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June 14, 2017

WH Smith shows airports can offer a $38bn bright spot for retailers

By GlobalData Retail

Travel retail continues to underpin WH Smith’s business — as its latest results show.

Its high street stores sales have been negative for over a decade but its travel store business just gets stronger and stronger.

This is not surprising as travel retail is one bright spot in the retail world, particularly airport retailing. GlobalData Retail’s latest report reveals spending in airports hit $38bn globally in 2016 and is set to grow by 27 percent to $49bn by 2021.

Apart from the growing numbers of air travellers, increased security over recent years delivers a constantly changing captive audience for airside retailers; 83 percent of all spending is airside.

This audience has time to kill and, especially when on holiday, is in the mood to spend.

This has given rise to a rapid development of retail space at airports as grateful retailers, who are seeing customers forsaking high street shops for online and leisure experiences, welcome the opportunity to get in front of willing customers again.

Meanwhile airports appreciate the extra revenue and are willing to invest in creating a more inviting space for travellers.

For instance in Singapore’s Changi airport you can catch a movie, see new art, play games, pamper yourself in a spa and entertain your kids – the airport equivalent of a modern shopping centre.

Boosted by Chinese travellers, APAC airports generated the most spending in 2016, taking $14.8bn through their tills, with the opportunity to buy duty free luxury goods a major attraction for the Chinese.

Meanwhile, Europe ranks number two on spending with $10.7bn in 2016. Indeed, one benefit of the Brexit decision was the increase in tourists to the UK attracted by the low value of the pound.

Even the US, which has traditionally offered such a poor shopping experience at airports, is cashing in and developing new retail spaces and offers – though it is unfortunate this coincides with US president Donald Trump’s attempts to curb immigration, which is making regular travellers think twice about visiting the country.

While WH Smith’s high street stores are mocked for the lack of investment, its decision to invest in travel retail has proven sound and a decision other retailers are now taking.

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