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HIGH-FLYING RETAIL

JFK’s The Shops raises bar for airport retail with posh purveyors

BY DEBRA HAZEL

At one of New York City’s toniest retail venues, shoppers can browse in boutiques featuring merchandise from DKNY, H. Stern Jewelers and Danish designer Sand. But these shoppers aren’t on Fifth or Madison avenues. They’re at The Shops at Terminal 4, at John F. Kennedy International Airport, in Queens, N.Y.

The Shops occupies 100,000 square feet at the 1.5 million-square-foot terminal. Those involved with the project say they are particularly impressed by the success of its high-end offerings, which may extend its reach beyond the typical airport retail customers — travelers, meeters and greeters, and employees — to the surrounding neighborhood. A key factor toward this goal is the fact that shoppers do not need to pass through security checkpoints to reach the Shops.

“I never thought a $600 or $700 suit would sell at an airport,” said Bart Collins, operations manager of Runway Retail, which operates 15 boutiques at the Shops. The company, a joint venture of Irish corporation Aer Rianta and a private investor, operates in 12 airports worldwide. “We did a tremendous business with Hugo Boss [in December].”

A lot has been done to improve airport retail over the past decade or so. BAA Pittsburgh made a big splash with the 1992 opening of its AirMall at Pittsburgh International Airport. Various airports in Europe, including Schiphol, in Amsterdam, Netherlands, and Heathrow, in London, have shopping concourses that rival U.S. malls. And Westfield Group’s airport retail division has dramatically increased the fashion retail offerings at JFK rival Newark (N.J.) Liberty International Airport, among other U.S. airports.

But what makes the Shops at Terminal 4 different is its concentration on fashion, Collins says. “Our focus is on the high end [of the market],” said Collins. “That is typically a weakness at airports.” Other brands sold at the Shops include Swarovski and Bulgari. But these are certainly affordable for the affluent international clientele passing through Terminal 4, which serves more than 50 domestic and international carriers.

“We didn’t know how high ‘high’ is in terms of price point,” said Carol Fish, commercial director of JFK International Air Terminal LLC, which operates the terminal and its retail. “People are looking for brands.”

The weakness of the U.S. dollar against world currencies has also helped business, at least where non-U.S. shoppers are concerned, Collins says.

Development of the Shops began in 2000 as part of an overall renovation of the airport — one of three operated in the New York metro area by the Port Authority of New York and New Jersey. Terminal 4, built on the site of the old international arrivals building, was redeveloped by JFKIAT (a consortium of Schiphol USA, a subsidiary of the operator of the Amsterdam airport; U.S.-based developer LCOR; and Lehman Bros.) It is the first U.S. terminal to be built and operated by a private entity instead of a government agency or airline.

The first incarnation of the Shops opened in May 2001, largely with service tenants. Management decided to pursue fashion tenants in late 2003, and new retail was opening throughout 2004. With the exception of duty-free merchant DFS Galleria, all stores are required by lease to sell their goods at prices comparable to more traditional retail outlets. Placing so much retail “landside” (before the security area) rather than “gateside” (after) proved a prescient decision for a number of reasons. “When you have everything post-security, you’re dependent on passengers,” Fish said. “That’s great in good times, but not so great when travel declines, as it did following the Sept. 11 attacks.”

The mall’s managers are attempting to draw nontravelers to the airport, publicizing in the local media a fashion show in December and an event to celebrate the opening of the food hall in January.

“Because we’re open to the public, we can have events,” Fish said. “We’re gearing up to decide how to appeal to the community.”

Still, getting to the Shops is not easy for nontravelers. New York City public transit does access the site, but visitors have to contend with the size of the airport and its parking fields. Terminal 4 alone occupies 165 acres.

Most airports are trying to stick with their main customers, says Pauline Armbrust, publisher of Airport Revenue News, which covers airport retail. “The goal for people in an airport is to get people onto their flight,” Armbrust said. “People want to get through security.”

Improving retail and food offerings has become more of a focus for airport managers, she added. “It’s a way to give back to the community,” Armbrust said.

JFKIAT is just beginning to track sales figures, calculated here as sales per enplanement, not sales per square foot. Rent structures, too, vary by tenant and are not comparable to those of traditional shopping centers, Fish says. And though she is reaching out to the surrounding neighborhood, she concedes that she doesn’t expect much revenue to come from local shoppers.

But Fish does have high expectations for the JFK workforce. With 30,000 employees, the airport is a city unto itself, she says. And the most important “resident” is the transient one. “Certainly, our focus is on the passenger,” said Fish. “The rest is additional business.”