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heathrow heaven

LONDON’S HEATHROW AIRPORT USES RETAIL TO READY ITSELF FOR THE OLYMPICS

By Mark Faithfull

On the air-travel trauma scale, many might agree that London’s Heathrow Airport can feel like a magnitude 5. But BAA, the airport’s operator, is promising no more magnitude 5’s. Instead, the company is offering Terminal 5, a brand-new terminal that in turn will offer shorter walks to the gates — and better retail too.

Terminal 5, or T5, as the parties call it, is slated to welcome its first travelers on the morning of March 27, 2008, who will be arriving from Hong Kong on British Airways. BAA and British Airways say they expect to handle some 30 million passengers a year through Terminal 5.

Meanwhile, the airport’s four other terminals will see new life as airlines and destinations get reshuffled and a refurbishment program that includes a rebuilt Terminal 2 kicks in. All this is to be completed in time for the 2012 Olympics. Central to the Terminal 5 concept is its retail strategy, which is bringing in a premium range of stores that will be placed in attractive settings.

“Sixty-eight million passengers will fly through Heathrow this year in aging terminal facilities designed to accommodate around 45 million,” said Tony Douglas, CEO of BAA Heathrow. Indeed, that could explain Heathrow’s current condition. “When T5 opens and 30 million passengers move out of existing terminals, for the first time we will have space to breathe in the central terminal area and have a once-in-a-lifetime opportunity to redevelop the rest of the airport.

The audience demographic is anticipated to be 92 percent high- and middle-income people, according to BAA, and the terminal will be for the exclusive use of British Airways domestic and international flights.

BAA is aiming high with the retail strategy. Each store — 144 shops and restaurants on 215,000 square feet of retail space across two floors — is to be “surprising, tempting and experience-enhancing,” the company says. The development will increase Heathrow’s retail portfolio by 50 percent.

The retail area will be far more open than the existing, windowless ones. “One of the key changes passengers will see is that on both levels of the shopping area, you can see the planes,” said Claire Cooper, product director of Terminal 5. “Firstly, it makes for a spectacular view, but, secondly, it would reduce the stress levels of those worrying that they miss their plane.”

BAA, which manages its own retail leasing, has signed up department store Harrods, fashion retailers Kurt Geiger, Mulberry, Paul Smith and Ted Baker, jewelers Links of London, Mappin & Webb and Tiffany, and luxury accessories retailer Smythson. There will be a slew of food offerings, too, including the Caviar House & Prunier Seafood Bar and celebrity chef Gordon Ramsey’s first airport-based restaurant.

The units are allocated on what Cooper says is more of a concession-style model within department stores than leasing in a mall. The rents will be based entirely on sales, varying by category; fashion will pay a higher rate than technology, for example, though a minimum guaranteed rent of 80 percent of expected income will apply across the board. Leases will generally run for three years, though slightly longer for food concepts because of building and equipment costs. “The shorter terms provide flexibility for both sides,” said Cooper.

To help create a distinctive retail experience, BAA and design agency The Nest prepared a brochure, some marketing materials and a short film outlining the vision.

“Our approach was to create a tone of voice for Terminal 5 that had synergy with the overall ambition but was more human, intimate and appropriate for prospective retailers and their customers,” said Giles Brookes, the Nest’s creative director. “This narrative was driven by five promises that were to underline every aspect of the shopping experience — tempt, satisfy, surprise, respect and simplify — and become cornerstones for the brand.”

BAA and the retailers have focused attention on the design of the stores and their surrounding environment. Harrods is creating a “mini” department store format that Cooper describes as “very clean and cool.” Tiffany’s boutique will be its first airport store in Europe and only its second in the world, and will feature architectural details from its New York City flagship.

Mappin & Webb will offer complimentary jewelry cleaning services and an on-site valuation service for items a customer already owns. At Links of London, customers will be able to order from the full line over the Internet, and then Links will deliver purchases, wrapped, right to them in the departure lounge.

High-end apparel retailer Paul Smith’s new shop will include rare books, photographic prints and furniture alongside the Paul Smith collections. Ted Baker’s Twisted Nature-themed store will sell a range of products exclusive to T5.

“We were in a really privileged position, because applications for the retail space were oversubscribed by five or six times,” said Cooper. “And because we wanted to create something different, we were able to challenge the retailers to do far more than usual. With their applications, we asked them to provide a blueprint of the store design, the shop-fit details and what sort of exclusive products and events they would be offering.”

Cooper says store planning for airports is “far more scientific” than at many malls. “We use macroeconomic data; we have detailed information about traffic flows,” she said. “We also obviously have very detailed data about the shoppers and about buying patterns, so each of the category teams was able to develop their category from that.”

One question the terminal planners will probably not be asking, though, is whether shoppers would prefer to be at a mall or at an airport.