Resource Manual for Airport In-Terminal Concessions (2011) / Chapter Skim
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3 Establishing Goals for the Concession Program
3 Establishing Goals for the Concession Program
Pages 22-39
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From page 22... ...
These stakeholders typically include the following: • Current concessionaires interested in continuing their tenure under the most advantageous and profitable terms. • Prospective concessionaires seeking a place in the concession program.
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Kennedy International Airport in New York, and Continental Airlines' Terminal 3 at Newark Liberty International Airport. Establishing Goals for the Concession Program 23 18% 79% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strong Pe rc en t o f A irp or t C on ce ss io n M an ag er s R es po nd in g Weak Neutral 13% 67% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Pe rc en t o f A irp or t C on ce ss io n M an ag er s R es po nd in g Negative, constraining the program Positive, contributing to a good program Neutral Source: Airport concession manager survey.
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Figure 3-2 presents a conceptual diagram of the concession-planning process, highlighting the key steps in establishing concession program goals, the first major task in the planning process. 24 Resource Manual for Airport In-Terminal Concessions Assess Current Program Prepare SWOT Analysisrepar l i Benchmark Comparable Terminalsench ark o par l r i ls Establish Overall Program Goalsstablish verall r r l Prepare Financial Planr r i i l l n Prepare Space Planrepare pace lan Prepare Concession Mixrepare onc ssi ix Establish Business Termsst lis i r s Prepare, Conduct Solicitationrepare, onduct olicitation Implement New ProgramI l t r r Prepare Contracting Strategyrepare o tr cting trategy Establishing Goals for the Concession Program CONCESSION PLANNING PROCESS Figure 3-2.
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Few concession programs are planned with a completely clean slate, and airport operators will want to evaluate their current concession program's performance before planning a new program or updating an existing one. Successful concession managers use a variety of techniques to measure customer satisfaction.
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3.3.3 Customer Comment Cards Long a staple at airports, comment cards in concession units and information kiosks can provide an easy means for collecting customer comments, compliments, or complaints. 3.3.4 Complaint Letters Letters and emails from customers may be indicators of a significant problem requiring investigation, especially if multiple complaints are received from different customers.
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• Passenger dwell time. Longer dwell times in the terminal correlate with stronger concession sales, particularly in food and beverage concepts, such as casual dining restaurants, and in specialty retail shops.
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Providing additional concession space can be expensive and may not be cost-effective in most cases because of the high cost of expanding a terminal. Evaluation of the factors listed above can be useful in identifying the appropriate benchmark airports and setting reasonable concession program goals.
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Longer passenger dwell times and more attractive passenger demographics provide a stronger base for supporting specialty retail sales. Duty free performance varies more widely than other concession categories because of differences in spend rates that correspond with the nationalities of departing passengers.
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In the United States, import duties are relatively low, and local taxes are a fraction of the VAT levied in many industrialized countries. Supermarkets, department stores, and "big box" discount retailers sell at prices that are competitive with U.S.
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In addition to high consumption taxes, excise taxes, and import duties, in many Asian countries, luxury brands are not widely sold and are restricted to sale in a few department stores, limiting price competition. Cosmetics are particularly expensive in Asia, and airport duty free shops offer a strong selection of brands at attractive pricing compared with local department stores.
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$2.02 $2.76 $2.77 $2.92 $3.29 $3.41 $3.44 $3.62 $4.08 $4.43 $4.64 $4.76 $4.91 $5.04 $5.12 $5.24 $5.45 $5.56 $5.56 $7.18 $8.75 $9.95 $9.00 $11.66 $16.42 $19.25 $19.37 $23.62 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 Iceland Italy United States Canada Spain Luxembourg Austria Japan Portugal Germany Greece France Slovak Republic Netherlands Switzerland Denmark Hungary Belgium Czech Republic Poland Finland New Zealand United Kingdom Ireland Sweden Australia Norway Turkey Korea 102% of retail value regardless of alcohol content Figure 3-5. Comparison of 2007 local excise taxes on liquor (in U.S.
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Comparison of local excise taxes on cigarettes (200 cigarettes)
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From page 34... ...
3.7 Preparation of a SWOT Analysis For concession managers, a good starting point for the concession planning process is to prepare a SWOT analysis for the concession program, juxtaposing the current program's strengths, weaknesses, opportunities, and threats. Strengths and weaknesses refer to internal matters that can be controlled by the airport operator, while opportunities and threats refer to external matters over which the airport operator has little or no control other than to adopt measures to mitigate the potential threats (i.e., risks)
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From page 35... ...
Source: LeighFisher. POSITIVE NEGA TI VE STRENGTHS WEAKNESSE S Strong origin-destination market Lack of post-security space to meet demand Consistent long-term growth in traffic Lack of utilities in some co ncession units limits cooking and types of food concept s Re latively good layout for concessions Lack of local food and retail concepts Local economy growing at a faster rate than national econom y Surplus of pre-security space Strong interest in our concession program by potential concessionaires Some older concessions appear date d Planned terminal expansion will provide new concession spaces Some concepts are weak, tire d Below average spend rate compared with benchmark airports High sales per square foot in post-security areas of terminal indicate a lack of capacit y OPPORTUNITIES THREAT S Additional low-cost airline service could stimulate traffic and concession sale s Terminal expansion may dilute traffic in some areas of the existing terminal, requiring rebalancin g Expiration of major concession agreements in 2013 allows time to plan a new progra m One airline is financially weak and may fail or be acquired, with unknown consequences in terms of future p assen g er demand We ll known local food concepts could boost spend rate s Lack of consens us on need for conces sion at Board level Low spend rate compared to other benchmark airports shows good upside from an updated progra m Current concessionaires may oppose program expans io n Specific opportunities for more specialty coffee, more specialty retail, and food court expansion IN TE R N A L FA CT O RS EX TE R N A L FA CT O RS
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Concessions at the airport reflect this theme through the use of design features and materials that complement the passenger terminal, creating a unity of design. 36 Resource Manual for Airport In-Terminal Concessions Source: LeighFisher Figure 3-8.
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of the airport. Establishing Goals for the Concession Program 37
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The emphasis on sustainability will vary widely, largely reflecting the standards of the local community. Some major concessionaires have voluntarily adopted sustainability standards for all of their operations and incorporate LEED planning principles in the design and construction of new concession units.
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From page 39... ...
Balancing common concession program goals. Goal Large Hubs Medium Hubs Small Hubs Customer service 1 Securing the best tenant in each category 2 Financial (increasing revenue to the airport)
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