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"Airports Take Aim At Holiday Shoppers With Canny Planning"


Monday, December 25, 2006

Airports Take Aim At Holiday Shoppers With Canny Planning
International Duty-Free Sales Hit the Sky
By Monte Reel
The Washington (DC) Post

BUENOS AIRES -- The wheeled suitcases they pulled might as well have been running on tracks, leading directly toward the cash register.

Erich Berthin and his wife, Barbara, arrived at the airport here this week to catch a flight to Bolivia to visit his family. Time-strapped professionals with heavy travel schedules, their Christmas shopping remained unfinished. To get to their gate -- or to get anywhere at all inside the airport -- they had no choice but to pass through the duty-free store.

A cashier rings up purchases in Buenos Aires' Ezeiza Airport, one of many where travelers must walk through duty-free stores to reach their gates.
A cashier rings up purchases in Buenos Aires' Ezeiza Airport, one of many where travelers must walk through duty-free stores to reach their gate.

Young women in Mrs. Claus outfits smiled in greeting. A saxophonist played Christmas carols. The air was lightly perfumed.

All of it was designed to coax them toward a series of seemingly inevitable decisions.

"I'm getting a shirt for my brother," said Berthin, 35, a salesman who lives in Buenos Aires but travels nearly every week throughout South America. "And I'm getting some wine, and a camera."

The airport, not the mega-mall, has become the international multitasker's holiday shopping center. Carry-on restrictions and security concerns might pose unpredictable challenges for retailers, but the travel industry in the past five years has bet heavily on duty-free stores, pouring money into promotion and expansion. The stores have gone upscale in a big way, shaking a traditional reputation as places for people who want to save some change on a bottle of scotch and a pack of cigarettes.

Retailers have been a presence in airports for years, but the widespread expansion of the duty-free industry is relatively recent, with overall sales increasing by more than a third since 1998, according to industry statistics. Now some airports promote holiday shopping as energetically as a suburban outlet complex, and the payoff has been enormous in many places.

A promotion on Wednesday at the duty-free store in Dubai, for example, resulted in 77,000 individual transactions worth $8.2 million within a 24-hour period -- an all-time record for a duty-free store, according to the London-based Moodie Report, which tracks the travel retail industry. That kind of buying frenzy gets noticed in an international airport industry that is currently experiencing a downturn in revenue streams such as landing fees, which traditionally have been used to pay for infrastructure development.

"There has been a huge expansion of duty-free retailing in recent years, particularly in airports and to some extent on airplanes," said Martin Moodie, editor of the Moodie Report. "Airports all around the world are placing greater emphasis on such revenue streams, opening more and bigger shops and offering an increasingly diverse range of items."

Airports customarily get a percentage of sales at duty-free shops, which explains why aviation officials generally bend over backward to give retailers every opportunity to hook customers. At Ezeiza Airport in Buenos Aires, authorities recently changed the floor plan to force all passengers to pass through the duty-free complex -- a design strategy called "the walk-through," which was pioneered in the 1990s at Terminal 3 in London's Heathrow Airport. The idea has been copied shamelessly in the past five years as airports all over the world launched remodeling projects.

"By the end of next year, all of our duty-free stores will be walk-throughs," said Enrique Urioste, president and chief executive of Interbaires, which operates 14 duty-free shops at airports, including the one at Ezeiza.

On Thursday night, Urioste opened the latest addition to his duty-free store here -- an Armani Emporio department, which sells the designer label's complete line of apparel and accessories, from suits to wallets. The ever-expanding store now measures about 42,000 square feet, and includes several designer boutiques, a cosmetics counter, a toy department, a confectioners', a sporting goods aisle, a cigar smoking salon, and even a meat counter where travelers heading to European countries (it hasn't been approved for transport elsewhere) can buy travel-ready cuts of Argentine tenderloin, rib-eye and roast beef.

Because the customers at duty-free shops generally have their passports handy, many of the stores now electronically scan the customers' travel documents when they go to check out. This allows the employees to instantly fashion a personal sales pitch to the frequent traveler. After scanning customers' passports, a computer in Urioste's store pulls up their shopping histories, identifying the types of products purchased in the past. The cashier, Urioste said, is then instructed to ask customers whether they had purposefully chosen not to buy their usual items this time or whether they had just committed an unfortunate oversight.

The result is that travelers can often feel as if a bright red target has been painted on their wallets. Urioste reinforced that idea when he explained how the computers help him target big-game shoppers: "Instead of shooting with a little pistol," he said, "it's like using a rifle."

Among the consumers in his sights this week was Paulo Franca, 50, from Rio de Janeiro. Franca said that in countries such as Brazil, where there is a large trade in counterfeited name brands, the duty-free stores can be counted on to provide the real deal in perfumes, electronics and liquor.

"I always buy a little more this time of year," said Franca, who had filled a shopping basket with perfume and whiskey. "The perfume is a gift, and the whiskey is for me."

His purchase was no surprise to Urioste.

"Brazilians always choose a certain type of perfume, a sweet perfume," he said.

But there was still hope that Franca might follow the trends set by his fellow countrymen and opt for a bigger-ticket item, as well.

"Brazilians don't like white gold," Urioste said, "so we make sure to show them the yellow gold."

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