Airport retail sales are big business. But limited storage space and high levels of security protocols make for challenges in supply chains.

The global travel retail market is expected to reach US$85bn by 2020, compared to US$63.5bn in 2014, according to Generation Research. At 38.6% of the retail market share, Asia-Pacific travellers are the largest group in the market, followed by the European region travellers, at 32.2% of the market share, according to Airports Council International (ACI).

This booming business has a problem supplying shops with the necessary product when it’s needed. The logistics challenges are the most difficult, according to Angelika Heinbuch, spokesperson for Passenger Services at Frankfurt Airport. “Sometimes there are long distances between the stockrooms and shops. There are also time-consuming shifts between the public space and security area. There are limits in space availability in general, and access authorisations are needed depending on the area one needs to access,” Heinbuch explained.

The majority of airports around the world have between 600 – 800 m2 per million passengers of retail space, according to Heathrow Airport’s 2017 Review of Commercial Revenues Civil Aviation Authority Final Report. The quantity and quality of space, and being short of that space, is an ongoing problem. Heathrow Airport is approximately 10,000 – 25,000 m2 short of space, according to the report.

Due to these constraints at airports, larger stockrooms in non-commercial areas are frequently utilised, explained Heinbuch. “Larger stockrooms off-store in the airport’s terminals and additional small stock space within the shop is common,” she explained.

“Just-in-time delivery straight to shelves becomes more and more common, especially in Duty-Free due to optimised logistical supply chain. Off-store or even off-airport storage depends very much on the number of units supplied and the type of concept and can vary from 0 up to 30% of the total space rented,” she said.

Airports are getting creative with their spaces, however. A 2017 ACI survey reported there is a growing trend of automated retail units at airports. The units allow revenue generation from space that would be too small for traditional retail outlets, according to ACI. Of North American airports, 53% have implemented automated retail units, averaging annual gross sales of US$92,668 in 2016.

The biggest trend is e-commerce. Hong Kong International Airport (HKIA) made omni-retailing, digitalisation and customer engagement with interactive features part of their retail development. According to an Airport Authority Hong Kong spokesperson, HKIA launched an airport-based online shopping platform last year that “allows passengers to collect their orders at the airport as soon as three hours after order confirmation, before or after their flights, or deliver to a local Hong Kong address.” They are also launching a food pre-ordering program which will allow travellers to order a meal for a specific time upon arrival at the airport, the spokesperson explained. Heathrow Airport also offers shopping collection/home delivery, personal shopper, Reserve & Collect, and Terminal Shopping Transfer as part of their e-commerce updates, according to their report.

Frankfurt Airport’s Heinbuch sees a few changes in the airport goods and services industry. There will be a growing trend in showrooming, combined with online purchasing, she said. Showrooming is the practice of visiting a shop to examine a product before purchase and then buying it online at a lower price. There will also be a growing just-in-time delivery of goods to stores, a trend to use packaging and home-delivery options for customers, and possibly an increasing trend to “Collect on return” at airports for return-travellers, she explained.