Trends and dynamics in airport retail PRESENTATION Trends and dynamics in airport retail ARN Conference 2017 Neil Saunders March 2017

Retail consumer expenditure growth, 2016-2021 Retail spending growth Overall US and airport retail Retail consumer expenditure growth, 2016-2021 Total US retail 14.9% Total US airport retail 28.3%

We’re cautious So we’re careful How do you expect your finances to change over the next 6 months (index, better – worse)

Inspire Tiered offerings Mix needs and wants We’re cautious What does it mean for airports Inspire Tiered offerings Mix needs and wants

We’re jaded Shopping isn’t as much fun as it used to be Percentage of American consumers who say shopping has become a bit boring 2006 28.2% 2011 39.4% 2016 50.8%

Be unique, a sense of place We’re jaded What does it mean for airports Be unique, a sense of place Look to services Change and churn

Change in total number of annual visits by US shoppers 2006-2016 We’re shopping differently Physical retail is losing out Change in total number of annual visits by US shoppers 2006-2016 Department stores -53.7% Shopping malls -33.9% Online +2810.9%

Use technology effectively We’re shopping differently What does it mean for airports Use technology effectively A place to be discovered Less is more

Total value of the US off-price market, $billion We demand value Low prices are ubiquitous Total value of the US off-price market, $billion

Duty free is less effective We demand value What does it mean for airports Duty free is less effective Bargains and deals Exclusives and brands

Airport shopper mindset Four main variants DASHER CAREFREE FROM A TO B BIG VACATION

Airport shopper mindset What they want DASHER CAREFREE FROM A TO B BIG VACATION SPEED EASE SOLUTION FOCUSED SERVICE ORIENTED TIME EFFICIENCY CURIOUS UNIQUE / DIFFERENT INDULGENCE LUXURY SERVICE ORIENTED NEEDS, NOT WANTS VALUE FOR MONEY HABITUAL FAMILIARITY EASE KILLING TIME INSPIRATION & FUN TREAT MENTALITY COST CONSCIOUS FAMILY FRIENDLY

Airport shopper mindset Different airports, different mixes LHR MHT

Conclusion The final question ? Would people come to your airport to shop if they weren’t travelling anywhere?

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