Guest Slot – Analysis Insider – Sarah Wilson

 

It’s not too big a secret that for many retailers their best performing stores are based in travel locations – namely airports and train stations. It is no wonder therefore that spaces like the high-gothic St Pancras station and the glass palace that is Heathrow’s Terminal 5 are locations that retailers are taking more notice of than ever before.

St Pancras: premium retailer destination.

It certainly seems that businesses with stores in travel locations are getting a few things right. One factor is that they have to deal with limited space, which they must sweat. This means being very selective about the products what earns the right to that space. 

It is therefore critically important that these retailers know intimately the travel customer, both business and leisure – what they need on the move, the essentials for enhancing their travel experience and the nice-to-haves, which put people in the holiday mood.

All of this has to be managed with military precision – there is little storage space in travel locations and delivery times are restricted so the supply chain infrastructures have to be more responsive than for other stores. The typical travel retailer can replace a product on the shelf in 9-to-16 hours. This compares with the supermarkets who achieve between 12-24 hours.

Successful travel retailers often have a separate division within the group to manage the nuances of the travelling customer and do it very well – you could argue that the WH Smith travel division delivers results its high street equivalent would be very proud to replicate.  As an example of this flexibility you only have to look at their new concept store ‘The London News Company’ – the first of its kind is located at Gatwick airport. 

London News Company: news from WH Smith.

Given the results of this sort of laser-guided thinking I would argue all retail formats could learn from this approach – it’s not rocket science, it’s just good old-fashioned retail detail! Really getting under the skin of what the customer needs and wants, make every product earns its right to space, imagine the supply chain has to deal with the constraints of no space, and most of all create the experience which is right for the needs of the customer at the time they are shopping.

While it could be said that some of the success of travel retail is down to the increasing levels of footfall going through transport hubs – this is the case at both rail stations and airports. It is my belief that it is mainly down to a laser focus and bringing really targeted ranges and experiences to the travelling customer.

Maybe one of the drivers of success in these stores is the competition to gain leases – any failure to deliver strong revenues will likely see a retailer replaced as there is no shortage of merchants ready to replace poor performing incumbents.

And the beauty of gaining a unit in travel locations is that there will be little competition as there will only be one retailer in each category present. Once you are in the door then expect little direct competition from rivals. 

Another less obvious benefit is the potential to leverage travel retail into an overseas presence. If retailers start moving into overseas travel locations then it is a soft landing into a broader expansion within international markets.

Many retailers do not see this as an expansion opportunity, but they should. As an opening gambit into new markets it provides a great springboard for expanding into traditional retail locations.

Watermark: the French arrive at King’s Cross station.

Maybe we are starting to see this happening in the UK at King’s Cross station for example the French book retailer Watermark (owned by LS Travel Retail) has opened its first outlet in this country.

If you fancy a foray into China and have a model for a travel retail proposition then it is a great opportunity. Consider that around 90 new airports are planned for the country (it’s the same story around the rest of Asia). And then the rest of the country is a retailers’ expansionary oyster.

So maybe some of UK retailers’ best performing stores won’t be limited to the likes of St Pancras station in London but will be found in Chinese airports in the near future.