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Retail in Motion

Retail is no longer consigned to shopping centres and high streets but canbe anywhere, from the home at the click of a mouse to on the move betweencities or even continents. This second model of Retail in Motion recognisesthat beyond their traditional transport services, airports and train stationscan evolve a range of new functions and revenue drivers, from developingtheir real estate into commercial assets, transforming their terminals intoshopping malls and expanding their logistics and distribution chains.

With airports typically surrounded by undeveloped land, many are sitting ona potential goldmine of real estate opportunities. Office blocks, hotels,convention centres, medical facilities, casinos, free trade zones and evenentertainment and theme parks can be built within or just beyond the airportperimeter to generate new sources of revenue and encourage the perceptionof the airport as a business or tourism destination.

By contrast, many rail stations are at the heart of major cities, with high footfall,central locations welcoming a mix of locals, commuters and travellers.

We’ve talked to four of you who shared with ‘MORE Vision’ their view inexclusive interviews - Together with key data, useful links and must-seevideo, it makes the fifth issue of MORE Vision.

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every 2 months: 1 consumer trend briefing • 4 retail real estate player’s viewpoints • online follow-up

MORE+ Vision n°5April 2012

• The trend briefing • Interviews:LS Travel RetailNetwork RailPolish AirportsThe Circle at Zurich Airport

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every 2 months: 1 consumer trend briefing • 4 retail real estate player’s viewpoints • online follow-up

Where does the trend come from ?*Interest in retailing within transport hubs has been generated by some impressive growthfigures for the retail offers which currently exist. Retail sales at airports are predicted to growby more than 60% between 2010 and 2015 to a value of circa $44.1 billion. Much of thisgrowth is expected to come from emerging economies, especially in Asia Pacific, which isforecast to grow by 76.2%, and the Middle East and Africa which is forecast to grow by 40.0%.Between 2001 and 2010, duty free sales at airport shops rose steadily from $8.9 billion to$23.3 billion – a 162% increase – and retail has become an important source of revenuefor the airports, representing up to 60% of non-aeronautical income.As a result a new phenomenon has emerged as more and more aviation-oriented businessesare being drawn to airport cities and along transportation corridors radiating from them, anew urban form is emerging—the Aerotropolis—stretching up to 30 kilometres outward fromsome airports. In addition, Europe’s major rail hubs are becoming fully functioning retaildestinations, attacting both travellers and the local catchment in these urban locations.

We’ve chosen four drivers behind RETAIL IN MOTION:1. EDUTAINMENT: How retail can blend with services and location

2. TECH-SPEC: Bringing the virtual world to the travelling environment

3. INSTANT-NEEDS FIX: Helping consumers on the move

4. TRAVEL HUB CITIES: The travel environment as branded destination

The trend briefing

*Source: trendwatching.com a London-based, independent trend firm, scans the globe for the most promising consumer trends, insights

and related hands-on business ideas. Its free monthly Trend Briefings get sent to more than 160,000 business professionals in 180+ countries.”

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Whether it is just a few moments passing by or hoursto be killed preparing to travel or in transit, transporthubs provide travellers with a chance to considerand consume things that they might otherwise notencounter. These features can also give transport lo-cations an opportunity to create a sense of identityand occasion, and to give something back to theircustomers, which provide further benefits to thebrands. Examples are the giant Lego tree at King’sCross St Pancras station in London, which provideda unique showcase for the toys retailer, or the holo-graphic fashion show US retailer Target organised atGrand Central Station, New York.

Opportunity 1: Edutainment

Opportunity 2: Tech-spec

*Source: trendwatching.com a London-based, independent trend firm, scans the globe for the most promising consumer trends, insights

and related hands-on business ideas. Its free monthly Trend Briefings get sent to more than 160,000 business professionals in 180+ countries.”

every 2 months: 1 consumer trend briefing • 4 retail real estate player’s viewpoints • online follow-up

Selected linksIn November 2011, Finnish airlineoperator Finnair launched the QualityHunters programme for a secondyear in partnership with HelsinkiAirport. The initiative offered sevenpeople a five-week world tour, wherethey went in search of ways ofimproving the travel experienceacross themed topics. The ideas werepresented back in December and thepublic voted on the best.When the new Berlin BrandenburgAirport goes into operation, 150shops, restaurants and service facilitieswill be offered across 20,000 sq m.Besides well-known internationalbrands, BER will primarily presenthigh-class regional concepts from theretail, gastronomy and service sector,reflecting the best of the region’sproducts and merchandise.Lego unveiled a giant Christmas treeat London’s Kings Cross St Pancrasrail station in November last year. The10m tree took two months and600,000 Lego bricks to build. Some ofthe hanging bauble had QR codeson them that either directed peopleto a site with information on theproject or the start of a Harry Potter-themed treasure hunt.

Sales at Indianapolis Internationaljumped sharply during the first twoweeks of February as sports fansdescended for the Super Bowl. Salesper passenger rose from an average$10-11 to a peak on Super BowlMonday of $30, when pop-up sportsstores made $350,000 in sales.

4More links on trendwatching

Selected linksWoolworths in Australia has become thelatest retailer to unveil a virtualsupermarket at a train station inMelbourne. The temporary billboard,which looks like a real supermarket shelfwith images of 120 key grocery items,enables commuters to purchase productsby scanning the barcodes with theirsmartphones. The barcodes take users toWoolworths' mobile phone app wherethe store's full range of 40,000 productscan be purchased and delivered tohomes and offices within hours. In September the New York Transitsubway system introduced its firstwireless locations around the city’ssubway system, using a neutralplatform supplier. The programmewill see all 271 stations converted towireless within four years, with sixnow in operation and 30 more to becompleted by the end of the year.Via a partnership between internationalFMCG group Proctor & Gamble andCzech retailer Mall.cz set up a virtualgrocery store in four Prague subwaystations during October 2011, allowingcommuters to buy via QR codes ontheir smartphones. Tesco pioneered asimilar scheme in South Korea and isrolling this out to 20 bus stops in Seoul.PayPal, Boku and Google Wallet are all

developing in-store/in-situ paymentsystems which will enable travellersand commuters to buy products andservices from their smartphoneswithout having a credit card or bankcard. Business travel airport hotel chainYotel has already signed up, as haveHome Depot and Pizza Express.

4More links on trendwatching

What could you add to a busy travel hubto entertain and educate customers?

Are all the opportunities to engagebrands being taken?

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How do you see it?

Could your environment be made moredigitally accessible and how would

this benefit you?

Is there a digital offer which could becustomised to your location?

Post your answer4here

Selected videoASICS, Columbus Circus

How do you see it?

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Technology has enabled retailers and brand to turnpublic realm into ‘digital space’ and this has beenenacted better at transport locations than almostanywhere else. Tesco Homeplus’ experiment witha QR code store has been copied around the worldand there are now numerous examples of digitalstores. Tesco itself is expanding its experiment.Such applications of technology are a greatdistraction for time-poor commuters or time-richtravellers and can be constantly updated andenriched, providing an ever-changing space ofexpectation which meets the consumers’requirement for excitement and unpredictability.

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Selected videoTarget modelless show, Grand Central

every 2 months: 1 consumer trend briefing • 4 retail real estate player’s viewpoints • online follow-up

*Source: trendwatching.com a London-based, independent trend firm, scans the globe for the most promising consumer trends, insights

and related hands-on business ideas. Its free monthly Trend Briefings get sent to more than 160,000 business professionals in 180+ countries.”

Travellers often have instant needs and few options withwhich to fulfil them. Increasingly, transports hubs are be-coming locations where those requirements - and someneeds which passengers may not even know they had- can be met. From the Barclays-sponsored ‘Boris Bikes’for hire scheme in London through to punch bags in theShanghai subway system, transport can provide theplatform for offers meeting the material, practical andsocial elements of a traveller’s needs. Many of these re-tail or services offers may also provide a sense of ‘gi-ving’, providing customers with good value and help,providing an enhanced brand connection.

The rising importance of the non-travel sector alsochanges the concept of the airport: Originally plannedas an infrastructural building, the distance from check-into gate was kept as short as possible. The modernairport makes the passenger pass by as many shops aspossible. The dynamic architecture and the spacious hallsare designed to work as shopping malls: a roofed mall,airy, and flooded with light. But airports aren’t onlyfocusing on retail and catering: they have also started toinvest in recreational facilities, entertainment and real-estate development. Airports are changing into city-likestructures, so called airport cities, such as LondonHeathrow, Amsterdam Zuidas, Las Colinas, Texas, andSouth Korea's Songdo International Business District.

Opportunity 3: Instant-needs fix

Opportunity 4: Travel hub cities

Selected linksFrance-based railway company SNCF launched ascooter hire schemewith French car manufacturerPeugeot in September. Commuters to the ParisMontparnasse station can rent an electric scooterfrom one of several outlets and use it to completetheir journey home or to the office.

Launched in July, US-based bike maintenancefirm Bike Fixation is a company producing self-service vending machines for bicycle tools andparts. The bike repair stations include free aircompressors, a universal work stand and toolsfor small adjustments and minor repairs. Thefirst vending station was installed in the UptownTransit Station in Minneapolis and is free to use.

Anystop is a free mobile application for Androidphones that not only helps users find bus routesand bust stops but also predicts when the nextbus will arrive by combining real-time data fromthe GPS devices on buses and scheduled transitinformation. Anystop can be used in variouscities in the US, Canada and Australia.

The Delhi Airport Metro Express is to developtwo Metro stations as ‘mini-airports’ within fourto five months. Over 100 retail outlets will beopened at these stations. Domestic check-ins,flight updates and information kiosks are alreadyavailable. Shops, spas, internet lounges, vendingmachines and restaurants will be added, givingtravellers the option of spending time at thestations instead of waiting at the airport.

4More links on trendwatching

Selected linksShopping at Zurich airport includessightseeing and entertainment: observerplatforms, exhibitions, round-trips andthe organisation of children’s birthdayparties are offered. The newly builtRadisson Hotel has a direct connectionto the terminal and offers 23 meetingrooms and a conference centre.Westfield Concession Management hasbeen awarded a 17-year lease aimed atsprucing up the culinary and retail selectionsat the iconic Theme Buildingand twoterminals at Los Angeles InternationalAirport. The deal is expected to generate$331.1 million in revenue for LAX andWestfield will refresh the food andbeverage and retail offer in time forcompletion of a $1.5 billion expansion ofthe Bradley terminal in March 2013. The Transbay Transit Centerproject is atransportation and housing project whichis expected will transform San Franciscoby creating a Gradan Central Station forthe west. Expected to complete in 2017,the $4bn project will include leisure, foodand is eco-friendly.PKP and HB Reavis showcased theWarsaw Zachodnia Station and officecomplex at MAPIC this year. The

scheme will create a new railway station,due to open at the end of 2014, and amixed-use centre of retail, office andresidential buildings. PKP is also workingwith private investors in Katowice andPoznan to combine transport hubs andcommercial space.4More links on trendwatching

Can you provide something bothuseful and which enhances the retail

offer?

Can you monetise interaction in a waythat benefits the consumer?

Post your answer4here

How do you see it?

How do you see it?

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Selected videoApple store, Grand Central

Share your view and join inthe discussion!

Share your view and join inthe discussion!

How do you create a destination outof something which is transitory?

As a destination, how does the offerchange?

Post your answer4here

Selected videoPortuguese airport retail opportunities

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Retailer: Fin Casey, managing director,LS Travel Retail UK & Ireland

What does the transport location bring tothe offer?A travel retail specialist needs to have a wellprepared offer specific to the environment,although every store will need adjusting forits location and the trading space. But it’s im-portant to reflect more than just the needsof travellers – major transport hubs are beco-ming destinations in themselves. Retailers intravel environments need to leverage the lo-cation. At Kings Cross, London for examplewe are next to Harry Potter’s Platform 9 ¾and soon a Harry Potter store, providing thepotential to work off the continuing energyof those books.

How have you approached the offer at astation?As a business [Relay] we started in a Paris sta-tion around 200 years ago, so entering Europewith a Watermark bookstore feels a little likea romantic arrival home. Obviously there aresimilarities but also differences between rail

and airport retail. At a station you have lessdwell time but potentially far more regular vi-sits, so you have the opportunity to build a re-lationship with the customer. For a bookstoreone role is to provide some calm and respitefrom the travel experience, the other is to fulfilan instant requirement for a book before tra-velling, which is what distinguishes a travel lo-cation from a high street or mall store.

What happens next?We believe there is further potential forstores in European transport hubs but any rail– or airport – location has to meet a minimumfootfall requirement to provide the right salespotential. Stations are much “leakier” thanairports in terms of sales per passenger andso we would be looking for a minimum ofaround 10 million passengers at an airport,40-50 million at a station. Transport locationsprovide a unique set of elements and they docater to very specific needs, which is whatmakes them attractive.

What does the transport location bring tothe offer?It’s important to realise that retail hubs donot only serve travellers, with the right offerthey act as destinations in themselves. At Li-verpool Street 40% of the shoppers are non-travellers, at Euston, which has a very limitedretail offer, still 18-20% of the shoppers arenon-travellers. So clearly stations in urban lo-cations have the potential to be turned intodestinations, where people arrive earlier orleave later, meet friends and dwell longer. Asa rail operator it is about defining what thecatchment requires and how it is delivered.

How have you approached the offer atyour stations?Last spring we added new restaurants atManchester Piccadilly; this year further retailspace will open at London Waterloo, Birming-ham New Street and King’s Cross. For sta-tions one of the first jobs is to clear theconcourses of pods and standalone units,improving passenger flow. Retail and food

needs to be separated so that it comple-ments but does not provide an obstacle tothat flow. To provide retailer’s with security Iwould advise that leases run to around threeto six years and for food outlets to seven toeight years. Our rents are base plus turnoverbut in locations like rail stations flexibility isalso needed because some retailers will benew to these environments and no matterhow hard everyone tries, it will not alwayswork.

What happens next?We have a programme of retail opening atUK stations. Our broader strategy is to stripretail out of the main concourses to ease cir-culation and then generate new areas of re-tail above and below. I think the ultimate goalfor any rail operator would be to attract abrand like Apple because of the strength ofthe location on offer, although achieving theminimum space requirements would be verydifficult. Ultimately flexibility and a pragmaticapproach are vital.

Rail operator: Gavin McKechnie, head ofretail, Network Rail

@networkrail

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Airport operator:Michal Marzec, generaldirector, Polish Airports

What does the transport location bring tothe offer?The idea behind airport cities, which are be-coming more and more popular all over theworld, is the combination of aviation and non-aviation. An additional source of revenuesfrom commercial services has a significantimpact on the region's economic growth,through the creation of new jobs and deve-lopment of infrastructure. Good examplesare similar projects in other European cities,such as Düsseldorf, Munich and Amsterdam,where the non-aviation activity acts as astrong driver for economic growth on amacro scale. Such venues also enhance theairport's, the city's and the region's reputa-tion internationally.

How have you approached the offer atChopin?We want to use the benefits of the location,which is in close proximity to Warsaw city cen-tre, but is also directly adjacent to the airport,the train station and a coach station. This type

of interchange will be increasingly importantfor airport cities and for us as aviation trafficcontinues to increase at Chopin Airport. Wehave a 22.5ha site adjacent to the airport whichwe will transform into a mixed use, office-ledscheme called Chopin Airport City over thenext ten years, including a business park withretail, entertainment and leisure facilities.

What happens next?As an airport operator, this is a new expe-rience for us. The first step for any proposedairport city is to do the research, which wecarried out with CBRE. We concluded it is im-portant to give workers and travellers a com-fortable environment. The commercialbuildings will be set within a park, with a cen-trally-located plaza providing restaurants, fit-ness centres and retail, and traffic will bedirected around the perimeter of the site, lea-ving the centre traffic-free. Such an approachis part of our plan to encourage office workersto stay at the end of the work day and to en-courage passengers and aviation workers.

What does the transport location bring tothe offer?The role of an airport city is effectively tocreate a new city on the edge of the city, onethat is well connected and acts as a magnetfor multinational businesses, conference or-ganisers and educationalists. It is not aboutplanning to make money by increasing thenumber of passengers through an airport;that is not the point. Instead, it is about in-creasing their length of stay and serving de-mand from a new segment of traveller whodoesn’t currently exist. Retail works at a dif-ferent cycle to aviation as well, which canprotect an operator by running different in-come streams which will be impacted diffe-rently by the economy.

How have you approached the offer atZurich?For businesses, an airport city creates a‘headquarters with its own airport’ and theidea behind such schemes is to make the air-port a whole, self-contained destination in its

own right, developing it from a transportationhub and a commercial centre. That alsomeans providing a recognisably national ex-perience, which in our case promotes Swit-zerland and helps us and the city of Zurich.The Circle’s architect is a Japanese company,Riken Yamamoto & Field Shop, and a majorrequirement is sustainability, which we be-lieve is crucial to any high quality commercialdevelopment.

What happens next?We are at the point where we are continuingto attract investment, which is why we wereat MIPIM this March, and if we achieve ourfull equity requirements, we hope to start onsite in 2013. But it is also important in deve-loping an airport city to look at the wider be-nefits to the region, which is why in the caseof our development it is being coordinatedclosely with the adjoining city of Kloten.Connections between an airport city andother towns and cities can provide far broa-der commercial benefits.

Polarisation: Boutiqueor big centres?Andrea Joerger, projectleader, The Circle at ZurichAirport

@ChopinAirport

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is a new initiative by MAPIC, The international market for retail real estate 14 – 16 November 2012, Palais des Festivals, Cannes, France.

Every two months, MORE+ Vision introduces a newtrend that is influencing retail property strategy.

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CreditsContributors: Mark Faithfull • Jean-Marc AndréAcknowledgement: MORE+ Vision wishes to thank the interviewees for their kind participationDesign: Frédéric Beauseigneur – Reed MIDEM Publishing Dept.

Sources: “trendwatching.com, a London-based, independent trend firm, scans the globe for the mostpromising consumer trends, insights and related hands-on business ideas. Its free monthly Trend Brie-fings get sent to more than 160,000 business professionals in 180+ countries”

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