Resource Manual for Airport In-Terminal Concessions (2011) / Chapter Skim
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5 Developing the Concession Space Plan
5 Developing the Concession Space Plan
Pages 52-78
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From page 52... ...
• Provide a wide variety of concessions with a broad selection of services and product choices • Create interesting and entertaining concession choices for the customer • Integrate food and beverage with retail to create synergy and encourage spending across categories • Allocate as much concession space as can be financially supported during the design life of the terminal • Promote open-sell rather than over-the-counter sales to promote spontaneous purchases • Establish a strong commercial image and identity As the airport concession industry has matured, a structured approach to planning has evolved. Although industry consultants recommend a structured approach, 67% of airport operators surveyed indicated that they use a concession space planning metric or standard.
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From page 53... ...
5.1.1 Supportable Concession Space There is strong correlation between the amount of concession space at an airport and customer spend rates. Figure 5-2 presents a scatter diagram showing the strong correlation between space and spend rates for a number of large and medium hub airports, using concession space per 1,000 enplaned passengers on one axis and the combined food and beverage and retail spend rates on the other axis.
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From page 54... ...
Generally, the more frequently passengers travel, the less time they are likely to spend in the terminal building, and their propensity to spend is lower. 54 Resource Manual for Airport In-Terminal Concessions 2.0 4.0 6.0 8.0 10.0 12.0 14.0 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 Passenger spend rate - food and beverage and retail (excluding duty free)
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From page 55... ...
Airports that generate sales above two standard deviations from the mean are likely to have exceptional characteristics that make for an unreasonable comparison. For example, in 2008, Pittsburgh International Airport produced the nation's highest specialty retail spend rate of $6.49, twice that of the next highest performing airport, due to a combination of factors that included terminal configuration, concentrated passenger flows, and the expertise and contracting flexibility of a third-party developer.
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From page 56... ...
Average 95% Average 95% Average 95% Food and beverage $3.49 $5.37 $4.50 $5.97 $5.34 $7.39 Convenience retail $2.17 $3.65 $1.95 $3.24 $1.88 $3.06 Specialty retail $0.27 $1.03 $1.21 $3.87 $1.71 $4.20 Total retail $2.42 $3.90 $3.15 $7.11 $3.53 $6.20 Total food and beverage and retail $5.92 $8.46 $7.66 $11.29 $8.87 $12.79 Duty free $0.00 $0.00 $4.98 $16.66 $7.05 $16.29 Small Hub Medium Hub Large HubCategory Note: At the 95% percentile passenger spend rates are independent. Performance in each category is independent of performance in other categories.
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From page 57... ...
on current spending habits, desires, dwell times, etc. • The performance of existing concession units in terms of spend rates per enplaned passenger and sales per square foot • The performance of concessions at airports with terminals of similar size and passenger mix • The concession planners' experience in achieving increases in spending rates at other airports Developing the Concession Space Plan 57 Table 5-2.
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From page 58... ...
Space per 1,000 enplaned passengers by major concession category -- 2008. 61% 68% 62% 63% 59% 66% 66% 64% 73% 24% 15% 22% 19% 23% 17% 17% 9% 2% 15% 17% 16% 18% 18% 17% 17% 28% 25% 0% 25% 50% 75% 100% More than 15 million 10 to 12 million 8 to 10 million 5 to 7 million 4 to 5 million 3 to 4 million 2 to 3 million 1 to 2 million Under 1 million Range of annual passenger enplanements Pe rc e n t o f t ot al fo o d a n d be ve ra ge a n d re ta il sp ac e Food and Beverage Specialty Retail Convenience Retail Source: LeighFisher.
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From page 59... ...
Average or current productivity may not be appropriate for use in determining supportable space, as many terminals are undersized relative to current demand. Developing the Concession Space Plan 59 $114 $453 $821 $1,271 $285 $651 $976 $1,329 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Non Hub Small Hub Medium Hub Large Hub Airport Category Av er ag e Sa le s Pr od uc tiv ity p er S qu ar e Fo ot Food and beverage Retail Source: Airport Revenue News 2009.
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From page 60... ...
Hartsfield-Jackson Atlanta International Airport ranked 3rd in sales per square foot, but 22nd out of the top 25 airports reporting data in sales per enplaned passenger. Both airports are among the most challenged in terms of providing concession space to meet demand and could undoubtedly produce higher average sales per enplaned passenger (and revenue per enplaned passenger)
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From page 61... ...
Top 25 large hub airports submitting data for Airport Revenue News Fact Book 2009 (Airport Revenue News 2009)
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From page 62... ...
For these reasons, use of a detailed supportable space analysis that indicates concession space by terminal zone is recommended over a rule of thumb or comparison with other airports. 62 Resource Manual for Airport In-Terminal Concessions Table 5-5.
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From page 63... ...
The approach to determining customer locations is to split the terminal into zones. The actual number of zones depends on the size of the terminal, but a typical subdivision into zones includes the following: • Landside departures • Airside core area departures • Airside concourses • Airside arrivals • Landside arrivals Developing the Concession Space Plan 63 Source: LeighFisher.
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From page 64... ...
The determination of where customers will be and the visual presentation of this information can prevent a frequent error in concession planning -- the provision of excessive concession space where traffic volumes are low, such as at the end of concourses. The forecast supportable space can be determined by multiplying the expected spend rate in each area of the terminal by the number of potential customers using each area.
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From page 65... ...
Also of interest is that the Airport Revenue News Fact Book 2009 data appear to show an approximately 10% "cannibalization" or reduction of convenience retail spending where a significant Developing the Concession Space Plan 65 Table 5-7. Example of concession space allocation by zone and category.
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From page 66... ...
Location issues consist of the following: • Pre-security versus post-security split • Concentration into concession zones versus dispersion • Contiguous concession spaces versus interruption of concessions • Flow-past versus flow-through concession areas • Departures level versus mezzanine level concessions Each of these criteria is discussed in the sections that follow. 5.4.1 Pre-Security versus Post-Security Split With implementation of passenger security screening, the location of the concession offerings became an important issue because of the following: • Almost the entire concession program at many older terminals was in areas that became pre-security.
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From page 67... ...
The fact that the current and recommended percentages of concession programs located post-security increases with airport size is consistent with the increase in importance of retail as airports increase in size, and the fact that retail tends to be an impulse purchase that requires the passenger to have time and the appropriate frame of mind. As indicated in Table 5-10, for the surveyed airports, the suggested post-security percentages of the total concession program are significantly higher than the post-security percentages Developing the Concession Space Plan 67 Table 5-9.
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From page 68... ...
Although the program is successful, the terminal owner plans to relocate the main security checkpoint so that the concessions area will be post-security and anticipates increased spend rates as a result. 5.4.2 Concentration into Concession Zones versus Dispersion In older terminals, concession programs, particularly post-security concessions, often appeared to be fit into available space, resulting in a scattered program.
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From page 69... ...
5.4.3 Contiguous Concession Spaces versus Interruption of Concessions For maximum effect, a contiguous format for the concession program is recommended, with minimal interruptions to the physical flow of concessions created by operational features such as corridors, fire hoses, blank walls, utility rooms, columns, and restrooms. The benefits of creating a "sense of place," design theme, and effective signage are enhanced by minimizing interruptions to the visual and physical flow of the commercial retail area.
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From page 70... ...
The mezzanine level concessions at these airports are predominantly food and beverage concessions -- mostly casual dining restaurants seeking to attract passengers with longer dwell times, such as early-arriving originating passengers and connecting passengers with longer connect times. At the Atlanta and Calgary airports, the mezzanine concessions are all casual dining units or food courts.
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From page 71... ...
Figure 5-12 illustrates adjacencies that can contribute to a successful concession program. Developing the Concession Space Plan 71 D eparting Passenger Flows Ar riv in g Pa ss en ge r F lo ws Source: LeighFisher.
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From page 72... ...
Other commonly used adjacencies include locating newsstands and specialty coffee units adjacent to one another; grouping specialty retail together, often with a convenience retail to increase exposure and take advantage of the foot traffic created by convenience retail; taking advantage of traffic created by restrooms to increase exposure to passengers; and clustering quick-serve units together in food courts, which creates more of a destination and allows members of a traveling party to stay together while using different concessions. 5.6 International Terminals The locations of concessions will differ in an international terminal where high-value concessions, such as duty free, should take precedence.
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From page 73... ...
Certain services, such as secure baggage storage, are also more common in international terminals. Food and beverage, convenience retail, and specialty retail concessions in international terminals are planned similarly to the way they are planned in domestic terminals, although the spend rates in international terminals are likely to drive higher amounts of supportable space.
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From page 74... ...
In this example, low productivity from food and beverage spaces and low percentage rent would produce low returns, with an exceptionally long payback period and a low IRR. Other concession categories achieve reasonable paybacks and internal rates of return.
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From page 75... ...
Internal rate of return for various combinations of productivity, rent percent, and terminal capital and operating and maintenance costs. Category Productivity ($/SF)
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From page 76... ...
5.8.2 Strategies for Space-Limited Terminals There are alternatives for space-limited terminals that can improve the concession program, including retail merchandising units, wall hugger concession units, in-holdroom concessions, pop-outs between gates, relocation of other activities, and automated retail machines, all of which are discussed below. Retail Merchandising Units One approach to specialty retail units is the use of retail merchandising units (RMUs or kiosks)
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From page 77... ...
It may be possible to increase concession space by relocating other activities, for instance: • To provide additional post-security concession space, security at Chicago O'Hare International Airport's Terminal 5 is being modified and relocated under a long-term concession agreement. • Airline lounges are low-rent space compared to concessions and often function more effectively on a mezzanine level.
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From page 78... ...
While most often used for specialty retail, these machines can also fill other needs. For example, at San Francisco International Airport, these sophisticated vending machines have been installed outside of the international arrivals area, where they offer travel necessities and personal care items as a service to passengers arriving on late night and early morning flights.
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