Not so long ago, luxury retail outposts at airports were limited to selling duty-free fragrances, chocolates and cartons of Camel cigarettes on the cheap. If the busy business traveler needed an extra piece of Longchamp luggage, he or she was out of luck.
But as long layovers — planned or otherwise — have become the norm, passengers have more time to kill shopping.
And luxury retailers have taken notice. In Heathrow's terminal 5, set to open in March 2008, airport management company BAA has inked a deal with high-end department store Harrods to anchor the terminal's retail operations. The store will occupy two floors, stocking high end clothing lines and accessories alongside its signature teddy bears and carryalls.
JFK's terminal 1 boasts Bulgari, Hermes and Salvatore Ferragamo outposts, while travelers through Singapore Airport will find Chloe, Cartier, Prada and Tod’s.
“Airports are a competitive, captive retail market because when travelers are waiting for a flight, they [literally] have nowhere to go,” says Patti Pao, founder of the Pao Principle, a New York-based retail consultancy. Pao predicts that consumers will see luxury brand outposts sprouting up at more and more airports worldwide. However, the focus will be bags, not shoes and apparel — at least not in such Far East airports as Shanghai’s Pudong International or Hong Kong International.
"You’ll see clothing in the West, but not in places like Japan,” predicts Pao. “The clothes in the Asian market are cut smaller for petite figures, so they won’t be sold somewhere that tourists frequent. And shoes are too specific. The focus will remain on accessories.”
A frequent business traveler, Pao says Zurich Airport and Kennedy International are two of her favorite retail spots. At each, she ventures to L’Occitane and the Palm store for last minute gifts and gadgets.
But Milton Pedraza, CEO of the Luxury Institute, a research firm that evaluates the purchasing power of high-net worth individuals, says that although the potential profit for luxury retail within airports is great, the outlets themselves need to work on improving customer service. “Luxury companies are occupying all the duty-free space that they can,” says Pedraza. “However, they need to commit to service at the highest level or risk brand erosion.” Pedraza finds service at London’s Heathrow constantly stellar, but he’s had a less-than-positive experience at Paris’s Charles de Gaulle.
If retailers can provide attentive service, upscale airport retailing will only continue to grow. “Whether it’s business travel or a vacation — all that waiting time makes you want to entertain your self in some way,” says Pedraza. “But retailers really need to enhance the service experience and cater to what the needs are, customer by customer.”
© 2012 Forbes.com