Would more stores help KCI? Airport is shopping for solutions

As air travelers, Kansas Citians are not known for throwing around big bucks shopping at the airport.

Which raises at least one good question: Why shop at an airport, anyway?

Yet Americans are doing so in other cities. And that matters to Kansas City International Airport, where retailers posted about $29 million in sales last year — a few cents shy of just $3 per passenger.

Supporters of a proposed new terminal want travelers to be able to browse a T-shirt rack or cosmetics stand without criss-crossing through cumbersome checkpoints. And sales affect KCI coffers, too: For every meal not ordered, every souvenir not bought, a pinch of airport revenue is lost.

A single, $1.2 billion terminal would aim to make KCI more retail-friendly, with a shopping environment that’s easier to see and stroll about. That means placing the bulk of shops and restaurants behind a centralized checkpoint, accessible to all gates.

However, some say the configuration could slow the pace at which travelers can carry out their main mission — to sit themselves down in a plane.

Local critics of a single terminal contend that the low retail revenues could be tied to the relatively short time it takes for travelers to enter KCI and board an airliner. And that, they say, is a good problem to have.

Because of drive-to-your-gate ease enjoyed by few other airports, “we’ve been trained in Kansas City to get on a flight without having to show up two hours in advance,” said Kevin Koster, who sits on the city’s advisory board on airport improvements. “We’re not there to browse in shops. ...

“The only way to make KCI more accessible for retail is to make the airport less convenient to travelers.”

Still, that shopping-mall feel is what many big-city airports seek. It makes long layovers feel less miserable, and a layover at KCI can be just that.

Retail also can help raise needed revenues for airports to maintain facilities. And on that score, one study shows KCI at the very rear of the pack of peer airports across the nation.

The problem largely rests in the existing terminals’ narrow, circular design. Most of the shops stand outside secured areas, away from passengers waiting to board after passing through security checkpoints at the gates.

Jon Stephens, president and chief executive of the Greater Kansas City Convention Visitors Association, said he hears it a lot from visitors.

“If you’re on the other side of that glass looking at something you need to buy, but you don’t want to go through security again, that’s going to make for a pretty inconvenient experience,” Stephens said.

Airports can benefit from a brisk shopping scene through contracts with retailers that entitle the airport to a cut of sales.

Here, those revenues appear meager.

Consultants Frasca and Associates compared KCI to other U.S. midsized airports serving 6 million to 14 million total passengers a year. KCI, with nearly 10 million passengers, was making less revenue on concessions per departing passenger than any of its 19 airport peers.

The study found that KCI makes only 66 cents per outbound traveler off of concessions.

The average cut of revenue from sales at the comparable airports was $1.58 per departing passenger. The San Jose International Airport in California collected the most revenue — $3.25 per departing passenger.

“The more an airport can make on concessions, the less it has to charge the airlines,” said Larry Belinsky, Frasca’s managing director. Low user fees entice carriers to locate to airports and add routes.

“The argument can be made that if there were more concession opportunities, people will spend more at the airport,” Belinsky said. “Right now, those opportunities don’t exist.”

While the airport would like to enhance its revenues through concession sales, that’s not the reason KCI needs a more diverse and accessible retail component, said David Graham Long, deputy director of properties and commercial development for the city’s aviation department.

“Our business model is not based on a concession program,” he said. “What we’re thinking of is customer convenience.”

Whether motivated by revenues, convenience or mere fashion, airports around the globe are incorporating more retail offerings. The toniest world travelers can even buy luxury cars at some airport dealerships overseas.

In the United States, airport retail began to climb to new altitudes in the mid-1990s, about the time shop-heavy Denver International Airport opened.

At many smaller terminals redeveloped in the years since, products and services available to travelers have swelled from fast food and convenience-store fare to high-end clothiers, fine jewelry, yoga studios and health clubs.

Long said KCI could use more specialty shops on the order of The Sharper Image. Spa services might be nice.

Some improvements have been made in recent years to put new KCI pubs such as Pork Pickle within secured areas near gates.

That’s good for the Southwest Airlines passengers waiting to board at those gates. Not so good for those flying other airlines.

Vending machines that take credit card swipes now offer earbuds and $300 iPad Minis from Best Buy. Another machine dispenses baby wipes and diapers from Babies on the Go.

A decade ago, additional space for concessions was figured into a $283 million improvement package at KCI. But a recent pair of estimates for renovating the existing facilities focused on upgrading the basics — roadways, elevators, air conditioning, building repairs — not on retail amenities.

Airport officials said the costs of any retail improvements at the present facilities would be borne by concessionaires.

But where else in the existing terminals might those concessionaires locate? The sublevel is a mish-mash of airline baggage rooms, plumbing and power lines. Adding upper levels could put more strain on the 42-year-old structures than they can bear.

Long said KCI just can’t keep shoehorning in, or bumping out much more, to create a workable blend of passenger traffic and nearly three dozen concession outlets in the two “circular tube” terminals still in use.

A long walk along the Terminal B concourse shows why.

It’s like a retail Easter egg hunt.

On the north end of the big curve, Plaza News and Books shuttered after Southwest moved its baggage claim and boarding areas toward the terminal’s center.

Looking down the concourse, walking passengers can see only about 75 feet of interior ahead of them because the walls curve away from view.

For lengthy stretches of the terminal, they see nothing but walls and signs promising that a place to eat is just around the coming curve.

“If you can’t see a shop from your gate, you’re less likely to step away and seek it out,” Long says. “The more people walking past, the more likely they’ll stop at some place and buy. That’s retail 101.”

He keeps walking toward the opposite end of Terminal B: “The PGA Tour Shop is down here. Trust me.”

You can’t see it until you’re right there, where outgoing passenger Doug Peete of Leawood flips through the clearance rack of pullovers.

“Twenty bucks is a good deal,” says Peete, who makes his purchase and hurries toward the gate where he’ll board a flight to San Diego. “I never knew this PGA shop was here. ... I just found it walking around for exercise.”

But Peete remains unsold on the need for a new terminal.

“I, for one, love our little airport,” he says. “I like being able to get in and get out.”

The future of in-store retail is seen as bumpy, at best, given the rise of online shopping.

But many airport retailers sing a different tune. They cite a clientele captive to their air-terminal surroundings and often more spend-happy than consumers outside an airport.

“Once regarded as purely utilitarian infrastructure ... today’s airports are increasingly immersive with places to eat, shop, sleep, socialize and even get married,” heralded a convention brochure for retailers who gathered earlier this month in Orlando, Fla.

A plus for vendors: Almost two-thirds of purchases at airport retail shops are “impulsive,” according to a recent report on buying trends in North American airports put out by Canadean, a market research company.

One airport retail developer, Westfield Group, manages more than $860 million in concession sales each year across eight major U.S. aiports, from JFK International in New York to Los Angeles International.

“What works for one airport doesn’t work for all,” said Westfield spokeswoman Angela Heuer.

At KCI, with or without a new single terminal, retail activity could never rival the bustle and mall-style opulence of major hub airports. And it shouldn’t strive to, Long said, noting that retail prospects can change when a facility’s air operations do.

In Pittsburgh, for example, the opening of a modernized international airport in 1992 ushered in AirMall Pittsburgh, a mix of more than 100 upscale and so-called grab-and-go retailers serving throngs of transfer passengers connecting at the US Airways hub.

But US Airways later did away with the hub. Pittsburgh International Airport now is reconfiguring its retail space to address declining revenues and new traffic patterns. Passenger totals there were down last year to early 1990 levels.

Even if Kansas City builds a new terminal and begins to perform as well as peer airports in raising retail revenues, conservative policy analyst Joseph Miller calculated the airport should only expect another $1 million or $1.5 million per year in extra funds.

Hardly much to offset the cost of building a new facility, he said.

“Remember that debt service for a $1.2 billion new terminal is likely to be close to $70 million a year,” said Miller of the Show-Me Institute, a free-market think tank based in St. Louis. “In terms of making a new airport affordable, retail sales are not a well-thought-out argument.”

And there remains that other argument: Why shop at an airport, anyway?

“It’s basically mall food,” said frequent flier John Murphy of Friends of KCI, which objects to a heavy city investment in a new terminal.

While the glitzier airports that he travels through do offer an array of mall-style merchandise, Murphy puzzles over what he thinks he sees:

“Everyone’s window shopping. Nobody’s buying.”

This story was originally published March 28, 2014 at 11:01 PM with the headline "Would more stores help KCI? Airport is shopping for solutions."