Bush Intercontinental Airport Does Retail in a New Way

February 21, 2004

Bush Intercontinental Airport Does Retail in a New Way
Houston Chronicle, TX


Inside Stars of Houston, Laura Shanon didn't bite on
the mix of spicy salsas, Western belt buckles and
Texas trinkets.

But she did buy a T-shirt.

"I was hot," said the traveler from Washington, D.C.,
who had packed only wool clothes on her business trip
through Houston to San Antonio.

Serving travelers' immediate needs is the single focus
of airport retailers, whose stores and shops differ
markedly from regular retail stores in traditional
settings.

In a nutshell, airport retailers' costs are usually
higher, the customer mix is different, the customers
can be hard to predict, and the operating hours have
to fit the quirky patterns of air traffic.

But there's money to be made.

At George Bush Intercontinental Airport, annual sales
surpassed $80 million in 2003, as some 34 million
passengers moved through the nation's eleventh-busiest
airport.

That's way short of totals that can exceed $200
million a year at the nation's busiest airports,like
Los Angeles or Atlanta.

But all airport retail, which once was almost an
afterthought, has become much more of a sciencein
recent years, said expert Brett McAllister of Leigh
Fisher Associates.

For one thing, retailers have to adapt to their
generally smaller locations to attract a maximum
number of customers.

In a mall or average retail setting, customers are
there to shop, McAllister noted. But in an airport,
you are dealing with passengers whose primary intent
is to get somewhere else.

That means retail outlets must beckon travelers to
turn into shoppers by catching their eye or offering
them something they can't do without.

Airport retail used to mean jacked-up prices that only
harried travelers were willing to payso they could
ward off hunger pangs or grab a souvenir so they
wouldn't face the kids empty-handed.

That's changed. Prices are more competitive these
days.

Food vendors who wanted to be a part of doing business
in the new Terminal E agreed to use "street prices,"
meaning the same price as their outlets in traditional
retail settings, which is not the same as the lowest
price at Wal-Mart.

A comprehensive survey is under way now at Terminal E
to make sure prices are in line. Street pricing also
is the norm at other terminals at Intercontinental.

Retail sales at Houston's biggest airport didn't
exactly soar in 2003, judging from sales rankings
compiled by Airport Revenue News. The airport doesn't
even rank in the top 50 in sales per passenger
enplanements, when compared with other airports.

The average amount spent per passenger was $4.23 at
Intercontinental in 2003,ARN found, which is below the
nationwide average.

But Houston airports spokesman Ernie DeSoto said ARN
used 2002 figures and the data doesn't reflect
differences between airports. Intercontinental has
four separate terminals and can't expose its entire
concessions program to all passengers, particularly
compared to an airport with one entry point.

Sales in 2003 improved to $4.87, he said.

Retailers in the newly opened Terminal E, which is
operated by Houston-based Continental Airlines, are
hoping to be able to boost sales. The new terminal is
bright and open and features a variety of creative
signage.

They currently are basking in the aftermath of
record-setting crowds. More than 30,000 travelers
moved through the airport Feb. 2, the day after the
Super Bowl, where stores saw a spike in sales because
many flights had been shifted to the new terminal.

But that shift also has created controversy, where
retailers in Terminal C are hurting because much of
the business they were getting has shifted to Terminal
E. They also are staring at many months of
construction adding to their woes, as work to
rehabilitate the older terminal proceeds.

The day after Super Bowl, travelers-turned-shoppers
either bought Super Bowl-related items that vendors
were hawking or things they needed, which is the usual
focus of airport retail.

Retailers have grown more savvy in recent years
regarding airport salesand what items to stock to
attract travelers, McAllister said.

"You always forget a belt, and you always forget a tie
— and I've done both," he said.

Outlets like Johnston & Murphy in Terminal E bank on
that kind of forgetfulness. The upscale footwear and
apparel maker has been highly successful in airports.

All airports are different, however. What is a
successful mix of shops and eating establishments in
the airports of Orlando or Las Vegas, which see a high
degree of tourist travel, might not work in Houston,
which has more business travelers.

Houston-based Continental Airlines also has a large
international passenger mix, particularly serving
Mexico and Central and South America, so name brands
that travelers recognize when they step off an
aircraft are important.

Of key importance is to have the proper variety of
different kinds of stores.

"You have to look at the mix of concessions,"
McAllister said. "What is the right balance between
retail and food and beverage, and what is the right
balance between local versus national brands?"

That all came into play when Continental tapped
Westfield Concessions Management to oversee the retail
outlets that would be part of the gleaming Terminal E.
Seven gates of the terminal opened in June, and the
remaining 16 opened last month.

The stores range from national chains like Borders
bookstore to local outlets like Drexler's Barbeque.

Consultants working with airports routinely will do a
survey of the types of passengers moving through the
facility and make determinations as to what will work
best operationally.

"It all depends on making the operational requirements
of an airport fit into the overall confines of a
design," McAllister said. "The purpose of bringing in
a retail consultant is to try to develop those areas
that have the most exposure to passengers and provide
the best service to passengers."

Westfield also handles concessions at Continental's
Newark hub. Terminal C there earlier this month was
recognized by Airport Revenue News and industry
experts for having the best concession program design.
Houston's Terminal E was patterned after that
terminal, which Continental also oversees.

Pappasito's Cantina has proved to be a real winner
with travelers moving through Terminal E. It sits in a
food court Westfield designed near the front of the
terminal that features a brightly lit seating area
near windows overlooking the tarmac.

Like many of the other food and beverage vendors,
Pappasito's features breakfast items at its
Intercontinental Airport location.

Also popular in Terminal E is the full-service
Pappadeaux restaurant, featuring dark gleaming
mahogany walls and a full assortment of seafood
dishes. Displays in the restaurant show flight
arrivals and departures.

Other vendors in Terminal E include everything from
Nestlé's Toll House/Auntie Anne's Pretzels to The
Little Creamery, featuring Blue Bell Ice Cream. Sun
Shades, Swatch and Coco Moka also are there, along
with vendors like Fox Sports Bar and Grill, a
full-service sports bar and restaurant.


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