Paul Topping - Session 2: Non-Aeronautical Revenue Development

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Travel Retail & Catering in

emerging markets: Generating

non – aeronautical revenue

Paul Topping

Director / Board Member

Flemingo International





Paul Topping



Travel retail & Catering in Emerging

Markets

Kuala Lumpur I 02/04/2014

Agenda

2

• About Flemingo

• Emerging Markets

• Importance of non - aeronautical revenue

• Non - aeronautical revenue figures

• Rubik’s Cube

• Offer

• Passenger profiling

• Maximizing tender process





Paul Topping




Markets


Flemingo- Introduction

3

• 138 operations in 31 countries

• Present in Africa, Asia, Europe and

LATAM

• Emerging market, travel retail specialist

• Vision: 2B.BY 2020





Paul Topping




Markets


Flemingo – Introduction

4

• Duty Free

• Duty Paid

• Food & Beverage

• Diplomatic

• Inflight

• MASTER RETAILING





Paul Topping




Markets


Emerging Markets

5

• Frontier …emerging.. developing…

advanced

• An underdeveloped country / high growth

potential / high risk / significant volatility

• $2000 to $12,000 GDP per capita

• More focus on goods than services

• BRICS (0ver 10 years old)

• CIVETS

• MIKT

• MINT





Paul Topping




Markets


Emerging Markets?

6

• India / China

• Brazil

• Argentina

• South Korea

• Vietnam / Myanmar

• Turkey





Paul Topping




Markets


Importance of non - aeronautical Revenue

7

• Ranges from 10% to 80%+

•airport retail/catering 27 to 36%

• Funds airport development

• Creates essential facilities

• Activity to satisfy traveler's needs

71%@ Sydney

Airport

58% @ Changi

Airport

54%@ Kuala Lumpur

Airport

81%@ Houston

Airport

Source: www.zawya.com





Paul Topping




Markets


Figures of non - aeronautical Revenue

8

Non Aeronautic

al 47%

Aeronautical

53%

Global Average

28%

72%

Global average

Terminal retail revenue

Other revenue





Paul Topping




Markets


The Rubik’s cube to maximize retail/catering

• Research

• Space and location

• Category and brand offer / Tenant mix

• Pricing / value policy and activity

• Contracts / partnerships

• Realistic tenure periods

• Service / standards

• Sense of place

9

50% of the global

passengers plan

purchase after

entering a retail

outlet





Paul Topping




Markets


The offer…

• Duty Free

• Exclusivity, walk through, allowances, departures

and arrivals

• Catering

• To go, coffee corner, fast food, fine dining,

branding

• Convenience

• Water, news, reading material, tobacco

• Local product …sense of place

• Specialist retail to match airport pax profile

• Airside / Landside

10





Paul Topping




Markets


Passenger profiling / research benefits

• Who is Travelling?

• What is their time availability?

• Origin / destination ?

• What is their demand for facilities / services / products / brands?

• What is their feedback on what you have to offer today?

• What facilities do they use elsewhere?

• Reason for using or not using your facilities ?

• Penetration / Conversion / Basket spend

11

Source: ACI – Airport Service Quality 2011

30% planned purchase passengers – end up not purchasing due to non

availability of product or poor information and

signage

20 Minutes

Average dwell time





Paul Topping




Markets


Target consumer groups (retail)

12

• Price sensitive shopping lovers

• Low income promotion swayed

• Emotional high spenders

• Low budget gift shoppers

• Conventional deal seekers

• Bargain seeking self – indulgers

• Time killing browsers

• Executive pre-planners

• Authentic product seekers

• Inspiration seekers

• Local touch gift buyers

• Wealthy convenience shoppers

• Intensive brand image shoppers

• Rational stock up shoppers

Mind-set research - Travel retail cross category global

segmentation





Paul Topping




Markets


Maximizing tender process

• Structured plan / information and transparency from

the beginning

• Maximize pre-tender process collectively

• Don’t attempt winning moves from impossible

positions

• Realistic time frames for process

• Realistic contract periods

• Create win-win relationships

• It is not about the highest bid

• Size does matter

13





Paul Topping




Markets


Summary

• Are you maximizing your non-aeronautical

revenue?

• Do you do enough research?

• Rubik’s Cube – Does your retail / catering move to

one colour?

• What is your short / medium / long term plan?

• Is your service offer from car park to boarding

gates consistent?

14





Paul Topping




Markets


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