Consultancy Project for Diesel (UK)

1. Ada Konowalska-Kuzniar
Annelise Sealy

2. CONTENT
- AIMS AND OBJECTIVES
- SECONDARY RESEARCH:
• Travel Retail: The Market In Brief
• Airport Travel Synopsis
• Retail Concepts
- PRIMARY RESEARCH
- FINDINGS
- PROPOSAL
- LOOKING INTO THE FUTURE
- SUMMARY

4. METHODOLOGY
Secondary research Primary research
- Online databases such as Both quantitative and
Mintel and Verdict; qualitative research in the
form of interviews, a
- Retail industry journals; questionnaire, and
- BAA (Heathrow) database observations.
The project is based on an
analysis and evaluation of the
current travel retail market.

5. AIMS
1.Investigation of a
potential travel retail
scheme.
2.Overview of modern
airport travel retail,
including reviews and
evaluations of the
existing market and
competitor strategies.
3.To determine all
options for the
approach to travel
retail and advise on
the best model(s) with
which to implement it.

6. OBJECTIVES
1. Research of key
airports, passenger
statistics and retail
statistics.
2. Analysis of existing
retail brands that
operate successfully in
travel retail.
3. Investigate current
methods of multi-
channel retail and
establish new
opportunities.

7. TRAVEL RETAIL MARKET
“Airport retailing has been
highlighted as one of the fastest
growing niche retail markets.”
Journal of Retail & Leisure Property

8. • Despite uncertainties in the global economy,
airport retailing flourished in 2011 due to increased
passenger numbers and spending per passenger.
(Verdict., 2011).
• Major airport retail sales are up to six times higher
per square foot than at shopping centres and
stores in towns and cities (Kasada, 2008).
“Airport retailing is the largest market
in international travel retail.” • In 2011, Heathrow airport achieved the highest global
retail sales of over 2bn Euros - 8.8% increase on 2010
(Verdict, 2011) due largely to an influx of travellers from the BRIC
nations (Airport International News, 2012).

10. Figure 5: Airport retail expenditure by region, 2008 and 2011e
(Verdict, 2011)
Domestic v. International v. Transit
Short haul/Long haul
Scheduled/Unscheduled
Business/Pleasure

11. Studies have revealed that consumers are
more likely to make impulse purchases in
airports. Retailers can implement strategies in
order to take advantage of impulsive
behaviour by minimising stress, reducing
boredom, and reducing or eliminating barriers
to purchase.
(Crawford & Melewar,
2003)

12. Consumer attitudes to shopping and airport retailing solutions (Verdict, 2011)

13. Figure 4: Strengths and weaknesses in the airport retailing market (Mintel, 2008)
Growing passenger flow Captive „transumer‟ audience
with time on their hands
Greater security = greater
time spent in the airport Duty-free available for long-
haul traveller
Clash between airport and
Tired and non-stimulating consumer pricing
environment
Insufficient entertainment and
No intra-EU duty-free experience facilities

14. HEATHROW
“a shopping centre with a runway attached” (Barrett, 2011)
“retail church” (Mintel, 2008)
 86 airlines
 183 destinations in 90 countries
 passenger numbers at Heathrow 15.7 million /first quarter of 2012/
 annual rolling traffic surpassed 70 million /year to 31 March 2012/
 revenue increased by 11.5%

15. TRAVEL RETAIL CONCEPTS
Airports are a major vehicle for brand
exposure, with travellers taking products and
experiences with them around the world.
Passengers spending time waiting are a
ready source of revenue, and retailers should
aim to provide a memorable experience,
service, and products to encourage spending.

16. INNOVATIONS IN RETAIL
 A key method of attracting customers is by
using exciting and unique marketing
techniques.
 Experiential marketing promotes interest by
gaining press attention and encouraging a
positive word-of mouth spread by consumers.
 An integrated campaign across social media
and outdoor experience.
 Interactive engagements.
 Virtual walls and surfaces.
 Worldwide delivery services; Click & Collect;
Mobile point-of-sale devices.

17. PRIMARY RESEARCH
Observation

18. PRIMARY RESEARCH
Observation
http://www.youtube.com/watch?v=gx-
5BgrsVQo&feature=youtu.be

19. POP-UP STORES
Pandora pop-up store
- Terminal 1
- For 3 months (from March 2012)
- Will be moved to another prime UK
airport to coincide with the London
Olympic Games
- Operated by World Duty Free Group
Paco Rabanne pop-up store
- Terminal 3
- For 3 months (in 2010)
- Cross-category shop
- Some products exclusive to the travel
retail outlet
- Striking visual merchandising

20. POP-UP STORES
Ted Baker’s pop-up store
- Terminal 5
- 300 sq. ft.
- For 3 months (from 13th February)
- Shop & Collect
- Reserve & Collect
- „Sweet Shoppe‟ theme
Jack Wills pop-up store
- Terminal 5
- For 6 moths (from August 2011)
- Pop-up led to the brand opening
a permanent store
- Unique visual merchandising - the focal
point was a custom Jack Wills Land Rover

21. PRIMARY RESEARCH
Interviews
 Respondents concluded that they would like more
entertainment, nicer relaxation areas and a wider
variety of stores at airports
 Respondents had difficulties to recall specific brands
when asked which one they can recall from the
airport. Most popular answers: Boots, WHSmith,
Hugo Boss, Lacoste, Duty Free shops.
Would you be likely to engage, in your own city, with a
brand that you experienced at the airport?
Yes
No
Not Sure

22. PRIMARY RESEARCH
Questionnaire
What do you do at the What do you purchase at the
airport? airport?
Books/mags
50
40
30 Clothes
20
10 Food/drinks
0
Forgotten items
Souvenirs
What would you like to find at the
airport?
More eateries
Lounges
More shops
0 10 20 30 40 50

23. PROPOSAL

24. PROPOSAL
Main Concept

25. PROPOSAL
Supporting Concepts

26. PROPOSAL
Theme
‘Diesel Clinic’ ‘Diesel Station’

27. LOOKING INTO THE
FUTURE
 Art galleries, 3D cinemas etc.
 Partnerships with airlines
 Mixed reality:
„Airport Park‟ at Amsterdam‟s
Schiphol Airport – indoor
lounge, café, retail shop, outdoor
terrace, garden + technology
such as projections and audio
effects.
 Railway Travel
Retail

28. CONCLUSIONS
• Research shows that the travel retail market is one of few areas of large future growth, with the market set to achieve £39.1bn by 2015. New revenues
are coming from higher passenger numbers from the BRIC countries due to their strengthening economies. The categories with the best performance
are Fashion & Accessories and Beauty. Furthermore, there is a gap in the market for non-luxury retailers. This creates a perfect opportunity for a
premium Fashion and Lifestyle brand such as Diesel.
Research of key • Initial testing of the market is recommended for London, due to Heathrow having the highest global airport retail sales. However, key areas to target
airports, passenger are Asia, the Middle East, and Africa, as they are set to surpass the Americas and Europe in terms of passenger volume and spending levels.
statistics and retail
statistics.
• Heathrow airport has become a shopping destination in its own right. Terminal 5 in particular has earned a reputation for introducing new brands and
pop-up concepts into the retail market.
• Analysis of the current Ted Baker pop-up and standalone stores was performed through an observation of each and assessing the visitor and conversion
rates. Findings demonstrate that the pop-up concept was more than twice as successful in comparison with the regular store.
Analysis of existing
retail brands that • Further investigation into consumer attitudes demonstrated pop-up concepts, a wider retail offering, and improved relaxation spaces as key areas for
operate development.
successfully in
travel retail.
• Stimulating concepts need to be introduced to airport environments to reduce boredom, entertain travellers and encourage spending. If Diesel were
to introduce something new to the market it would not only increase brand awareness, but it would also generate a lot of interest from consumers
and press.
• It is important to integrate social platforms, e-commerce and m-commerce technologies to provide a fully developed offer to consumers.
Investigate current • The team proposes a pop-up concept with two roles – retail, and relaxation. These could take on themes, as was proved popular (Ted Baker).
Smaller concepts for minor airports include vending machines; sleep pods; and gaming stations. These could potentially generate a viral spread of
methods of multi- information on the brand.
channel retail and • Future expansion will be into larger concepts with new technologies, such as „mixed reality‟ and 3D.
marketing, and • Other aspects of the travel retail - railway stations, bus terminals, cruise ships and in-flight retailing.
establish new
opportunities.