On location at Malta International Airport; a new terminal extension transforms the commercial offer – 18/06/09

MALTA. Malta International Airport last week unveiled a milestone in its history – a €25 million extension of its terminal that incorporated a vibrant new commercial offer.

That offer comprises a fine walk-through store and a destination concept operated by concessionaire The Nuance Group, plus a series of specialist boutiques in the main Departures concourse from leading local retailers including Salvo Grima. And there are also some major enhancements to the food & beverage offer.

The airport company also revealed its plans to further develop its non-aeronautical activities – and crucially, it plans to hold a major tender for food & beverage concessions in 2010 as the contracts of the incumbent concessionaires expire.

The Nuance Group’s walk-through store is the highlight of the new extension


Big commercial ambitions
Malta International Airport (MIA) CEO Julian Jäger said the investment marked a new departure for the airport, and for its commercial facilities.

He said: “Our aim is to become the best airport in our class in the Mediterranean, and we rate very highly in Europe in that regard already. With this extension, we underline our faith in the future of the airport and in the future of Malta.”

In a briefing that followed last week’s inauguration – an inauguration conducted by Maltese Prime Minister Lawrence Gonzi – Jäger outlined his ambitions for non-aeronautical operations at the location.

He said: “Commercial income is still around 19% of our overall revenues, which remains lower than we would like. Our goal is to raise that to 30% by 2010, and the new extension will play a big role in that.”

Malta International Airport CEO Julian Jaeger: wants commercial to account for 30% of turnover by 2010


Turnover from retail and food & beverage reached €5.08 million in 2008, up by +8% on a year earlier, while the 2007 figure was €4.7 million, up by +20% on 2006. At just over €3 million, airside retailing accounted for the majority of 2008 retail sales.

Jäger also revealed the thinking behind the commercial expansion, which culminated in last week’s opening. “We needed to restructure and double capacity in the security area, which was too small for the number of passengers coming through,” he noted. “Also, we had a number of contracts that expired in 2008 so that gave us the opportunity to make some changes. Malta’s entry into Schengen last year was also a factor, plus we needed to better maximize the commercial space we had, and diversify our revenue streams.

“Importantly, once we decided to extend the security area, the opportunity also arose to extend duty free on the floor above, which was critical. We also relocated the lounge on the second floor, which freed up valuable space for retail.”

With the aid of The Design Solution and Pragma Consulting, the airport created a new plan for the commercial zone, which resulted in a major addition to the space.

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Malta Airport transformed

In retail terms, this resulted in a +169% increase in landside space to 704sq m, and a doubling of retail space airside to 2,291sq m.

Food & beverage space airside has increased from 745sq m to 1361sq m, while landside some 1,494sq m were added – including a new food court featuring KFC, Burger King, a Fat Harry’s pub an Italian restaurant, plus a Chinese/Indian/Turkish concept – taking the total area to 2,602sq m.

The opportunities ahead
“We believe we have finished up with a good selection of local and international retailers,” said Jäger. “We have a lot more space for F&B and crucially, also for seating, so the environment is much more comfortable. And we are not finished yet. We have just tendered for a 180sq m gaming hall, which should be operational by the end of this year or in early 2010.

“I also believe we have an opportunity in the non-Schengen zone, where arguably there are too many retail outlets in too small a space, and it’s not comfortable enough during peak times. So we want to address that.

“We are also developing other non-aeronautical areas. We are planning a new 500-space car park and we also believe the valuable land close to the terminal is an area of opportunity, and that could become a retail and entertainment hub for the local community.”

Catering for all tastes: A greatly enhanced food & beverage offer includes a Burger King, KFC and a Fat Harry’s Bar in the landside food court, plus a revamped Hard Rock Cafe in airside Departures (below right)

Spotlight on the commercial design
As part of the presentation of the retail concept, The Design Associates Director Robbie Gill outlined the thinking behind the new terminal design. He said: “We needed to create a balance between a well-rounded offer and the relatively small number of passengers here at MIA [3.11 million in 2008 -Ed]. It had to be space that was commercially supportable and that would attract the best retailers.

(Left to right) Nuance (Malta) Operations Manager Paul Sainitro; General Manager (Malta), Adil Raihani; and Buying & Merchandising Director Europe Alex Anson at the opening, while (right) Robbie Gill of The Design Solution, a key influence on the commercial design of the extension, reveals the thinking behind the new areas


“Previously, I described the duty free shop here at Malta’s best kept secret, as it was hidden away. Other issues included the location of lounges in prime retail space and we had a number of immovable services such as lifts and stairs. That influenced how we designed the duty free area, where the aim was to filer people around the shop before they entered the Departures lounge. I think the major strengths of this design are that the F&B areas are located around the lounge while the retail is central. The passenger flows are so strong in retail that it is very likely that passengers will locate what they want with ease.”

Gill concluded: “I don’t know an airport of this size anywhere in the world that has as strong a retail offer.”

The new-look Nuance store
The core of the new-look commercial area is The Nuance Group’s 970sq m walk-through store, in which the retailer has doubled the space it operated previously. Separately, it also manages a 145sq m Spirit of Malta stand-alone outlet along the concourse.

Nuance Europe Buying & Merchandising Director Alex Anson outlined the key principles behind the new look. He said: “We have been driving recently from doing the retail basics to retail excellence, through our category management approach, top-class ranges, pushing the “˜hero’ categories to the fore, our promotions, our Best Price Guarantee and strong merchandising plans in-store.

Malta International Airport Head of Non-Aviation Services Mario Psaila-Savona (left) greets the opening of the new extension; (Right) Alex Anson outlines the principles behind the Nuance ‘Worlds Of’ concepts


“As a company we have been asking ourselves recently, “˜What can we be famous for?’ And we believe we can add real value in the area of customer education and events. This store – and others in our network – aim to deliver that through our Worlds Of concepts, translated to the specific local environment.”

Those “˜Worlds Of’ concepts that the retailer first implemented at Stockholm-Arlanda Airport last December are on show in a more muted way here in Malta, though the category by category delineation makes wayfinding around the store easy for travellers – and crucially, gives Nuance flexibility to change the fixturing, scale and presentation of each “˜World’. Here, it’s the category, rather than the brand name that the passenger encounters head-on – and it’s a refreshing change to the brand marketing-led approach of many travel retail stores.

“We want to move away from the emphasis exclusively on brands towards positioning products by region and by category,” said Anson. “On the domestic market people shop by category, not by brand, so there is room for that approach in travel retail too.”

Value for money is a critical message – as shown here at the entrance to the store


Shoppers have good views back into the store from the exit (above) as they push through into the main concourse


Walking the store
Passengers enter the walk-through after clearing security one level below. The entrance to the store opens on to the key impulse, value for money category of white spirits – a big attraction for UK passengers, who account for roughly one-third of travellers.

Displaying the offer by category rather than by brand lends clarity to the liquor sector


The price-off message is a key one here, across all liquor categories and in beauty too, with the retailer directly – and boldly – comparing its prices with Tesco in the UK, as well as the local High Street. Yet the pricing message is a little lost in places – and it’s a useful tool that could be more aggressively used. It’s an area that Nuance says it will address in a bigger, bolder way in future.

The Nuance Group uses its Best Price Guarantee to underline to UK passengers the price differential compared with UK supermarket Tesco’s stores, and it’s an approach it plans to be even more aggressive about in future


Liquor looks likely to play a greater role in the (largely duty paid) offer in the future. That’s because Malta has halved its duty rate on spirits & wines. “This makes it a very interesting business for us,” noted Nuance (Malta) General Manager Adil Raïhani. “It helps us major on the value for money element. For example, when the duty cut came in we were able to reduce our price on a bottle of Smirnoff from €22.50 to €12.95. Some of that was offset by the currency exchange effect with Sterling, but it underlines how we can add real value. We plan to concentrate on ten core products to make a statement about the value we offer.”

He added: “Plus we need to give these passengers other reasons to buy. We have a vastly improved wine offer from Malta. And we have a better, more rounded whisky offer – with double the number of single malts, and we are offering full ranges like never before, from 5yo to 30yo in the major Scotches.”

After the spirits offer, passengers can swing either left towards wines and Champagnes, or as many will choose to do, right towards the fragrances & cosmetics zone across a broad corridor.

Passengers are attracted to the “˜hero’ beauty brands as they travel the store – with high-quality fixturing a vital feature


There, the retailer plays strongly on the “˜hero’ brands of Dior, Chanel, Lancôme, Estée Lauder, Clinique and Clarins to draw the passenger in. In fact, the heavily branded merchandising of the P&C zone contrasts sharply with the understated category approach through the rest of the store – although here too the price-off message, as with other categories, is also underlined.

The vital role of the beauty category is emphasised by the 335sq m of space devoted to it – Nuance previously devoted 170sq m to the sector. P&C is now around 32% of sales, and is closing in on tobacco’s dominant share – which was once in the mid-50s, but is now around 40%.

If one moves from the main entrance in the other direction, the smart World of Wine & Champagne, plus the World of Cigars with its 9sq m humidor catch the eye.

The Worlds of Wine and Champagne give a smart new look to these categories


The World of Wine is notable for its emphasis on Maltese products – underlining the retailer’s keenness to deliver a Sense of Place about the offer, which it does well through a range of exclusive local brands. The execution is also high-class, with the “˜wine cellar’ look sure to capture passengers’ attention as they walk the store.

A central area combines Nuance’s World of Wellness with an events zone that should entice footfall around the nearby beauty category.

As passengers make their way towards the tills and out towards the main Departures lounge, they’re met by the vital tobacco category – still the largest contributor to sales. It’s the category that has held up best in the face of the weak Pound, according to Nuance – a “˜safe,’ price-driven category to which many travellers fall back in times of crisis.

Peak sales: Confectionery has been one of the success stories of recent years at The Nuance Group’s business in Malta – driven by a mixture of core international brands such as Toblerone and popular local specialities


The impulse category of confectionery is located directly next to the tills


The shopper then comes across the pivotal, fast-growing confectionery offer. Confectionery sales rose by +30% year-on-year in 2008 and is one of Nuance’s boom categories in Malta.

Maltese Prime Minister Lawrence Gonzi (centre) is introduced to the Valrhona display at the inauguration


But it is also offering a point of difference. The key international brand names are all there but encouragingly, Nuance has also devoted space to showcasing loose chocolates, notably from French luxury brand Valrhona, and close by, high-end Maltese brand Cordina. The excellent space devoted to both brands – neither of them international household names – is daring and imaginative.

Cordina, a high-end destination concept from Malta, is allocated excellent space – a daring move


“Cordina is an exceptional brand,” said Raïhani. “It invests continuously in its ranges, and we work closely with the company to develop an offer that suits the airport passenger. It’s also the first food brand here to provide a hostess to help shoppers, and that’s something you rarely see in food & confectionery.”

Nuance’s destination merchandise concept Spirit of Malta aims to carry the best local products from the Mediterranean


The retailer neatly links its confectionery range with a food-led destination offer, complementing its Spirit of Malta store in the main lounge. That range, not yet fully in place at the time of our visit, will offer Maltese lace, Mdina glass, wines from the Victoria hills, local cheese, as well as a range of caps, t-shirts and other fashion items. In a nice touch, the store design aims to evoke the style of a Maltese limestone quarry, with a light blue ceiling reminiscent of the sea and sky in the Mediterranean region.

A children’s gifts shop-in-shop rounds out the offer in the Nuance outlet


Nuance has built its offer around a combination of impulse purchases and value for money items – notably in the core areas of liquor, tobacco and confectionery, and allied this with the perennial attraction of the iconic brands in the fragrances & cosmetics categories.

Nuance plans to lean heavily on its themed promotional programme, notably in fragrances & cosmetics


Even in a relatively small airport the range is a broad one, and it’s supported by an aggressive promotional plan aimed at drawing consumers in through special themed events.

That broad range, well-executed merchandising, promotional plans and the category by category approach should encourage passengers to linger longer in the shop. Among the few downsides are the low ceiling height throughout the store – not a feature the retailer can influence – and the occasionally dark lighting, particularly towards the back of the shop – but this is an issue that is easily addressed.

We also think the Best Price Guarantee – now a Nuance staple in many locations – is a positive addition, especially for price-sensitive UK consumers who have an intimate knowledge of prices at Tesco, but not on local markets at their destinations. Convincing these passengers to buy – not an easy task given the fluctuating fortunes of the UK Pound and the often tricky currency conversions used to compare prices – will be critical in ensuring the continued prosperity of Nuance’s Malta business.

In short, the new Nuance store counts among the very best travel retail outlets at Europe’s small to medium sized airports.

MORE STORIES ON MALTA INTERNATIONAL AIRPORT

Malta International Airport opens terminal extension as Nuance unveils walk-through store – 11/06/09

Organic Apoteke poised for Malta opening with Nuance – 02/02/09

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