Sales take off at Detroit Metro Airport

Despite September 11, local retailers are
flying high in the new McNamara Terminal

If she’d had the benefit of hindsight, perhaps Joyce Harding, director of retail operations for the Detroit Institute of Arts, would have stayed away from airports on September 11, 2001.

When news of the terrorist attacks on New York and Washington unfolded, Harding was at the unfinished McNamara Terminal at Detroit Metropolitan Airport, working on plans for the DIA shop to be opened in the new terminal.

“It was strange to be there and not have a plane taking off,” recalled Harding. “You could see the word spreading through the airport. Pretty soon all the construction workers’ radios were tuned to the news.”

It was an ominous start to the DIA’s first airport retail venture, but Harding didn’t let the tragedy shake her confidence.

“I wasn’t discouraged at all,” she said. “But I tend to be the eternal optimist. We didn’t realize the implications at the time.”

Despite the lingering effects of terrorism on air travel, optimism has paid off for Harding and other local retailers who have opened up shop at Detroit Metro. Since the new McNamara Terminal opened February 24, sales have soared for many airport retailers as their businesses gain exposure to a worldwide market.

“It’s been great publicity for the DIA,” said Harding, who is planning to open a second shop in the terminal this summer. “People can see what a wonderful institution the DIA is without even being in the city, and maybe they’ll come back and visit.”

“I’m extremely positive,” concurred Dominic Pangborn, a Detroit designer who sells his original neckties, handbags and jewelry boxes at Pangborn Design Collection in the McNamara Terminal. He also offers unique glassware, pottery, jewelry and gifts from around the world.

Sales so far are twice what he projected for the shop, and he believes they’ll double again. The store has been so successful that Pangborn is already looking at opening additional airport stores in Toronto and Amsterdam.

Local flavor
The new Edward H. McNamara Terminal/Northwest WorldGateway was designed not only to maximize convenience and efficiency for airlines and travelers, but to provide an optimum environment for airport retailers and restaurants.

With 125,000 square feet of retail space and a total of 80 shops and restaurants planned (15 have not yet opened), the Detroit terminal ranks as one of the country’s largest in terms of shopping. It will have twice the number of retailers found in the old Davey Terminal.

The mile-long main concourse contains all the major gates in a straight line. Moving walkways and an overhead tram speed passengers’ progress through the terminal. Shops are concentrated in the center, where passengers enter through security, and are strategically placed along the concourse near the ends of moving walkways and at tram stops.

The layout is advantageous because the retailers aren’t split up between several concourses, said Len Singer, spokesman for the airport.

“The entire concession program is available to all of the passengers,” he said.

The airport deliberately sought out a strong representation of local stores as well as national chains. At least 10 of the retailers have direct Michigan ties, ranging from the GM Collection and Motown Music Review to the Henry Ford Museum Store and Mediterranean Grill, a Middle Eastern restaurant. Two stores, Michigan Marketplace and
Lansing-based Michigania, focus on Michigan products.

The purpose in featuring local businesses was twofold, said Singer: it gives the airport a distinctive Detroit flavor and lets area businesses capitalize on a unique retail venue.

“Our goal was to have local products, services and shops so passengers clearly knew they were in Detroit and in Michigan,” said Singer. “Smaller companies don’t always have an opportunity to do business in an environment like this. We designed our proposal process so that would be possible.”

Michigan-related products have proven to be top sellers in the airport. Travelers clearly appreciate the opportunity to take home a piece of the Great Lakes State.

Mackinac fudge and Cherry Republic products are big hits at Michigania. In the Detroit Institute of Arts store, popular items include Pewabic pottery - handmade in Detroit - and T-shirts featuring one of the Institute’s murals by Diego Rivera.

“Anything related to Michigan sells really well,” said Gayle Harte, owner of Royal Oak-based Gayle’s Chocolates. She has found Michigan Cherry truffles to be one of the biggest sellers at her airport store.

Different world
Retailers have quickly discovered that operating a store in an airport brings many challenges foreign to a mall or downtown location.

The airport is open around the clock, 365 days a year. It’s a fast-paced environment catering to travelers from around the world.

“Time is of the essence with our customers. They’re there to catch a plane, not to shop,” said Lou Bottino, of Atlanta-based The Paradies Shops, which operates concessions in 59 airports. The company has partnered with a group of Detroit minority business owners to form Paradies Metro Ventures, which runs 18 stores at Detroit Metro.

Another difference, he noted, is that airport retailers can’t start an advertising campaign to drum up business if things are slow.

“We can’t do anything to effectively generate traffic,” Bottino said. “We are reliant on the airlines to produce traffic.”

Then there’s security, which has become an even bigger hurdle since September 11. Employees must go through security clearance before being hired - a process that can take two weeks - and pass through security checkpoints on their way to work. Moving merchandise and supplies into the store is also fraught with security restrictions.

“It’s not for everyone,” said Bill Baco, director of retail for CA One Services, a concessions company based in Buffalo, New York, that manages stores in airports nationwide, including 14 at Detroit Metro. “Operationally it’s a lot more challenging.”

Many of the local retailers at the airport have partnered with CA One to establish their presence in the terminal. They work closely with CA One on store design and merchandise assortment, but the concession company handles day-to-day operations such as staffing and buying.

With 50-plus years of experience in airport retail, CA One is able to avoid pitfalls that might trip up a small retailer, Baco said.

“We know the logistics,” he said. “We know the headaches we’re going to be faced with because we’ve done it before.”

Retailers under the CA One umbrella said the partnership has worked well.

“CA One is very professional,” said Harte, of Gayle’s Chocolates. “Not having to deal with the day-to-day work of running a retail store is nice. I just do what I like to do—make chocolate.”

Pangborn, the tie designer, is one of the few airport retailers operating on his own. He said it’s been worth it to have control over the quality of his staff.

Though making the move into this challenging setting was “frightening,” Pangborn said the gamble has paid off.

“To build a store in this kind of environment is very expensive - probably double what it would be anywhere else,” he said. “But it has proven itself right from day one because sales have been so strong.”

Pangborn, who previously sold his creations chiefly to buyers from department stores, is enthusiastic about his foray from wholesale into the retail world - especially the opportunity to receive direct, immediate feedback from customers.

“It’s almost like having our own testing laboratory,” he said. “We can see what customers like and don’t like. I can design a small quantity, put it out on the table and see how fast it disappears.”

He’s received effusive e-mails from customers around the world telling of the compliments they’ve received on a tie they bought at his store. Contrary to expectations, those far-flung shoppers often have opportunities to come back and purchase again.

“Many of the customers, especially the business customers, are here so regularly,” Pangborn said. “We seem to have already created a significant following.”

The biggest advantage of the airport location over a traditional mall is the nonstop stream of customers, Pangborn said. Indeed, it’s not unusual to see a dozen or more shoppers at a time bumping elbows inside his 980-square-foot store, which is located near the bustling center of the concourse.

“You have a continuous flow of traffic seven days a week,” he said. “Sometimes it’s overwhelming the number of people who walk through here.”

Terrorism impact
The events of September 11 threw a rock into that steady stream of airport traffic - a reality that’s more apparent to experienced concessionaires than to the local retailers who opened just this year.

“Sales have been tough,” said Bottino, of Paradies Shops. “We’re still living with the effects of 9-11.”

Last year was the first time in 11 years that passenger traffic at Detroit Metro failed to increase, according to airport spokesman Singer. Detroit’s record of continuous 4-percent growth - twice the national average - would have been broken merely because of the poor economy, he said. The shutdown in air traffic following the terrorist attacks and the ensuing drop in air travel pushed passenger counts down 9 percent for 2001, to 32 million passengers.

Tightened security further cut into traffic volume. Only ticketed passengers are allowed into the gate area, where all the shops are located. That means “meeters and greeters” can no longer browse at the stores or eat in the restaurants.

The flip side is that passengers must arrive earlier to get through security, leaving them with more time in the airport - time they’re likely to spend shopping.

“Everyone’s getting to the airport much earlier than they used to,” said the DIA’s Harding. “It’s a much more relaxed shopping environment. Shopping becomes a form of entertainment.”

Pangborn said the tight security can actually be an asset.

“Those who do get through security are the ones who are traveling and have money,” he said. “We’re not bombarded with people just loitering.”

After September 11, said Singer, the airport considered moving security checkpoints beyond the central shopping area but concluded that the 5 to 10 percent of sales that comes from “meeters and greeters” wouldn’t offset the loss of business from connecting passengers, who would be unlikely to go outside security to visit a store.

The post-September 11 decline, though, is expected to be a mere blip on the radar screen of steadily increasing air travel. The Federal Aviation Administration predicts that the 650 million people who traveled by plane in 2000 will grow to 1 billion by 2010.

Detroit Metro Airport is poised for growth as well. Traffic has rebounded gradually since September. Although passenger counts are still not back to the high reached in 2000, some 88,000 people are expected to pass through the airport every day this year, with about 75 percent of them in the McNamara Terminal.

The addition of the new terminal makes the Detroit airport one of the most up-to-date in the country. Complete renovation of the old Davey Terminal, scheduled for 2006, is expected to give more local retailers the opportunity to launch airport shops, though on a smaller scale than in the McNamara Terminal.

“Long-term, the growth prospects for airport business are still very strong,” said Singer. “The numbers of people who are passing through this terminal every day and every year make this a great place to do business.”

This article was written by Michigan Retailer staff writer Rachel Whitaker.

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