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"Miami airport unveils upscale retail options"


 
Saturday, March 11, 2006

Airport unveils upscale retail options
MIA showed off new retail stores opening in Central Terminal that it hopes
will please passengers tired of dingy, no-name options.
BY STEVE HARRISON
The Miami (FL) Herald


Passengers walking through the usually dreary Central Terminal at Miami
International Airport may have noticed something new in recent weeks: Retail
stores with recognizable names. Fetching merchandise. Inviting interiors.

After years of drab, no-name stores, MIA's efforts to improve shopping
options for its 31 million passengers are starting to pay off. A Borders
bookstore opened last week near Concourse G. A Brookstone opened in
December, along with a high-end toy store, Mindworks.

''The retailing at this airport was stuck in the 1970s,'' said Henry Leace,
owner of Havana Shirt Store, which will open this weekend.

After passengers consistently gave MIA poor marks in surveys for its retail
and food choices, the airport has been trying to attract national brands --
and shake up a system notorious for awarding contracts to the most
politically connected, rather than best-quality, retailers.

Thirteen stores are already open; another seven will open by August.

John Stol of Colombia travels through MIA about 15 times a year. Browsing in
a Hudson News on Friday, he said he appreciated the new stores.

''This is top of the line,'' he said. ``Look, I'm going to spend $30 or $40
on magazines. The airport still looks horrible, but this step looks good.''

The new stores are in concourses E, F, G and H. Proposals for a massive
retail contract were due Friday for the still-under-construction North
Terminal and the South Terminal, which is scheduled to open late this year
or in the spring.

MIA previously handled its food and retail contracts through ''management
agreements.'' The airport spent its own money outfitting the stores, which
meant less risk for retailers. In return, the airport received a high
percentage of revenues compared to peer airports -- about 30 percent on
average, said Patricia Ryan, director of commercial operations for MIA.

The problem: Neither the airport or the vendors did much to keep the stores
looking good. The enormous influence county commissioners have over awarding
contracts at MIA discouraged some national chains from doing business at
MIA; some brands such as Disney believed the airport was closed to
outsiders.

PASSENGERS LOST

The result: Passengers were frustrated, and the lack of retail and
restaurant options was another reason MIA lost passengers to Fort
Lauderdale-Hollywood International Airport.

MIA's overhaul will increase the number of stores in the Central Terminal
from nine to 23 and nearly double the retail space from 14,200 to 27,000
square feet.

But to entice brands such as Brookstone, MIA is receiving a much smaller
percentage of sales. The average take of revenue is a little over 15
percent.

That means the airport must double the per-square-foot sales to break even.

''Our revenues aren't going to be much higher than they were in the past,''
Ryan said. ``But it's important to recognize what consumers want. And when
you do that, we'll have a much happier person traveling through Miami -- and
it's more likely they'll choose Miami again.''

The five-year contract for Central Terminal retail stores was awarded to
Westfield Concessions Management, an Australian firm. The stores were
supposed to open by last summer, but unexpected problems involved in
installing fire and safety systems in the old building caused a delay.

Sirgany Century, which operated most of the Central Terminal stores under
management agreements, is no longer at the airport.

One concern about the new stores is whether there will be enough passenger
traffic in 2007 for them to be profitable.

When the new, $800 million South Terminal opens in early 2007, many of the
airlines now located in concourses F and G will leave. Faced with the
prospect of empty concourses, MIA once considered mothballing Concourse G,
but now it hopes it can house low-cost carriers such as JetBlue.

$2 MILLION DEAL

Ryan noted that Westfield understood that 22 airlines such as Lufthansa, Air
France and Alitalia would move when the terminal opens. The airport is
guaranteed just under $2 million from the deal.

Even if new carriers don't open in Central Terminal, she said, there will be
plenty of traffic. Passengers connecting from Europe to Latin America with
three- or four-hour layovers will walk the airport looking for something to
do.

The stores' opening means the airport is trying to end what some called
Central Terminal's ''flea market'' look, or the operation of some businesses
in the corridors.


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