Possible Mini-Store Airport Locations

At the Oct. 2004 unveiling of the mini-store concept at the Stanford Shopping Center (N. Calif.), Sr. V-P Retail Ron Johnson said the stores' smaller size would allow Apple to open stores in other types of venues, including airports.

Airports have long had retail shops, but they focused mainly on duty-free shopping, and newstands with books, candy and magazines. But within the past 10 years, three factors began to change the airport retail scene: the need of airlines to pay less landing and lease fees, the need of airports to stretch thin municipal budgets, and the need of retailers to find additional customers niches.

The new Pittsburgh (Penn.) airport set the modern retailing standard in 1997 when it opened with an "AirMall" area that featured national stores selling items at ordinary retail prices--something previously unheard of! Many other airports have embraced retailing as they add new terminals, renovate older terminals, or build entirely new airports.

The terrorist attacks of 2001 had a significant impact on the then-emerging airport retail movement. The resulting increased security also cut out a huge group of potential airport retail customers--those who came to drop off or pick up their friends and relatives. Interestingly, however, the airlines' service cutbacks provided one source of new retailing--food establishments. Fast food retailers such as McDonalds, Wendy's and Burger King jumped into airports when the airlines cut back on their in-flight food service. Even mainstream restaurants located at airports to fill the needs of hungry travelers.

Airport retail designers use terms such as "transfer rate," "footfall," "retail dwell" and "sight density" to analyze designs that funnel passengers into the retail area, have them pause there with seating areas, and make the retail vendors highly visible.

The transfer rate indicates how many passengers might be staying within the terminal between flights, instead of hurrying to their plane (outbound), or dashing for a taxi (inbound). The dwell time indicates how long a passenger would have between flights. Anything over 30 minutes could be considered wait time (after going to another gate, bathroom, eating, etc.), which could be used to investigate the retail stores.

Airport retailers typically sell more per square foot than in a mall setting (up to $1,800 per s.f., compared to around $600+ per s.f. for Apple's standard-sized stores), if only because the sales space is so tiny. Consequently, airport sales figures are usually stated per-passenger, which can range from $5 to $10.

Lastly, you might know that airline route selection is an enormously complex task that takes extensive mathematical analysis. The result is that airlines makes extensive use of "hubs" to carry passengers economically to their destination. The hub concept, in turn, concentrates passengers into a few of the nation's 546 commercial service airports--just 31 airport hubs account for 70% of all passenger enplanements. This offers retailers a great opportunity for to present and sell their products by investing in relatively few store locations.

However, the selection of concourse or terminal is critical: airports typically separate international from domestic, and often commuter from long-haul airlines. Each terminal has its own mix of passenger demographics (business vs. pleasure, economy vs. high-flyers, etc.), dwell times (from 30 to 90 minutes) and number of flights.

But These Requirements...

These new venues provide an additional point of contact for Apple, but they also brings an additional set of size, design and operational requirements that the airport authority establishes. For example, some airports require standardized signage for storefronts, certain entrance dimensions, matching flooring with the concourse, and operation during airport hours (typically 7 a.m. to 10 p.m. every day). Some airports require store prices to match those of mall-based stores in the same chain, or so-called "street pricing." There may also be issues of delivery and personnel access, and security at airport stores, as well as the need to stock inventory at another location. (Download large 5.2Mb pdf with list of requirements)

Lease costs for airports are typically higher--usually in the range of $150 to $200 per square foot, compared to $20 to $50 per square foot for malls. Overall, consultants say it costs double to open an airport location compared to a mall site.

Some very new airports were designed with specific retail areas and spaces, and are part of the overall plan for movement of passengers to and from planes. Other airports have squeezed in retail spaces where possible, which often means compromises in placement and traffic patterns.

Airport marketing is focused on advertising their price competitiveness, while the speed of transaction is important once a customer has entered the store. Entry and exit has to be easy and obvious, merchandise has to be displayed for easy grab-and-go, and the payment process must support prompt attention and completion.

Airport retail sales are traditionally impulse based. However, in Apple's case, sales would be need-based. This obviously requires a tweaking of the standard mini-store product mix: Apple's mini-stores fulfill many of the requirements, perhaps only requiring a tweak of the product mix iPods, their carrying cases and accessories, plugs and adapters, cables, CDs and laptops should make up the bulk of the displayed products. Everything now hung on pegs, or displayed in boxes at a full-sized store will probably appear in an airport mini-store. Everything else won't be available.

As of April. 2008 Apple has taken no apparent action to install airport stores. In fact, they've not installed any additional mini-stores of any kind.

By the way, outside airport retail development is concentrated in two developers--BAA USA and Westfield Development Corp. However, there are many airports that operate their own retail development operation, and use the Request for Proposal (RFP) process to solicit possible airport retail tenants.

Download (pdf) a brochure of 2002 winners of the annual Airport Revenue News competition for best airport retailing.

So which airport might Apple select for its mini-store concept? Here is a select list of the country's airports, including the airports with the most annual passenger traffic, ranked by sales per enplaned passenger (EP). Note that some airports with high sales have much less passenger traffic.

Airport

Sales EP

Retail S.F.

Passengers

Pittsburgh - Managed by BAA USA, 100 stores; considered the trend-setter when opened in 1997. One of the only airports with a Gap and Victoria's Secret store.

$10.08

94,800

14,265,000

Newark - Transfer rate 8%, dwell time 108 minutes

$8.91

100,600

29,584,600

JFK - New York - A mix of old retail and new retail space (Terminal 4), sprawled over a huge facility. Transfer rates vary among terminals, from 11% to 27%; dwell times up to 132 minutes. Has two Brookstone stores

$8.17

239,414

31,712,728

Washington (DC) Reagan Airport - Managed by Westfield Corp., a developer that often works with Apple. The 40 available spaces average 900 s.f., and include the Smithsonian store (largest at 2,373 s.f.), The Gap, Victoria's Secret, Bath & Body Works, Gymboree, PGA Tour Shop, and several regional retailers. Transfer rate 1%.

$7.47

60,207

13,973,000

Las Vegas - Major tourist destination, but they apparently still have money to spend when they arrive at the airport.

$7.45

120,190

36,265,705

San Francisco - Has new separate international terminal, plus expanded domestic terminals. Major gateway to Asia.

$7.43

168,360

29,296,681

Miami - Transfer rate 45%, dwell time 60 minutes

$7.03

145,723

29,595,618

Seattle/Tacoma - Sales up 11% during 2004; just added 6,000 s.f. in Concourse A that requires "street pricing." Port estimates 3% sales increases per year.

$6.96

75,000

26,752,768

Sky Harbor - Phoenix - Has street-pricing policy for retailers. Issued an RFP for a new Terminal 4 retail spaces totaling 40,000 s.f. Transfer rate 20%

$6.89

131,628

37,409,388

Hartsfield International Airport - Atlanta - Major hub airport for both east-west and north-south routes; largest retail operation of any airport; 50% transfer rate, 103 minute dwell time. Over 200 concessions with $289 million in revenue per year. PalmOne has two stores at the airport.

$6.72

166,000

76,086,792

Toronto -

$6.72

96,640

24,729,784

Denver - Designed and built in 1996. Transfer rate: Terminal A - 33%, Terminal B - 64%. Dwell time 50 minutes

$6.59

124,000

37,462,428

Boston Logan - Managed by BAA USA, transfer rate 10%, dwell time 90 minutes.

$6.47

83,700

22,706,000

Philadelphia - honored by Airports Council International-North America in 2002 for retail configuration.

$6.36

97,813

24,671,074

Los Angeles - Major gateway to Latin America and Asia, and also hub for southeast U.S. flight. A 1995 retail renovation by a private developer added 35,000 s.f. of retail space, and paid for itself within a year. But airport has 9 terminals, making retail investment a scatter-shot endeavor.

$6.17

156,561

54,969,053

Minneapolis/St. Paul - Ranked #1 by ARN for best concession design; 90 shops in two concourses.

$6.04

115,633

33,195,873

O'Hare - Chicago - Both a major destination and hub, dwell time 90 minues. Has Brookstone store

$5.85

109,722

69,354,154

Washington Dulles - serves DC and Baltimore (Md.) area. Sales $5.74 EP

$5.74

23,000

16,751,000

Charlotte/Douglas - Has two Brookstone stores

$5.51

83,841

23.062,000

Baltimore-Washington Airport - Managed by BAA USA, transfer rate 15%, dwell time 120 minutes.

$5.47

 82,754

19,686,000

Dallas/Ft. Worth - 60 retail spaces in new international Terminal D. Has cellular and computer accessories store

$5.43

152,944

53,243,061

Orlando - Major tourist destination, 27,000 s.f. of retail space. Transfer rate of 15%, dwell time 150 minutes. Has Airport Wireless store.

$5.41

168,501

27,316,221

Detroit - New airport opened just after Sept. 11th with emphasis on retail areas; 80 shops. Transfer rate 35%; has Gadgets to Go shop

$5.21

108,986

32,679,350

San Antonio -

$5.02

41,798

6,459,000

Houston - Retail space being expanded by 20,000 s.f. Transfer rate 53%

$4.21

82,556

34,119,680

sales EP - sales per enplaned passenger per year

Also see Airport Revenue News list (pdf) of top retailing airports (2004), including those, "whose design standards have resulted in attractive storefronts, strong theming and inviting shopping atmosphere."

Source: Passengers: Infoplease, 2003