Contact Alasdair McNab, Senior Associate Director, Interior Design
alasdair.mcnab@benoy.com
Luxury stores within airport terminals are predominantly found in the world’s largest aviation hubs, characterised by significant volumes of international travel. These bustling travel centres, including major airports in cosmopolitan cities and popular tourist destinations, attract affluent passengers from around the globe. Here, Alasdair McNab, Senior Associate Director in our EMEA Interiors team explores how as key gateways to diverse destinations, they offer prime locations for luxury brands to showcase their high-end products and cater to the discerning tastes of affluent passengers seeking premium shopping experiences while in transit.
Return to Future Thinking
Airport retail has long been dominated by luxury brands, leveraging the allure of tax-free shopping to provide customers with a price advantage compared to downtown stores. The luxury travel retail market was valued at US$104bn in 2021 and is projected to grow to US$233.5 billion by 2030, with a 9.38% CAGR from 2023 to 2030, estimated to be c.25% of all luxury retail sales.
This dynamic has led to the creation of some of the most extravagant and imaginative store designs globally. However, recent trends indicate a shift towards a more diverse retail landscape, with a deliberate emphasis on incorporating local brands and unique offerings. This strategic evolution mirrors the approach taken by leading conventional retailers to stay attuned to evolving audience preferences. Additionally, the success of mid-market and mass-market brands such as JD Sports underscores a growing demand among budget and package holiday passengers, competing with luxury brands through accessible products like passport wallets or stylish sneakers, appealing to a broader spectrum of passengers.
Luxury stores within airport terminals are predominantly found in the world’s largest aviation hubs, characterised by significant volumes of international travel. These bustling travel centres, including major airports in cosmopolitan cities and popular tourist destinations, attract affluent passengers from around the globe. As key gateways to diverse destinations, they offer prime locations for luxury brands to showcase their high-end products and cater to the discerning tastes of affluent passengers seeking premium shopping experiences while in transit.
Luxury retail also attracts substantial investment from leading luxury conglomerates such as LVMH, Richemont and Kering. These conglomerates are increasingly expanding their presence in airports, establishing unique lounge offers and boutiques to enhance the passengers experience. As part of a shift towards post-pandemic resilience, airports are diversifying their offerings, incorporating leisure and entertainment options alongside luxury retail. By investing in luxury brands, passengers not only acquire premium goods but also gain access to premium lounge-like services.
Indeed, it is easy to imagine scenarios where brands like Prada extend their offer to include lounge experiences akin to their popular Harrods Prada Caffe, further blurring the lines between retail and hospitality within airport environments. The Louis Vuitton Lounge by Yannick Alléno at Hamad International Airport in Doha has already set the bar high: a private lounge-meets-restaurant destination where travellers “can relax in a space designed with Louis Vuitton’s signature style and dine on Chef Yannick Alléno’s ‘multilingual’ menus at all hours of the day.” This collaboration between high-end retail and haute cuisine, set in a beautifully designed lounge area, gives an indication of things to come as the luxury trend gathers momentum.
Passenger forecasts for 2024 indicate a promising resurgence in global travel, with anticipated levels surpassing pre-COVID figures by approximately 3%. This optimistic projection signals a robust recovery in the aviation industry and suggests renewed confidence among passengers to take to the skies once again. With growth on the horizon, the aviation industry is poised to ‘take off’ into a new era of exploration and connectivity, with positive implications for luxury retail and other associated businesses within the travel ecosystem.
As the travel retail world reawakens with the return of passengers, it’s clear that each airport harbours its own unique charm and dynamics, shaped by diverse factors including passenger demographics, regional economic conditions and emerging retail trends. Pragma and Benoy harness their respective strengths to craft tailored aviation strategies designed to meet the specific needs and nuances of individual airports. Our collaborative efforts extend to helping luxury brands pinpoint optimal locations within airport terminals, and curating product assortments perfectly aligned with the distinctive passenger demographics of each location. Most recently, we have supported the opening of airport retail stores in Frankfurt and Istanbul. In each case, our use of cutting-edge tools like AI-powered MassMotion (see image), combined with primary consumer research, has enabled us to predict passenger behaviour, and optimise retail layouts to drive customer engagement and sales.
'As part of a shift towards post-pandemic resilience, airports are diversifying their offerings, incorporating leisure and entertainment options alongside luxury retail. By investing in luxury brands, passengers not only acquire premium goods but also gain access to premium lounge-like services.'
The strategic alliance between Pragma, Benoy and luxury brands epitomises the renewed energy sweeping through airport retail. It also emphasises adaptability and precision as the keys to success in this dynamic landscape. Using Pragma’s data-driven insights, we’re able to design targeted and impactful luxury retail and service offerings, helping tenants to leverage aviation real estate as an equity-building channel. As much as any high-street, mall or pop-up experience, modern airports present a golden opportunity for retailers. No longer purely focused on tax resales, airports provide platforms for luxury brands and services (retail, F&B, entertainment, hospitality) as they look to bolster and diversify their revenue streams. And in turn, this enables brands to engage a captive, selective and affluent audience. Gucci’s invitation-only boutique showroom in downtown LA is a prime example, and another exclusive retail format we expect to see emulated around the world.
The key thing for both tenants and developers is to understand the site-specific preferences of their transitory customer audience, which may differ entirely from the needs and expectations of local non-aviation consumers. Air travel hubs in low-income regions, for instance, will still attract high net-worth travellers making transfers and stopovers along the international aviation network. Therefore, these airports are also key venues for building luxury brand presence and equity, despite a contrasting consumer offer in the surrounding urban environment.
At Pragma and Benoy, we provide meticulous analysis of airport demographics, footfall and context. And, as luxury aviation retail continues to soar, we’re committed to creating unique, inspiring and commercially viable design solutions that deliver value long into the future.