Q&A: Changi Airport

23 March 2011 (Last Updated March 23rd, 2011 18:30)

Non-aeronautical revenues are playing an increasingly important role for airport operators the world over. Getting your retail offering right is a key component of this strategy. Changi Airport Group's executive vice-president, commercial, Lim Peck Hoon, explains the key to a successful concessions business to Mark Brierley.

Q&A: Changi Airport

Changi Airport, Singapore, has amassed over 350 awards since opening in 1981. Every aspect of the airport's design and operation has helped it to gain its position as one of the best airports in the world. Its unbeatable passenger experience has been largely aided by the retail offerings available to passengers, which currently stands at over 230 retail and 100 food outlets across four terminals. Changi Airport Group's commercial strategy is aimed at getting the most out of the available retail space, while also maximising non-aeronautical revenues for the airport. Lim Peck Hoon explains how this is achieved.

Mark Brierley: How much revenue from retail has Changi Airport gained in recent years?

Lim Peck Hoon:2009 was difficult for the aviation industry, with the first half of the year being particularly tough. Nonetheless, Changi Airport saw a turnaround in its passenger numbers in the second half of 2009, in line with the improving global economy. In tandem with the steady recovery in passenger and flight numbers, Changi's concession sales registered a turnaround to positive growth starting September 2009, after being on a downward trend for the first eight months of 2009. Since then, concession sales at Changi have been steadily improving. For the last quarter of 2009, concession sales rose 6% year-on-year. This improved to a healthy 19% increase year-on-year for the January-May 2010 period.

MB: Which retail companies does the airport work most closely with?

"Changi Airport, Singapore, has amassed over 350 awards since opening in 1981."

LPH: CAG works closely with global travel retail operators such as DFS and Nuance Watson, as well as established local retailers such as Chomel Pte Ltd (for the brands Chomel and Madame Butterfly), RISIS Pte Ltd (for the brand RISIS Atelier) and Focus Network Agencies (Singapore) Pte Ltd (for the brand The Cocoa Trees).

MB: What criteria do retailers have to fulfil to gain a presence at the airport?

LPH: Our criteria when assessing which concessions to bring to Changi covers a number of factors, such as the quality of the brand and range of products, inventiveness of concept, track record of operator, financial proposal, popularity among consumers, and how well the concession complements and enhances our existing retail offering.

MB: What are the key elements of the airport's policy on concessions businesses?

LPH: Together with its retail partners, CAG shares a vision and commitment to be the best in class, with a mission to deliver a high-quality travel retail experience. To grow Changi Airport's commercial business, CAG adopts a holistic strategy, which includes attracting quality concessionaires to operate at Changi, continuously adjusting and improving our retail mix, providing support to our concessionaires by creating a conducive retail environment at the airport, and organising various shopping events and promotions to drive spending at the airport.

At Changi, we want shopping to be fun and enjoyable, and for shoppers to buy with confidence. We offer a 30-day no-questions-asked money-back guarantee on all purchases made at Changi. In addition, for the key liquor and tobacco, and perfumes and cosmetics categories, we benchmark prices regionally and ensure that Changi offers one of the most competitive prices among key Asia Pacific airports. For the rest of the products, we guarantee that prices at Changi are no higher than the brand's downtown outlets, or other comparable downtown retailers in Singapore. Otherwise, shoppers can seek a reimbursement of double-the-price difference.

MB: What has the airport done to maximise revenue from retail? Is the goal of this strategy to increase revenue or improve passenger experience, or do both go hand-in-hand?

LPH: CAG believes in being a responsible and proactive landlord, who takes the lead in implementing strategies that will maximise the overall sales potential of its terminal malls.

As a result of this philosophy, CAG won, for the fifth consecutive time, the 'Airport Authority with the Most Supportive Approach to Travel Retail' award at The DFNI Global Awards for Travel Retail Excellence 2010.

"Changi Airport Group's commercial strategy is aimed at getting the most out of the available retail space."

As part of its efforts to create a conducive retail environment, CAG implements a sustained campaign of exciting shopping promotions and interesting on-site activities throughout the year – at both the public and transit areas of the terminals – all with the objective of boosting spending at Changi's retail shops and drawing more public footfall to the airport by improving passenger experience. Through these innovative and exciting promotions, CAG hopes to bring value to its visitors by making shopping and dining at Changi not just a fun and enjoyable experience, but most importantly, a truly worthwhile and rewarding affair. By doing so, we also provide concessionaires with effective marketing support and help create a retail-friendly environment in which they can thrive.

MB: How do you ensure that passengers have the right blend of retail options?

LPH: One of the world's busiest international airports, Changi, serves over 37 million passengers from all over the world annually, with diverse nationalities, cultures, and different consumer tastes and preferences. Therefore, we make it a point to provide a wide range of retail and F&B options, covering a whole spectrum of products and cuisines at different price points, so as to cater to the diverse tastes and demands of passengers and visitors to the airport. With about 230 retail stores and 110 food and beverage outlets spread across its four terminals, shoppers and diners are spoilt for choice. Our retail offering includes traditional duty-free favourites such as liquor and tobacco, perfumes and cosmetics, chocolates and candies, as well as other products such as electronics, luxury goods, fashion, watches and accessories. Food lovers can choose from a wide range of international cuisines and dining concepts, from full-service restaurants, cafes and bistros, bars and lounges, to food courts serving authentic Singapore cuisine.

MB: How do you calculate the importance of retail opportunities as a factor in the quality of the passenger experience?

LPH: Through feedback systems available throughout the terminal buildings, as well as customer surveys conducted on a regular basis, we closely monitor passenger feedback to ensure the consistent delivery of top-notch service, as well as to find out which areas we are lacking in and how we can improve.

"CAG adopts a holistic strategy, which includes attracting quality concessionaires to operate at Changi."

Every year, the many awards Changi receives also serve as an affirmation from customers and partners that we continue to meet their expectations in delivering the desired airport experience. Changi Airport has won over 350 awards since it opened in 1981. We are proud to be the world's most awarded airport.

Retail and F&B is a key part of the travel experience for passengers at Changi Airport. Many of our passengers enjoy shopping and dining at the airport before boarding their flights, and we are grateful for their support in making us a 12-time winner of Business Traveller Asia Pacific's Best Airport Duty-Free in the World Award.

MB: What plans do you have to provide more retail choice for passengers in the future?

LPH: We will continue to bring in new and exciting brands. Some of the new brands that have arrived in the first few months of the year include Miu Miu, Diva, Café Dunkin Donuts and Quiznos, and those that are coming soon include perennial favourites such as Pizza Hut and KFC, and popular local F&B brands like Ruyi by Tung Lok and Astons. We estimate that there will be more than 100 leasing opportunities for the whole of 2011, cutting across many categories such as confectionery, speciality retail, F&B and money-changing.