The travel retail market has continued to grow as railway stations look to rival airports, and shake off a tired image with glossy multimillion-pound investments. Drapers looks at the growing opportunities for fashion retailers before departure.
Travel retail used to be straightforward. Airports were the domain of luxury retailers, while railway stations had only WH Smiths and coffee shops to entertain travellers. But, as the number of passengers continues to boom, (Gatwick has just celebrated its busiest ever February and Heathrow recorded its busiest ever day in July last year) travel retail is becoming more attractive than ever. Multimillion-pound investments at King’s Cross, Manchester Piccadilly and the ongoing work at London Bridge have also presented new opportunities for brands and retailers.
“There’s been a shift in how people view and experience stations. We’ve moved on from them just being a place to grab a coffee and a sandwich,” explains Daniel Charles, head of retail at Network Rail, which owns and operates the UK’s railway infrastructure. “Over the past few years we’ve noticed that the people spending money at stations aren’t necessarily the commuters, but people travelling for business or leisure, or those who are living or working nearby.”
People spending money at stations aren’t necessarily the commuters, but people travelling for business or leisure
Daniel Charles, head of retail at Network Rail
Simon Black, director of travel retail at property agent Harper Dennis Hobbs, paints a similarly positive pictures for the UK’s airports: “Airports have performed phenomenally over the past 12 months. Those with a more premium fashion offering have benefited from the Brexit decision and the pound taking a tumble. Airports have seen 30%-40% week-on-week sales growth. They’ve also experienced record passenger numbers.”
Travel retail is an integral part of British tailoring and shirting brand Thomas Pink’s strategy, explains global marketing manager Alex Field: “We have stores in all the Heathrow terminals, and at Paddington, St Pancras and Waterloo.
“Travel retail works for us because of two things: it’s the heartland of our target customer base, whether it’s our large commuter base or people flying for business or leisure. It’s also convenience shopping – customers don’t want to have to go across London or the country to buy a shirt, so making it part of the everyday routine on the morning commute is perfect.”
Airport stores are open twice the number of hours as a normal store, making it a more productive space
John Egan, Dune Group
Footwear and accessories retailer Dune is another business making the most of the opportunities in travel retail, operating stores at Gatwick’s North and South terminals, Manchester and Stansted, as well as St Pancras International. The retailer is also exploring expanding its travel retail offer into international airports.
“Travel retail is still a growing bricks-and-mortar business, which is hugely important, and people underestimate the potential profits,” says Dune Group chief executive officer John Egan. “Airport stores are open twice the number of hours as a normal store, making it a more productive space. You can also tell exactly what kind of people will be coming through at any particular time.”
For fashion retailers exploring new markets overseas, a presence in UK airports can help them connect with international consumers when they are at home and abroad.
“As Gatwick starts to introduce flights to and from China, the Chinese customer will come over and see Dune London in the terminal,” says Egan. “Being in a major British airport helps us build credibility when those consumers then see us on [Chinese online marketplace] Tmall.”
Cities across Europe have been rocked by terrorist attacks over the past 18 months, leading to concerns around whether a dip in tourism could hit travel retail. Although the impact can often be devastating for local markets, retailers have experienced little effect on travel retail.
“Travel is an incredibly resilient sector,” says Black. “More and more people are flying. Last year, there were 7 billion air journeys and that’s projected to reach 9 billion in the next few years. Paris itself has suffered, but Charles de Gaulle [airport] remains a resilient international hub.”
Egan agrees: “We opened in St Pancras a couple of years ago because it connected us to people coming in from Paris and, as the station opens up to Holland and Belgium, travellers from those countries too. Terror attacks have had very little impact on the store.”
We can’t offer huge spaces to our retail partners but it’s about working with our fashion partners
Daniel Charles, head of retail at Network Rail
However, the resilience of the market does not mean that travel retail is without its challenges. Black argues many high street retailers have yet to truly find their feet in the market, particularly in airports. Logistical issues, such as limited space and the rigorous checks needed for staff to work airside, complicate retailers’ day-to-day operations. Zara closed its Gatwick store in January this year.
Black says: “It’s still a slightly tricky sector for the high street and some fast fashion retailers at a low price point find it very difficult to get their head round the smaller space and high rents. Most of them are looking for 3,000 sq ft or 4,000 sq ft stores and big storage areas, which airports can’t offer. You can’t just bolt on an airport store to your existing operation. It’s a 365-day-a-year operation with longer trading hours, and needs its own management team to handle the logistical challenges.”
Space can also be at a premium at railway stations, says Network Rail’s Charles: “We can’t offer huge spaces to our retail partners but it’s about working with our fashion partners and saying how small can you get your concept down to but still offer a good product mix. Retailers are getting cleverer about tailoring their product offer for the space.”
Millions of customers and heavy investment in refurbishments to the spaces make railway stations and airports a tempting prospect for fashion retailers. However, retailers need to consider how they can condense their offer to work within the limited space available for their offer in stations and airports to really take off.
Five minutes with Chris Annetts, retail and service director, Heathrow airport
How Heathrow has developed its travel retail offer?
Over the last few years we have redeveloped the retail space in three of our four terminals. The newest Terminal 2 in 2014 with some of the best of British brands including John Lewis’ first airport retail space. We also opened a second personal shopping lounge to personalise the experience at Terminal 5. This summer, the retail offer in Terminal 3 is a key focus for us. We want to remodel part of the departure lounge to bring in new brands and broaden the offer.
How does Heathrow’s offer differ from other airports around the UK?
We compete with other European hubs to encourage passengers to choose the UK as their chosen transit airport. This means it is vitally important we offer services that cater for our diverse mix of customers and gives everyone a taste of British hospitality as we are the first and last impression of Britain for many passengers across the globe.
What opportunities are there for fashion retailers in travel retail?
Last year we introduced a number of new and innovative pop up units to Heathrow. These give our very frequent passengers a different retail offer every time they fly and helps us to trial new brands to Heathrow. We can collect immediate feedback from our passengers and retailers can get great insight into what works and what doesn’t for this passengers. This year we also want to improve pre-awareness of our retail services through our reserve and collect services and develop our pre-booking and ordering tools.