Heathrow’s retail concessions director is piloting a change in the way the airport works with its fleet of retailers.
With global expansion high on the agenda for major fashion retailers, allocating budget to travel retail and having a presence in the key ‘shop windows’ at airports has become integral to international strategies. And with 69.9 million potential shoppers travelling annually through Heathrow - 90% of which are high-spending ABC1 consumers, compared with just 50% on the high street - it’s little wonder the UK’s number one airport is now considered a prime retail destination.
It’s with this in mind that Drapers catches up with Heathrow’s retail concessions director Muriel Zingraff-Shariff, who despite her calm and collected demeanour is busy behind the scenes preparing for the relaunch of Terminal 2 (T2) in June 2014. She’s keeping details under wraps for now - although does reveal plans to use more digital technology to communicate with customers, citing Burberry’s new Regent Street flagship as a prime example of how to innovate - but is keen to talk about Heathrow’s transformation into a leading retail destination and emphasise the close working relationships she enjoys with the airport’s concessionaires.
Sitting down over a coffee in the frenetic surrounds of Terminal 5, she explains that whereas traditionally airports simply hosted retailers, Heathrow is leading the way in becoming part of the ‘trinity’, which is the operator, brand and the airport, all working more closely together. “My overall strategy is that we want to be seen as a retailer,” she says. “In terms of the size of the business we represent in the UK we’re a very big retailer.
We sell different things but we’re up there with Tesco and Marks & Spencer.”
Existing and potential concessionaires benefit from dealing directly with the Heathrow retail team - though they can also choose to work through a third-party operator - with advice on hand about how to tailor their offer for travel retail, and shared information on which flights are landing when, enabling them to remerchandise for peak times.
Zingraff-Shariff says perceptions are changing, with major fashion retailers placing greater focus on travel retail. Zara was initially reluctant to sell from a smaller store, but since entering Terminal 3 has been a huge success. “It took three years of discussion to get Zara and it’s taken a little bit longer just to tweak its assortment so it understands what sells and what doesn’t,” she says. “We take retailers along in that journey of understanding what an airport is about.”
This marks a transition from the airport simply being a landlord to becoming a retailer in its own right, claims Zingraff-Shariff. “No one would say Harrods is a real-estate company, and we have the same business model,” says Zingraff-Shariff. The challenge perhaps is that despite their numerous concessions, the luxury department stores have an overriding, encompassing brand of their own, which is arguably more difficult to create in an airport.
However, if branding is the challenge, then with more than 20 years’ experience in developing brands - including roles such as main board director for fashion, beauty and accessories at Harrods, chief executive of fashion house Paco Rabanne, new product development and licensing director at luxury footwear label Jimmy Choo, and more recently luxury advisory roles at private equity firms 3i and Oaktree Capital - Zingraff-Shariff is the right person for the job.
Since joining as retail concessions director in July 2011, she has used her retail pedigree to build the Heathrow brand. Its five terminals are home to more than 500 stores, from luxury concessionaires such as Mulberry, Chanel and Dolce & Gabbana, to premium high street chain Reiss and fast-fashion giant Zara. It also has the highest retail sales of any airport, with South Korea’s Incheon airport in second place.
Gross year-on-year retail sales rose 13% to £1.7bn in 2011, while retailers saw an 8.8% growth in gross turnover as a result of a boom in luxury spending, and net retail income per passenger increased 5.3% to £4.35. Clothing and accessories sales soared further in the same period, rising 18.6% to £271.2m in 2011. Zingraff-Shariff notes that luxury has been a major driver, with sales up 41% over the past three years. However, she admits Heathrow is “essentially an accessories business”, with clothing proving harder to sell due to the transient nature of passengers worried about missing their flights. Of the fashion that does sell, however, outerwear is particularly popular from brands such as Burberry and Barbour.
Barbour has had a presence at the airport since 2003, first in T2 and then moving to Terminal 1 in 2008 when T2 closed. The brand’s managing director Steve Buck says: “As Barbour continues to evolve as an international lifestyle brand, it is important that we showcase our products in the right environments. London Heathrow offers us a unique opportunity to present our brand to passengers from all over the world as they pass through the airport, many of whom may not have been aware of Barbour and what we have to offer.”
At the same time as revealing plans for T2 in January last year, Heathrow unveiled six new retail directions as part of its effort to strengthen its proposition, focusing on areas including personalised service and experiences targeted at its international audience, innovative collaborations and multichannel.
“The birth of T2 has enabled us to really think in-depth about what we wanted retail at Heathrow to say about the airport,” says Zingraff-Shariff.
Technological advances and the growth in the use of smartphones and iPads for shopping also means that all airports can no longer rely on a captive audience with no alternative on offer. “High street retailers are shifting to a much more multichannel strategy, and airport retailers should look to do the same,” says Kate Ormrod, retail analyst at Verdict Research. “Airports such as Heathrow need to more heavily promote their pre-ordering, collect-on-return and home delivery services to emphasise the convenience they offer consumers.”
Zingraff-Shariff agrees that airports can no longer take captive audiences for granted.
“I think we’ve moved away from that tremendously,” she says. “First of all because we’ve probably had people in our international departure lounge who instead of buying in the stores could decide to buy on Amazon.”
The new retail directions initiative began taking shape in July last year when the airport launched a new starter induction programme and began asking all staff, including those of concessionaires, to wear a Heathrow badge.
And on October 30 its retail website Heathrow Boutique went live with a soft launch, followed by a marketing campaign on November 15 which is set to run throughout 2013. The site isn’t transactional, but allows passengers to browse ahead of travelling and then reserve and collect, while home delivery is available from some brands too. Zingraff-Shariff hopes the convenience factor will encourage passengers to spend more.
“For a lot of people still the airport moment of travelling is a bit of a no-man’s land,” she says. “If we could encourage our passengers to look at what we have on offer before, it would enable them to plan their time here much better and add value to their travelling.”
in late 2012 Heathrow also launched a free personal shopping service, bookable online and available on site across all of its terminals. Arching her eyebrows, Zingraff-Shariff adds: “No other airport has done it up to now and I’m sure we will be quickly copied.”
The airport also hosts up to seven pop-up shops at any one time to enhance its retail offer, with Burberry set to open one this year. Each pop-up runs for four months, which Zingraff-Shariff says is to “take into consideration the sometimes quite heavy investment that the brands have to do in their shopfit, because we really want the pop-ups to be unique”.
Zingraff-Shariff is positive about the prospects for travel retail, and says she was “gobsmacked” by the increased number of fashion businesses at travel retail show TFWA World Exhibition, held in Cannes in October. “Everybody wants to get into travel retail,” she says. “Retailers such as Spain’s Desigual - three years ago you wouldn’t see them [at the show]. There will be a lot of new entrants who will want to access this growing retail network.”