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RETAIL/F&B Last modified on May 24, 2010

The last word - Mark Knight

BAA USA president, Mark Knight, talks to Airport World about the wonderful world of retail.

Factfile 

Name: Mark Knight 

Age: 53 

Job title: President, BAA USA 

Nationality: American 

Time in aviation industry: 18 years 

Best known for: Being an industry pioneer in the North American airport concessions sector by developing the AIRMALLs in Boston, Baltimore, Cleveland and Pittsburgh. 

Little known fact: Pittsburgh International Airport, site of the first AIRMALL continues to post the highest per-passenger spend of any airport in North America.

 

In general, do airports do retail well?
It depends on the philosophy that the airport employs when it develop its concessions programme. In the United States, two basic approaches exist – the master concessionaire model, and the developer model.

The master concessionaire model places a single owner at the head of the table. That owner can own and operate most if not all food, beverage and/or retail units at the airport. Historically, this model is exploitative, producing fewer choices for the passenger and enabling the master concessionaire to charge a premium price for goods and services. In effect, the traveller is forced to pay a higher price for a meal, a souvenir or a gift because he/she is at the airport and has no other choice.

At the other end of the spectrum is the developer model, pioneered by BAA USA in 1992 at Pittsburgh International Airport with the introduction of the AIRMALL and also adopted by other concession programme operators. The concept has also taken root at BAA USA’s newer locations – Boston Logan International Airport and Baltimore/Washington International Thurgood Marshall Airport. BAA USA is extending the concept to Cleveland Hopkins International Airport.

Rather than exploiting the airline passenger at the airport, the developer model seeks to provide travellers with the optimal retail mix: a strategic combination of high-quality national and international brands that people recognise and trust; high-quality regional/local brands that inject local flavour, provide opportunity to regional business owners, and connect the airport to the larger community; a belief that competition breeds better results for airport merchants and airline passengers alike; and ‘regular mall prices, guaranteed’.

This formula has translated into widespread success because it represents a value proposition to the flying public.

Where is there room for improvement?
In the North American market, BAA USA believes that there is significant room for improvement when it comes to airport concessions in general. Many airports in major metropolitan areas are clinging to the outdated, under-performing master concessionaire model.

Passengers are subjected to extraordinarily high prices, very little selection, substandard customer service and poor quality.

The developer model, on the other hand, endeavours to put passengers first. The underpinnings of the developer concessions programme are drawn from a competitive platform, which means individual retailers and operators are competing for the passenger’s dollar. Travellers find high-quality merchandise, branded retailers and restaurants, and plenty of selection. At the same time, they know they are paying street prices. When you combine these elements, the passenger is more apt to part with his/her money. This enhances the passenger experience and simultaneously increases sales. Such a formula creates a win for everyone involved.

Are US airports playing catch-up with Europe in terms of developing retail/F&B opportunities?
Historically, Europe has done a better job of developing airport concessions. Some time ago, many operators in Europe learned that exploiting the passenger by charging sky-high prices for lackluster goods and services actually hurts profits. Many instead began adopting the developer model. BAA USA’s roots are in the United Kingdom, and Heathrow Airport is a shining example of a robust, dynamic airport concessions programme that puts the passenger first.

How important is an airport’s retail/F&B offering to customer service?
An airport’s retail and food and beverage offerings can have a significant impact on what we at BAA USA like to call the ‘passenger experience’. Whether individuals are travelling for business or pleasure, flying commercially can present a host of challenges – everything from constantly changing security regulations to long security lines.

Once passengers get through security, confirms that their flight is on time and find their gate, they begin thinking about purchasing a meal or a snack, finding some reading material, or perhaps doing some shopping.

Passengers seek quality and value for their money. They want to know that a restaurant or a store at the airport is not exploiting them. If they are satisfied with the quality and selection of both food and merchandise, they are likely to form a more positive impression of their experience. If staff members greeted them, helped them to find what they were seeking, and attended to their needs, that positive impression is only enhanced. This also creates repeat customers who travel frequently. In the end, the process can contribute to higher sales and a growing revenue stream for airport authorities.

How important are brands?
Brands are absolutely critical. High-quality brands – whether they are regional, national or international – have already earned the consumer’s trust and confidence. People respond to brands they trust.

Is it time for retailers to embrace new media to promote their offerings and even sell products?
Social media is a constantly evolving paradigm that has significant implications for retailers and their customers in just about every arena. Given this, it is only prudent for retailers and marketers to explore ways to incorporate social media into the marketing/sales mix.

How is your customer service philosophy reflected in terms of staff training and management leadership?
At BAA USA, our mantra is simple – put the passenger first. When you put the passenger first, everyone wins – the airport owner, the concessions developer, the individual retailers, local businesses and entrepreneurs, the region that plays host to the airport, and most importantly, the passenger.

This philosophy permeates our entire operation – from top management to individual operators to concessions employees. Setting and maintaining standards of excellence creates an atmosphere that drives our operators to succeed.

BAA USA maintains mentoring and training programmes at all of its airports for all of its subtenants. This programme extends to the entire operation – from merchandising, marketing, management and operations to financial record keeping.

Moreover, BAA USA regularly conducts a Quality Service Monitor (QSM) survey at all of its airports. The results of the QSM survey act as a guide and a benchmark to AIRMALL retailers, giving them a report card on how they are doing and on how they can improve. It is also incentivised. BAA rewards high-performing shops with monetary incentives that are shared among the employees of the winning tenants, and employees earn customer service awards for exceptional performance. The programme has received accolades from industry organisations and publications, including Airport Revenue News, Condé Nast Traveller, and ACINorth America (ACI-NA).

How closely do you work with your airport clients when creating a retail offering?
We believe in being an active participant in the entire process by setting very high standards for design and merchandising. When it comes to airport retail concessions, the design of the concessions programme must be both compelling and functional. BAA USA leads the industry in preparing and executing design plans that maximise passenger flow and create curb appeal to increase visibility. This also increases the bottom line for everyone involved.

In our view, first impressions are everything, and you only get one chance to make a good first impression. People often form their first impressions about a city, a region and its people when they arrive at the airport. How the airport is configured, the atmosphere, the retail amenities – these are all crucial pieces of the puzzle. Given this, BAA USA sets minimum investment levels and requires subtenants to use the highest levels of materials and finishes.

From a merchandising standpoint, BAA USA has a dedicated programme to assist operators, called Professional Assistance for Core Tenants (PACT). The programme gives individual operators the access they need to expert consultants on merchandising and operations. The consultants will travel to the airport to meet individually with concessionaires; assess their product mix, their presentation, their layout; and offer suggestions, guidance and possible modifications to increase productivity and success.

Over the years airport retail/F&B has earned itself a reputation for being a little on the high side? Is this label justified today?
BAA USA conducts plenty of research before it selects individual brands and operators to create the optimal retail mix for an airport concessions programme. When we offer highend retailers as part of the mix, we do so because our research indicates that passengers will respond to those brands based on their desires when they are travelling. Moreover, plenty of statistical data exists to support the notion that the average traveller occupies a higher income bracket than the average consumer.

 

 

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