Airport Retailing - Europe - June 2008

SUMMARY

Abstract

The volume of air travel has grown at a strong pace in recent years, recovering from the impact of 9/11, and this has benefited retailers operating in airports. In Europe, air passenger numbers have been rising at around 4-5% per annum although this rate accelerated to 6.5% in 2007. The opening up of Eastern Europe has been a factor in this growth as has the continuing rise in popularity of low-cost carriers like Ryanair and easyJet.

This does not mean necessarily that airport retailers will continue to benefit from rising passenger numbers. Current economic uncertainty and the high price of aviation fuel feeding through into higher ticket prices/surcharges, suggests that travellers will be watching the pennies on their trips abroad and hence may decide to skip buying things at airports.

Increased security in the wake of 9/11 has led to the need for passengers to spend more time at airports. The airport environment is a vacuum of boredom, where we are vulnerable to spending in a bid to kill time in the absence of other options or distractions. However, the basic retail principle remains that if there is little worth buying then little will be bought.

A great deal of airport development is underway across Europe in order to accommodate continually rising air passenger numbers. Development of new terminal facilities is enabling airport operators to offer more retail/catering facilities. Consumers at airports are looking for something different and special at airports and the coming years will reveal whether airport operators are able to respond to this demand with innovative retail concepts that inform and entertain as well as sell merchandise.

Key themes of the report:

• The value of airport retail sales across Europe is growing faster than all retail sales in the continent. However, much of the rapid growth of airport retail sales has come from new retail space opening at previously under-provided European airports. This is the opposite to the UK where most airports offer little that is not available on every high street. Hence airport sales are growing more slowly than the spending of both inbound and outbound air travellers - it is in effect losing share. Airside retail offers need to become more sophisticated with wider product ranges, better merchandising and improved service levels to actively sell products.
• Consumers are tending to be older, wiser and more affluent. They are flying more helped by the growth of low-cost airlines and hence are spending more time in airports. This should make airports one of the most exciting areas in European retail.
• This report looks at the drivers of airport retail - trends in passenger number growth and their spending, the duty-free market, airport operators and retailers and their plans for the future.

TABLE OF CONTENTS

Table of Contents

• Issues in the Market
• Key themes and issues
• Definition
• Financial definitions
• Currencies
• Abbreviations
• Insights
• Airport agents
• The kids are all flight
• How green is your airport?
• Market in Brief
• Air travel soars upwards
• Airports -- a strong retail market
• Economic clouds in the short term
• Airports -- new retail floorspace on the horizon
• A changing competitive landscape
• The power of airport operators
• What does the future hold?
• Internal Market Environment
• Key points
• Europe takes wing
  • Figure 1: European air traffic, 1990-2010 (f)
• Low-cost carriers (LCCs)
  • Figure 2: Low-cost carrier flights, H1 2006 and H1 2007
  • Figure 3: Top 25 low-cost carrier airports, July 2007
• European airports
  • Figure 4: Top 30 European airports by passenger volume, 2004 and 2007
  • Figure 5: Top 30 European airports, passenger volume growth, 2004-07
  • Figure 6: Major airports for travel beyond the EU, 2005
• Will Europe have enough airport capacity?
• Opening up the Skies
• A new generation of aircraft
• Where in the world?
  • Figure 7: Destinations of extra EU 25 passenger air transport, 2005
• European Airport Retail Market
• Key points
• Market size
  • Figure 8: European airport retail sales at current prices, 2003-07
• Relative growth
  • Figure 9: European airport retail sales compared to all retail sales, 2003-07
• Segment performance
• Duty-free
  • Figure 10: Europe duty-free market by segment, 2002-06
  • Figure 11: European duty-free market segments, 2002-06
  • Figure 12: Growth in European duty-free market segments, 2002-06
• Forecasts
• Duty-free
  • Figure 13: Global airport duty-free market, 2002-12
• Broader Market Environment
• Key points
• Four years of solid economic growth
  • Figure 14: European GDP and per capita GDP, 2003-09
  • Figure 15: European household expenditure and household expenditure per capita, 2003-09
• Retail sales have been on the up
  • Figure 16: European retail sales and retail sales per capita, 2003-07
• But confidence is now waning
• Figure 17: EU 27 economic sentiment index, May 2007-April 2008
• Europe is greying
  • Figure 18: Trends in the age structure of the EU 27 population, 2000-07
• Who's Innovating?
• Key points
• The terminal wow! factor
• Showcasing products
• And now for something completely different...
• ...and not just shops
• Leading Airport Operators
• Key points
  • Figure 19: Leading European airport operators, total turnover, 2007
  • Figure 20: Leading European airport operators' commercial sales, 2007
  • Figure 21: Leading European airport operators' retail & catering sales, 2007
• Aeroporti di Roma
• Strategic evaluation
• Background
• Financial performance
• Figure 22: Aeroporti di Roma, financial performance, 2003-07
• Retail facilities
• Aéroports de Paris
• Strategic evaluation
• Background
• Financial performance
  • Figure 23: Aéroports de Paris, financial performance, 2004-07
  • Figure 24: Aéroports de Paris, retail & catering revenues, 2005-07
• ADP Retail
  • Figure 25: Aéroports de Paris, growth of retail and catering floorspace, 2006-10
• Aena
• Strategic evaluation
• Background
• Financial performance
• Figure 26: Aena: Financial performance, 2002-06
• Retail and catering revenue
  • Figure 27: Aena: Retail and catering revenue, 2006
• Retail facilities
• BAA
• Strategic evaluation
• Background
• Financial performance
  • Figure 28: BAA: Continuing operations financial performance, 2006-07
• Retail revenue by airport
  • Figure 29: BAA: Retail revenue by airport, 2007
  • Figure 30: BAA: Retail revenue by airport, 2007
• Commercial and retail revenue by store type
  • Figure 31: BAA: UK commercial revenue breakdown, by type, 2004/05-2007
• Retail facilities
  • Figure 32: BAA: UK airport retail space, March 2005 and March 2008
• Retail strategy
• Dublin Airport Authority Plc
• Strategic evaluation
• Background
• Financial performance
  • Figure 33: Dublin airport authority, financial performance, 2003-07
  • Figure 34: Dublin airport authority, domestic turnover breakdown by activity, 2003-07
• Retail facilities
  • Figure 35: DAA, shops and catering outlets by airport, June 2008
• Fraport Group
• Strategic evaluation
• Background
• Financial performance
  • Figure 36: Fraport Group, financial performance, 2003-07
• Retail facilities
  • Figure 37: Fraport Group, shopping space development, terminals 1 and 2, 2005-11
  • Figure 38: Frankfurt-hahn & Hanover airports, retail outlets, 2008
• Macquarie Airports (MAp)
  • Figure 39: Macquarie Airports, airport shareholdings as at June 2008
• Strategic evaluation
• Background
• Financial performance
  • Figure 40: MAp: European airports performance summary, 2007
• Brussels airport
  • Figure 41: Brussels Airport, performance statistics, 2003-07
• Copenhagen airport
  • Figure 42: Copenhagen Airport, performance statistics, 2003-07
• Bristol airport
  • Figure 43: Bristol Airport, performance statistics, 2003-07
• Manchester Airport Group
• Strategic evaluation
• Background
• Financial performance
  • Figure 44: Manchester Airport Group, financial performance, 2002/03-2006/07
• Relative airport size
  • Figure 45: Manchester Airport Group, share of passengers by airport, 2006/07
• Retail facilities
  • Figure 46: Manchester Airport Group, shops and catering outlets by airport, April 2008
• Schiphol Group
• Strategic evaluation
• Background
• Financial performance
  • Figure 47: Schiphol Group, financial performance, 2003-07
  • Figure 48: Schiphol Group, revenue breakdown by activity, 2007
• Consumers
  • Figure 49: Schiphol Group, consumers division breakdown of revenue, 2006-07
  • Figure 50: Schiphol, Concession income per international departing passenger, 2003-07
• Retail facilities
• Flughafen München GmbH (FMG)
• LFV Group (Sweden)
• Oslo Lufthaven AS (OSL)
• SEA Milan Airports
  • Figure 51: SEA Milan Airports, shops and catering outlets, June 2008
• Unique (Zurich Airport)
• Vienna International Airport
• Leading Airport Retailers
• Key points
  • Figure 52: Leading European airport retail specialists' total sales, 2007
  • Figure 53: Leading European airport retail specialists' European sales, 2007
  • Figure 54: Leading European airport retail specialists' European versus ROW sales, 2007
• Autogrill (Aldeasa/Alpha Airports Group/World Duty Free)
• Strategic evaluation
• Background
• Financial performance
  • Figure 55: Autogrill airport retail: Components' financial performance, 2005/06-2006/07
• Store portfolio
• Alpha retail
• World duty free
• Aldeasa
• Aelia (Lagardère Services)
• Strategic evaluation
• Background
• Financial performance
  • Figure 56: Aelia: Sales by activity, 2007
• Store portfolio
  • Figure 57: Aelia: European airport locations, 2008
• Products
  • Figure 58: Aelia: Sales by activity, 2004 and 2007
• Belgian Sky Shops
• Strategic evaluation
• Background
• Financial performance
• Store portfolio
• Dufry
• Strategic evaluation
• Background
• Financial performance
  • Figure 59: Dufry: Financial data, 2003-07
  • Figure 60: Dufry: Sales by region, 2007
  • Figure 61: Dufry: Sales by product category, 2007
• Store portfolio
  • Figure 62: Dufry: Worldwide distribution of stores, June 2008
  • Figure 63: Dufry: European airport locations, 2008
• Gebr. Heinemann
• Strategic evaluation
• Background
• Financial performance
• Store portfolio
  • Figure 64: Gebr. Heinemann: European airport locations, 2008
• Kappé International
• Strategic evaluation
• Background
• Financial performance
  • Figure 65: Kappé International: Financial performance, 2003-06
• Store portfolio
• The Nuance Group
• Strategic evaluation
• Background
• Financial performance
  • Figure 66: The Nuance Group: Financial performance, 2003-07
• Store portfolio
  • Figure 67: Nuance Group: European airport stores, 2008
  • Figure 68: Nuance Group: Sales by product category, 2007