Airports and rail concourses are being reinvented as retail destinations across the UK. Mark Faithfull looks at the retail opportunities as operators map out their new strategies

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Perhaps we should blame it all on Heathrow T5. Not the snow before Christmas, but the shopping. T5 was certainly not the first travel environment to embrace retail but the scale, mix and big brands it attracted set the terminal apart, while giving breathing space to the 68 million passengers who previously flew through Heathrow using facilities designed for 45 million.

The level of retail earmarked for T5 was such that it engendered some criticism about treating the travel experience more like a giant mall, with its 144 shops and restaurants set over 200,000 sq ft, which increased the cumulative size of Heathrow’s retail portfolio by 50%.

A cast list including Harrods, Mulberry, Kurt Geiger, Ted Baker, Thomas Pink, Paul Smith, Tiffany and Bulgari, plus Gordon Ramsey’s first airport-based restaurant, opened at T5 in a strategy Heathrow retail concessions director Brian Woodhead says has become a model for subsequent development. “We coined the philosophy of retail on your way, not in your way,” he says. “With the refurbishment work at T4 and T3 since we’ve tried to retain that spirit, even though physical restraints have constrained what it has been possible to deliver.”

Indeed, BAA has enjoyed a good year for retail last year. In the nine months to September 30, retail income per passenger jumped 10.1% to £5.11, compared with £4.64 in 2009, and net retail income increased by 7.9% to £326.9m. Retail growth is forecast at 5.7% this year, buoyed in part by the £200m refurbishment of Heathrow T4 in 2009/10 and despite temporary disruption as T3 gets its own makeover.

“We are very clear that we facilitate the retail, we do not provide the retail,” stresses Woodhead. “So our role is to ensure the passenger experience of arriving and getting through security should give them not just more time but put them in a better frame of mind.”

On the rails

It’s not only airports where retail is being bolstered. In November, Network Rail - which already offers 480,000 sq ft retail space across 18 stations - unveiled plans for 75,000 sq ft of new retail space in a “new vision” for stations as retail destinations.

Consequently, this spring seven new restaurants will be added on the existing mezzanine at Manchester Piccadilly, then in 2012 further retail space will open at London Waterloo, Birmingham New Street and King’s Cross stations.

At Waterloo a 220-metre long balcony is planned to run the length of the concourse at first-floor level, creating 20,000 sq ft of retail space from old offices. Projected to open in April/May 2012, this would allow the concourse to be cleared of pods and standalone units, improving passenger flow while establishing the station as a destination.

Network Rail head of retail Gavin McKechnie says 40% of Liverpool Street’s shoppers are non-travellers. Meanwhile at Euston, regardless of its very limited retail offer, 18% to 20% of its shoppers are non-travellers. “So if we have a base of 20%, there are real opportunities to turn our stations into destinations, where people arrive earlier or leave later, meet friends and dwell longer,” he says.

The plan for Waterloo reflects a broader strategy to strip retail out of the main concourses to ease circulation and then generate new areas of retail above and below. So at King’s Cross a new concourse will create more than 27,000 sq ft of shops and restaurants by March 2012 as part of its western extension, while at Birmingham New Street John Lewis is set to anchor a redevelopment of the notoriously grotty station site, with a full-line 250,000 sq ft store that is due to open in 2014. The project will also include the upgrade of the existing Pallasades shopping centre.

McKechnie was formerly with BAA so perhaps it is no surprise that he has been keen to embrace the best airport strategy. Woodhead cites Heathrow T4 as a good example of BAA’s current approach. “T4 is long and thin and retail tended to perform best at the point where passengers emerged airside, so we crammed the retailing in,” he recalls. “But in the refurbishment we pulled the retail back and took island units out because we didn’t want to confront our passengers the moment they got through security.” Typically, he says, they sort the priorities such as finding the toilets and doing the needs-based trips to WHSmith and Boots first, then eat, then look around other stores.

However, Ibrahim Ibrahim, managing director of consultant Portland, still believes airport retail is “bland and boring” and says the “comparatively low proportion of travellers who shop suggests airports are not fulfilling consumer demand”.

Portland director of environments Lewis Allen says airport operators need to think about unique, boutique offers - especially those that offer a “flavour of the country”, and believes there are also opportunities for areas that change regularly, where retailers and brands can open temporary and pop-up spaces. CB Richard Ellis senior director Ed Humbert says there are very limited possibilities to get into airports, but believes chains such as H&M and Zara would be welcomed by shoppers.

Star of the show

Humbert points to St Pancras International as railway’s exemplar, with owner High Speed 1 having achieved a sense of place with a retail offer for both Eurostar passengers and non-travellers. Europe’s longest champagne bar rubs shoulders with retailers such as Thomas Pink, LK Bennett, Monsoon, La Senza, Oliver Bonas, Neal’s Yard Remedies and Hamleys, plus an arcade with independent and boutique retailers.

In September St Pancras launched a marketplace offering locally sourced fruit and vegetables and deli products. High Speed 1 head of revenue development Wendy Spinks says: “Obviously when we looked at the mix we knew we had that international dimension, like an airport.” She adds that because of its “iconic location” it recognised the need to be different and establish its retail offer. Its research included taking inspiration from Grand Central in New York.

HS1’s marketplace, which has a permanent location, proffers a deliberate nod to Borough Market. “Its use during the day, from people sitting with a coffee and croissants in the morning to a glass of wine and something from the deli later, gives the space a changing feel,” adds Spinks.

With a number of base and turnover leases set to expire, Spinks says HS1 will refresh the mix this year and anticipates that more retail space will become available next to the new hotel as refurbishment draws to a close, giving HS1 further scope to evolve the retailing offer. Travel retail is slowly but surely changing and retailers should consider whether they too can take advantage of these destinations’ captive audience.