TOP 10 AIRPORTS: HEATHROW 6


Favourable currency effects boost Heathrow in 2019 before grinding halt


A softening of the pound sterling against major currencies helped Heathrow coax shoppers to the tills in 2019, but Retail Director, Fraser Brown tells Luke Barras-Hill, that the UK hub is now negotiating an unknown scenario as the country emerges from lockdown.


Terminal’s 2 and 5 as the coronavirus (Covid-19) crisis continues its quake across global aviation. Confirmed cases in the UK


numbered more than 294,800, with more than 45,300 deaths. Activities in Heathrow’s terminals


were consolidated in April, a month in which the airport also slimmed down from two runways to one. A large number of airlines


Above: Heathrow says it is too early to say whether the so-called ‘revenge spending’ trend among Chinese consumers - important contributors to Heathrow’s luxury retail estate - will translate to the terminals.


H


eathrow Airport’s Retail Director Fraser Brown identifies the strong


balance in the commercial mix as an enduring quality. While he points out that the


airport continues to ‘buck the trend’ versus the High Street, there are some categories performing better than others; foreign currency for example, is in decline. “Last year we continued to see


demand for British retail across the globe, in particular from our Chinese and US passengers, and we will continue to offer premium retail where appropriate as this is hugely popular with the international passenger mix at Heathrow,” he tells TRBusiness. “At Heathrow, perhaps different


from other airports, we do engage with our operators and have some quite tough contractual discussions about high street pricing.” Retail revenue rose marginally


Revenue from retail concessions contributed the lion’s share of total retail income, growing by 5.9% to £342m, as the pound sterling’s drop in value against the Euro and US dollar aligned with greater shopping participation.


TRBusiness 34 TRBUSINESS


(+0.8%) to £722 million/US$946 million in the 12 months ending 31 December 2019. Growth was outstripped by a


meagre rise (+1%) in passenger traffic to 80.9 million, but intercontinental traffic climbed by 2.2%. Revenue from retail concessions


contributed the lion’s share of total retail income, growing by 5.9% to £342m/$448, as the pound sterling’s drop in value against the Euro and US dollar aligned with greater shopping participation. Retail revenue per passenger was flat at £8.93.


Group revenue +3.4% Group revenue for Heathrow Airport Holdings increased by 3.4% to £3,070m in light of increased flight demand, with adjusted EBITDA up 4.6% to £1,921m. Heathrow says it continues to


respond to trailblazing brands to satisfy passenger demand. Accordingly, the retail offer in each terminal is curated for a divergent customer mix. “While new brands are important,


many established brands such as Rolex, Chanel and Louis Vuitton also continue to maintain their status as popular luxury brands for passengers,” continues Brown. At the time of writing (mid- July), operations are restricted to


have switched services from Terminal’s 3 and 4 and American Airlines has moved from Terminal 2 to Terminal 5. Encouragingly, more than 50 retail


and F&B outlets are now open at both terminals, with World Duty Free recommencing shop sales in June and July. The majority of Heathrow’s shops closed in March after non-essential retail outlets in the UK were ordered to shut. “It will be a gradual reopening,


with each retailer and business partner working with us to make sure their front of house is safe for colleagues and passengers travelling,” confirms Brown. In early August, WHSmith is due


to open a large-scale blended travel essentials store at Terminal 2 on a trial basis over a 12- to 18-month period. The store will offer a combination


of confectionery, tobacco, news and pharmacy goods, TRBusiness understands. “For us as an airport operator, it


is incredibly useful in terms of the efficient use of space,” explains Brown. “WHSmith won this as part of a market testing exercise for T2 and we are incredibly excited.” Seldom does a public health


crisis leave imperceptible damage to economies, and Covid-19 has bludgeoned the retail sector. Boots and John Lewis were the latest casualties as this report went


AUGUST 2020


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