet luxury buyers where they are. With the decline of physical department stores, airports have become one of the few places where multiple luxury brands can be explored at once. This is especially true for international travellers who may not have access to certain luxury brands in their home countries.
Additionally, travellers tend to have higher purchasing power and are more willing to spend, whether they are on a holiday or a work trip. Luxury brands in airports can cater to this by providing an exclusive and immersive experience, such as the Louis Vuitton café in Heathrow. Furthermore, the captive audience of travellers, often with time to spare, makes airports an appealing target for luxury retailers.
By opening stores in airports, luxury brands can create a unique and immersive experience that resonates with younger generations of luxury buyers, fostering a positive brand association and potentially gaining loyal customers.
Corpus Christi's Airport: An Essential Travel Hub?
You may want to see also
Explore related products
Airports are viewed as in-between spaces of constant renewal
The presence of luxury brands in airports also creates a unique experience for travellers, positioning the airport as a luxury destination. Airports in the Asia-Pacific region, such as Abu Dhabi's Zayed International and Singapore's Changi Airport, have dominated the travel retail market, with the former attracting brands like Omega, Coach, and Hermès.
Major European airports are following suit, with Schiphol Airport in Amsterdam undergoing a makeover to redefine luxury retail and Heathrow Airport in London featuring a Louis Vuitton cafe. Luxury brands are important tenants for airports as they generate high sales per square foot, which is crucial in airports where space is limited.
The success of luxury retail in airports stands in contrast to the decline of high-end department stores, as consumers increasingly move their spending online. Airports may soon become the most accessible place for passengers to explore multiple luxury brands, further solidifying the view of airports as spaces of constant renewal and transformation.
Auckland Airport: Curfew Rules and Their Impact
You may want to see also
Explore related products
Travellers are often wealthy and willing to spend
The presence of luxury retail outlets in airports can be partly attributed to the fact that travellers are often relatively wealthy and willing to spend. Airports are viewed as spaces of constant renewal, and travellers are more likely to be tempted to treat themselves while on holiday or to buy luxurious items as a convenience on a work trip.
Airports are also able to attract luxury brands as tenants because they generate high sales per square foot, an important metric in airports where space is tight. Luxury brands are willing to pay top dollar to access these wealthy shoppers, particularly Chinese tourists, and the high-spending Gen Z and younger generations who might otherwise be intimidated to enter physical retail stores.
The introduction of luxury brands into airports has been a strategy to redefine the airport luxury retail experience and meet the demands of international travellers. Airports have sought to create a unique experience, positioning themselves as luxury destinations, with some even offering hybrid store-cafes to provide an "immersive" experience.
The success of luxury retail in airports can be seen when compared to the decline of high-end department stores, with airports becoming the most accessible place for many passengers to explore multiple luxury brands at once. This shift towards luxury travel retail has been particularly evident in Asian airports, which dominate the travel retail market, but it is also occurring in major European airports.
St. Croix Airport: Does It Exist?
You may want to see also
Explore related products
$21.97 $29.99
High sales per square foot
Airports are attractive to luxury brands because they offer a captive audience of travellers who are willing to spend. Travellers are often richer than the general population, as they have money saved for their trip or have a job that requires them to travel, which is likely not a minimum-wage job. Travellers are also more likely to spend money at the airport because they are stuck there for a while and have nothing better to do. This combination of factors means that luxury brands can generate high sales per square foot, an important metric in airports where space is tight.
Before the pandemic, travel retail sales were growing around 8% per year, creating competition to rent space in airports. Luxury brands were particularly eager bidders, and airport stores came to account for 6% of global luxury sales, according to Bain & Company data. In the busiest hubs, cosmetics and luxury companies could expect to hand over 40-50% of their sales as rent, according to Jack MacGowan, the former chief executive of Aer Rianta International.
Luxury brands are also attracted to airports because they offer a unique experience that cannot be found on high streets. This is particularly true as many high-end department stores have closed down due to the rise of online shopping. Airports have become the most accessible place for many passengers to explore multiple luxury brands at once. For example, Schiphol Airport in Amsterdam has recently welcomed new stores from Bulgari and Louis Vuitton, and Heathrow Airport in London features a Louis Vuitton cafe that blends fashion and "art de vivre" to enhance the travel experience.
In addition to providing a unique experience, airports offer luxury brands the opportunity to connect with younger generations of luxury buyers who may feel intimidated about entering physical retail stores. According to Yukun Bi, Chief Strategy Officer at Hylink Group, "Gen Z and later—these are consumers who have deviated away from traditional brick-and-mortar retail experiences and opt for more expedient, immediate omnichannel shopping experiences. However, inside an airport, it may be one of the first opportunities for these audiences to get to actually experience the brand and its products."
Airport Transit Visa: What, When and Why?
You may want to see also
Explore related products
Airports are becoming luxury destinations
Airports are increasingly becoming luxury destinations, with high-end brands like Gucci, Hermes, and Louis Vuitton setting up shop in terminals across the globe. This phenomenon is not new, but it has gained momentum in recent years, with airports seeking to capitalize on a growing market for luxury retail.
The presence of luxury brands in airports offers an opportunity to connect with younger generations of luxury buyers who may feel intimidated by entering physical retail stores. Airports provide an “in-between space" where travelers are more inclined to explore and make purchases. Additionally, travelers tend to have higher disposable incomes and are willing to spend, especially when they have time to kill before their flights.
Airports in Asia have been at the forefront of this trend, with Singapore's Changi Airport and Abu Dhabi's Zayed International Airport positioning themselves as luxury destinations. European airports have also embraced this strategy, with Schiphol Airport in Amsterdam and Heathrow Airport in London welcoming luxury brands to enhance the travel experience.
The success of luxury retail in airports stands in contrast to the decline of high-end department stores in city centers. As consumers shift their spending online, airports offer an opportunity for luxury brands to create unique, immersive experiences that cannot be found elsewhere.
The growth of luxury retail in airports is expected to continue, with projections indicating an increase in the travel retail market from $79.24 billion in 2023 to $90.41 billion in 2024. Airports are becoming key destinations for luxury brands to reach international travelers and showcase their products.
Airport Detentions: How Many Are Being Held?
You may want to see also
Frequently asked questions
Airports have luxury stores because they attract wealthy shoppers and generate high sales per square foot. Luxury stores also provide a unique experience that cannot be found on the high street, making them attractive to younger generations of luxury buyers who feel intimidated about entering physical retail stores.
Luxury stores in airports include brands such as Gucci, Hermes, Saint Laurent, Rolex, Coach, and Louis Vuitton. Airports also feature cosmetics and luxury companies, as well as unique experiences like the Louis Vuitton cafe in Heathrow and the Bulgari outlet in Rome's Fiumicino airport that offers services such as bottle engraving and custom gift wrapping.
Luxury stores benefit from the high traffic and captive audience of airport terminals. They also provide an opportunity for brands to meet luxury buyers where they are, particularly international travellers who may be more inclined to spend. Airports, on the other hand, benefit from the high sales generated by luxury brands, helping them become less reliant on aeronautical fees.
