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Cleared for sales, airport retail takes off


Over the last decade, U.S. airport in-terminal dining and retail programs have begun a transformation. As passengers’ time spent within terminals has increased, the demand for enhanced airport in-terminal experiences has equally increased. In turn, the state and local governments that own and operate all commercial service U.S. airports have shifted their retail and dining programs from generic offerings with minimal services to programs with a wide variety of specialty retail and dining brands, innovative technology and upscale amenities to respond to the new consumer expectations.

Design is a paramount element within airport retail. The new retail environments must serve the dual purpose of inviting travelers to meander and discover, while also recognizing that they must be able to easily find their way back to their gate when it’s time to board. They must also create a unique sense of place befitting of the airport’s location, landscape and culture.

The physical environment – that is the architecture and design – should work in tandem with the retail and dining mix to achieve that sense of place. All of these factors are evident at the recently renovated Los Angeles International Airport (LAX) Tom Bradley Terminal where a central component of the overall vision was to bring in local celebrity chefs whose streetside restaurants are a destination on their own. Of the 29 new dining destinations, 16 are local L.A. brands, 17 are new to LAX, and 12 are airport firsts.

A growing trend in airports today is a greater emphasis on luxury within the airline lounges. While Tom Bradley is home to several of the world’s most cutting-edge airline lounges, Westfield sought to bring the luxury vibe out of the lounges and into the central terminal area where all travelers – regardless of airline status – could relax and recharge. While traditionally airline lounges are tucked away from gate and shopping or dining areas, the opposite approach was taken at LAX’s Tom Bradley. The Mezzanine and Edge Lounges are placed in open areas with 365-degree views. Adjacent to the retail and dining districts, travelers can be found relaxing with a glass of wine, charging a device, taking a business call or simply enjoying the sights.

Operating successfully in an airport also means finding ways to make lengthy layovers and inevitable flight delays as painless as possible – even pleasurable – for those passing through. At LAX, retailers and dining remain open until the last flight of the day departs, ensuring that travelers aren’t greeted with dark storefronts and limited food options. Ample charging stations are available not just in the gate areas, but also in the retail and dining districts. By removing any worry of a device running out of battery before embarking on a 12 hour flight, travelers are more apt to take advantage of shopping, dining and amenities, not to mention spa services like massages, facials or nail treatments.

As part of the ongoing changes at U.S. airports, today many government entities are opting to lease all or large segments of the airport terminal concession space to one or more master developers who then redevelop and sublease space to retailers. These “master concession arrangements” are often structured as long-term public-private partnerships (P3) awarded to a winning bidder selected from a highly competitive and lengthy bidding process.

Unlike private developments, the number one challenge for retailers interested in entering this growing and profitable market is to understand and comply with the many government mandates that directly impact the way space may be developed, leased and operated. Foremost, retailers need to accept that while they may be contracting with a private entity as a master developer, all parties in the chain ultimately are bound by the applicable public requirements. Recognizing and being prepared to deal with that fundamental paradigm shift is the first step to winning airport business.

Under the P3 model, the master developer is subject to a litany of arduous space, concession and operational requirements throughout the term of the long-term deal. Many of these obligations in turn impact or are passed through to the concessionaires. For example, the P3 contract invariably requires that concession space be awarded upon a formal solicitation process. Onerous provisions to expect in space leases include broad and one-sided indemnities, significant insurance requirements and specific construction, employment and participation criteria, such as city residency requirements for workers and the Federal Airport Concession Disadvantaged Business Enterprise (ACDBE) Program.

At Westfield, our model is the path to transform the total passenger experience. We strive to attract high-quality tenants for our airport developments, many of whom are local small business owners who know nothing about the complex waters of airport leasing. That’s why we conduct a series of outreach seminars at the start of an airport development to educate local brands and operators about the process and the overall vision for the project. These events provide prospective retailers with the knowledge and encouragement to bid, allowing Westfield to create a unique and compelling retail mix for the project.

Perhaps the most important strategy for creating a successful airport retail experience is understanding the unique needs of an airport, its terminals, air carriers and passengers. The one-size-fits-all approach is a way of the past. Today, each project must be customized to suit unique traveler preferences within each terminal.

Retailers, however, should not expect to be experts on air travel demographics and behaviors in order to enter the market. When inviting retailers to bid, Westfield releases comprehensive data which informs the right retail mix.

For example, the new $1.9 billion Tom Bradley International Terminal (TBIT), Westfield’s first project in our LAX line-up which also includes Terminals 1, 2, 3 and 6, features direct flights to Asia, Europe and the Middle East and caters primarily to affluent international travelers with decidedly highbrow shopping habits. Passengers here arrive early to prepare for their long journeys, which presents retailers with an opportunity to attract customers and capitalize on the longer dwell times.

That’s why Westfield created distinctive shopping districts to explore designs inspired by iconic L.A. landmarks like Rodeo Drive. Glittering glass storefronts and 360-degree views allow shoppers to travel seamlessly from one shop to another, while also enabling them to find their way back to the gates without hassle or stress.

The TBIT retail collection blends internationally recognized fashion houses like Bvlgari and Michael Kors with local boutiques such as Fred Segal and Kitson that introduce travelers to the signature Angeleno style and offer special treasures for the jet set.

Not unlike the cutting-edge retail environments consumers are flocking to streetside, North American airports are beginning to catch up with their overseas counterparts as we find new ways to engage travelers through technology.

Today’s travelers are armed with a seemingly endless entertainment and diversion device – a smartphone. As the physical and digital retail spheres converge, Westfield has dedicated an entire business unit – Westfield Labs – to innovation, including new omnichannel platforms within airports. To help our retailers better connect with tech-savvy travelers, we’re implementing initiatives like digital directories, which aid in way

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