Talking passenger’s retail behaviour at London Heathrow Airport

Talking passenger retail behaviour with Fraser Brown, Heathrow's Retail Director.

International Airport Review’s Editorial Assistant, Chunekshi Wimalasuriya, caught up with London Heathrow’s Retail Director Fraser Brown at Amsterdam’s Passenger Terminal EXPO, 2023.

Brown answered questions about how the airport navigated its retail life through crises such as COVID-19 and some of the interesting behaviour trends of travellers when purchasing retail.

What responsibilities fall under your role, and what does it mean for Heathrow?

I have the privilege of being the Retail Director at London Heathrow Airport, and I’ve been so for about four and a half years. My team are responsible for food, beverage and retail of consumers; everything from duty-free stores to luxury brands.

We’ve got about 350 retail units across our four terminals acting as a concession model. My team work with partners to ensure food is delivered to a high standard, so that we deliver the best retail experience to passengers. We work hard to match up our vision of delivering the best retail service in the world.

Is that a tough vision?

It’s a very engaging vision, because it’s an aspirational one, one which has been tough to maintain through COVID-19 where we’ve had a reduced workforce and far fewer passengers, which has had financial implications for us as a private business.

What are some of Heathrow’s retail trends? How has travel retail navigated COVID-19 and a cost-of-living crisis?

When we talk about retail, a lot of people will focus on the domestic. We’ve seen the rise of pure play e-commerce retailers like Amazon and eBay, who negatively hit high street retailers. Before COVID-19, many brands appreciated the travel retail business because they weren’t seeing that same negative impact.

Airports continued to deliver more passengers due to the global growth in aviation. Those passengers were actually considered ‘rich’ relative to the typical consumer profile at a high street or shopping mall. So as an industry, airports were delivering demographically interesting passengers to travel retail and were doing so at scale. And that’s the case of the aviation industry as a whole and, more specifically at Heathrow.

So retailers, in many senses, were seeing travel business as a beacon of hope. They were losing money and depleting numbers on the high street, but were seeing those numbers increase in travel retail.

Now, that led to a little bit of a problem: complacency. Complacency around how fresh the offers were; how exciting and dynamic they were presented, and how quickly they adapted to digitalisation.

How has digitalisation affected Heathrow’s retail development? Have they adapted to it as quickly as you’d like?

The team will tell you; nobody goes as fast as I want them to. I’m very impatient!

The opportunity for us to use digital to augment airports’ physical experience is something we need to go further and faster. I’ll give you an example; most airports are great at using digital tools for basic passenger information such as flight information, terminal information and even for wayfinding.

In commerce terms, most airports apply it to parking very well. Travellers are able to go to heathrow.com/parking and pre-book their parking.

What we haven’t done is translate that competence quickly enough into the retail business. That’s a missed opportunity. If you didn’t want to browse the duty-free catalogue at Heathrow, you could do so via Heathrow Boutique, an online reserve and collect service. It works well, but doesn’t quite have the level of assortment of brands we want, and the complication is that we are not the retailer.

We have to think about how we curate that on behalf of the retailers and brands that we work with.

What can you decipher from passenger behaviour as they interact with travel retail?

We are very interested in how people behave post COVID-19. It’s been a terrible thing for the industry and clearly a medical disaster and tragic for many people, globally.

But to focus on passengers coming back to airports, we must consider the following questions. Will people behave differently? Will they turn up at different time? Will they be more/less likely to engage in food, beverage or retail given their pandemic experience?

What we find is, people are still turning up early because there is still this apprehension of how well aviation has recovered. We’re now managing, however, to get passengers through security at the times we expect and saw, pre-COVID-19.

That allows us to have a commercial opportunity. Where passengers are dwelling in the departure lounge, they are engaging in offers of retail, food and beverage. But it isn’t uniform; on food and beverage, it’s doing well. People, because they’re dwelling longer, are eating, and also because they don’t know what they’re going to get on the aircraft, they’re grabbing and going as well.

However, on shopping, the UK government chose to remove the VAT free purchasing scheme, and we are now VAT paid in departure lounges. We’ve got a structural competitive disadvantage, that we often describe as a tourism tax, which is seeing sadly, a reduction in the sales of beauty and cosmetics and in luxury products.

So we continue to press the British Government to make UK travel retail even more competitive and more successful as we come out of recovery.