I’ve been to quite a few airports in my time. People shop in the duty-free area (of course) and they might buy a book from the bookstore people to while away their time during the flight.
But the big-branded stores, the Rolex, the Dior, the super-dooper expensive retailers…I’ve never seen anyone IN those stores, ever. And it got me to wondering, how much business do they actually do in departures in airports?
I’m sure there must be at least a few. And with those super-expensive items, a customer buying one or two Rolexes is equivalent to another store selling hundreds of Cokes, Pepsis, books, granola bars, etc. It justifies an entire day of employee wages.
Presumably the same people who bought stuff from the Skymall catalogue back when that was a thing.
I think wealthy Chinese tourists (say) would have more brand awareness of Rolex or Dior than Skymall (even in its heyday).
Go look at the cost of an international first-class flight and then consider whether those customers might have enough disposable income to impulse-purchase a $300 handbag because they’re bored.
Had a long layover at Heathrow. There were several (not a ton) of shoppers in the high end stores and I saw not a few travelers carrying store bags.
Some rich people travel to different cities for the express purpose of shopping in high-end stores. For these people, shopping in the Dior store in the airport saves them a trip to the Dior store in the city. Or maybe they went to the Dior store in the city, saw something they liked, didn’t get it, have regrets, and now on the way home they stop by the airport Dior and pick it up there.
One thing that I’ve wondered about these stores is whether they have the typical airport markup. Even us regular folks know that stuff at the airport is marked up much higher than normal. Is that the same with high end stores? Is an item at the Dior store in the airport about the same as in the city? Or is it significantly more expensive because it’s in an airport?
Some mid-upper level store chains with airport locations have signs at the entrance claiming their prices are no higher than those in town. I’m thinking Brooks Brothers in one such.
For serious designer stuff, the manufacturer puts very tight controls on what retailers can sell for. No discounting, no gouging. In many cases of branded stores, the factory owns the store. At minimum it’s a sorta-franchise, and any store owner messing with the factory’s idea of correct pricing is a quick way to have your store abruptly killed from under you.
Perhaps some shoppers are spending the last of the money they set aside for the trip? Also, some are only in the airport because of a layover, so they don’t have the option of shopping in the stores downtown.
For some companies, keeping up a storefront with luxury items likely comes out of the marketing budget. It shows your brand is great enough to have a shop in a large airport. It’s also an advertisement to everyone who walks past it. And a lot of people, people who are wealthy enough to fly, will walk past it. That kind of targeted advertising is valuable.
Any sales at the location are just a bonus.
The difference with the SkyMall catalog is I didn’t need to lug anything with me for the rest of my trip. The vast majority of my flights are carryon only; IOW, I don’t have a lot of room in a relatively small bag for something big/bulky & even if it was one where I was checking luggage (with extra room), that luggage has already been checked & is out of my possession by the time I get to the retail stores in the concourse.
Airport stores are the only places on Earth with a captive audience of wealthy customers.
I’ve wondered the same thing about the super-upscale stores in the shopping malls attached to many Las Vegas casinos. You look in and see the super-model-attractive sales people (of both sexes) standing around in stores that are empty, or have one or two gawpers who are clearly not going to buy anything.
Of course, in the case of the casinos, someone who hits it big may decide to buy a Hermes bag or a Rolex they could otherwise never afford. But ISTM that the primary purpose of those stores is marketing: reinforcing the upscale identity of the brand. They don’t really expect to turn a profit.
It could be the same in airports.
I’d love to hear from someone in the know what the business model is for these stores.
I sort of have the impression that airport luxury shopping and/or duty-free shopping is really an exercise in two things.
One, lots of people go into “YOLO! I’m on vacation!” mode and spend lots more than they normally would. Having this stuff in the airports is a good way to try to tap into that on the tail end of a vacation. Why NOT buy a Rolex on the way home from Hawaii, to cap off that magical trip?
Two, many people believe that duty-free always means cheaper because of the lack of duty. This isn’t often the case; I’ve done a fairly good survey over the years of the liquor sold there, and it rarely pans out as actually cheaper. Usually it’s in the same ballpark when all things are considered. There are sometimes variations that are only sold in the airports, or that are hard to find, so maybe that’s the draw for some people.
Yeah this is definitely a thing, especially in Latin American countries. I was astounded to find out that there are people who regularly fly from Mexico and the northern parts of South America to places like Houston, Miami, and Dallas just to shop at the higher end retail outlets. I had just assumed that all those stores would have outlets in their capital cities or whatever, but apparently not, or apparently there’s a wider variety in some US cities within a relatively short flight.
I suspect this is a bigger part of it than we suspect. I mean, if you have your store(s) in the main concourse at Heathrow, Fiumicino, Narita, Charles de Gaulle, etc… you are going to get a LOT of wealthy eyes on your product, and it’s a sort of reinforcement that you’re big time. Kind of like how if you aspire to that big time retailer status, you don’t put your store in a strip mall in Mesquite, you put it in Highland Park Village or the Dallas Galleria. (or possibly Northpark, but personally I wouldn’t want my store associated with the riff-raff that tends to hang out there)
How would the rent in the airport compare to the rent they might pay for a store in the ritzy part of town? The rent in the airport is typically higher than most retail locations, but it might be that airport rent rates are actually cheaper than what they might be in the high-end part of the city. If that’s the case, even if there are fewer sales in the airport, it could be that the profit might end up being similar due to lower rent costs than they might pay in an expensive part of Beverly Hills.
Like car lots, they may only need one sale a day to pay the rent and staff.
Speaking as an ad guy: this is likely true. It helps reinforce brand awareness, and reinforce the connection between the luxury brand and the upscale travel experience.
I think it is partially this - people who are flying int’l first class aren’t the sort that look at price tags anyway - those are for the little people.
And this as well. Especially for Vegas - create the illusion of luxury and scarcity. Same to some degree at airports - “Oh, flying is so glamorous - why not accent my trip with this Rolex?” …to also show the little people what they can attain if they try reeeal hard.
I also think the operators of airports like to consider the whole “shopping mall” aspect of their facility - you have a captive audience, who may be stuck in there longer than planned, who need life-saving Starbucks, Cinnabon, and luxury handbags, and you can upcharge them good and hard. In fact, these high-end retailers pretty much have nowhere to go other than online and airports, since the traditional shopping malls, with a few exceptions, are all but dead. As mentioned, at least there is steady foot traffic and a 1x or 2x a day sale can pay for the day and then some.
Regarding duty-free shopping, I think Americans have a different view of such things, given the wide availability of discounted goods. Things like liquor or luxury watches are sold at a discount in stores like Costco or Total Wine & More. But in other countries, goods may be sold only at full markup (or perhaps even higher than that?) so the duty-free prices might not seem so bad.
After 9/11, when you could no longer take knives through security, Victorinox, the maker of Swiss Army knives, almost went bankrupt since a large part of their sales were from exactly these airport stores. So someone must have been buying them.