Airport Catering - UK-Strengths and Weaknesses in the Market-Dissertation Writing Help
Market in Brief
Unique market
conditions
●
Airport
caterers work under a unique set of market conditions, many of which alter
consumer purchasing habits within these areas compared to their usual high
street spending habits.
●
Reassurance
is a central concern for airport caterers: passengers mainly want reassurance
that they are going to make their flight, which is why various catering
operators have implemented ‘time service promises’ and departure screens in
their outlets (although the latter is dependent on the approval of the airport
operator).
●
Passengers
are also looking for reassurance that they are not being exploited as a captive
audience in terms of price, quality etc. This preconception lingers, despite
the fact that most catering prices are monitored by the airport operator.
●
Are
catering operators justified in charging higher prices in airports (eg due to
higher rents?) or are consumers justified in thinking that prices are inflated
in the first place? What is certain is that passengers expect more from airport
catering outlets than they do from comparable outlets on the high street.
●
Another
unique market condition is the fact that some customers still presume that they
can’t take food/beverages bought in the terminals onto the planes themselves.
There also remains confusion over what food/beverages can be brought through
security from home, although there are obviously added benefits to airport
caterers with certain consumers labouring under the misapprehension that food
from home is prohibited.
●
SSP
recently launched a campaign in several airports highlighting what consumers
could take on board from the terminals in order to try to counter this trend,
which often results in consumers buying meal deals from retailers such as Boots
to take on board but avoiding traditional catering outlets.
Impact of the recession
●
The
single biggest impact of the recession on the airport catering market has been
the reduction in the frequency of passengers flying.
●
Consumer
spending behaviour has changed at airports during the recession: car parking
has taken a big hit as consumers save money in this area, and specialist
retailers (eg bookshops) have also suffered as consumers shop in advance in
order to hunt out the best deals. However, duty-free products and convenience
items (eg bottles of water, newspapers) have held up as has catering on the
whole.
FIGURE 1: Trends in products bought at an airport,
2008 and 2009
Base: adults aged
15+ who have travelled by air in the last 12 months
|
|
2008
|
2009
|
% point change
|
|
|
%
|
%
|
2008-09
|
|
|
|
|
|
|
Most often:
|
|
|
|
|
Newspapers/magazines
|
27.1
|
30.2
|
+3.1
|
|
Wines, spirits,
liqueurs and beers
|
21.1
|
21.8
|
+0.7
|
|
Perfumes,
cosmetics and skincare
|
19.1
|
20.4
|
+1.3
|
|
Cigarettes,
cigars, tobacco
|
13.8
|
12.3
|
-1.5
|
|
Books
|
11.0
|
11.8
|
+0.8
|
|
Food (not for
immediate consumption)
|
7.8
|
4.3
|
-3.5
|
|
Other
|
3.0
|
4.1
|
+1.1
|
|
Clothing and
footwear
|
1.4
|
1.8
|
+0.4
|
|
Jewellery/watches
|
1.6
|
1.8
|
+0.2
|
|
Audio/electrical
items
|
1.2
|
1.3
|
+0.1
|
|
CDs/DVDs
|
1.1
|
1.0
|
-0.1
|
Taken from the
TGI survey of around 25,000 adults
SOURCE:
GB TGI, Q4 BMRB 2008-09 (Jul-Jun)/Mintel
●
What
catering operators have seen, however, is consumers increasingly choosing
venues with strong and familiar branding and it is these venues that have
helped sustain the market in the face of declining passenger numbers.
●
Therefore,
whilst innovative niche brands such as Pip have helped to refresh the
marketplace and improve its image overall, during the recession at least,
market share continues to fall to the better-known brands such as Starbucks and
Pret A Manger. These big brand names are easily recognisable and offer
consumers reassurance, a key term in the eating out market at present due to
consumers’ risk-averse nature during the recession.
Market size and forecast
●
Whilst
airport expansion and redevelopment has contributed to sustaining the market in
the face of falling passenger numbers, any future market growth in airport
catering is expected to be achieved at a much slower rate than previously
experienced. A number of factors will contribute to this trend, eg the low-cost
airline phenomenon has hit a plateau whilst passenger numbers may well come
under strain from issues such as the cost of air travel (ie from increased
taxes etc that have been mooted over environmental concerns).
●
Therefore,
the industry should take a bearish attitude towards the marketplace with future
growth plans focused on value rather than volume.
In-house versus high street brands
●
It
is generally accepted that the likelihood of airport operators reverting to
in-house catering operations is slim: as much as anything, consumers have now
come to expect high street brands at these locations. Niche brands such as Itsu
and Apostrophe are also increasingly present in the market, and have been
useful in improving the sophistication and overall image of airport catering –
although in terms of market share, high street brands such as EAT and Starbucks
continue to dominate as consumers look for tried-and-trusted outlets during the
recession.
Consumer habits and attitudes
●
Retailers
(eg newsagents) represent significant competition to airport catering outlets,
partly because they generally stock less expensive items as well as more
snack-like treats such as confectionary. The popularity of these retailers with
passengers may well also be driven by the ongoing confusion amongst passengers
as to what they are and aren’t allowed to take on to planes.
●
Self-service/quick-service
formats continue to dominate over sit-down outlets as time is a central concern
to travellers.
●
Expense,
or a perception of expense, continues to act as a major deterrent to passengers
when it comes to airport catering. Fears that they are being exploited because
they are a captive market also continue to linger amongst consumers despite the
efforts of caterers to prove otherwise.
●
Few
consumers feel like they have started their holiday once they’ve got to the
airport as increasing concerns over security, expense and the fear of
uncontrollable factors such as snow or strike disruption encroach on consumers’
ability to relax whilst in transit.
●
Only
a small proportion of consumers state that they don’t usually have time to eat
at the airport, implying that they may have the time to eat there but not the
opportunity eg few, if any, catering options in/near the departure lounges, or
they find the process of travelling too stressful.
Strengths
●
Once
they pass through security, passengers are essentially a captive audience for airport retailers and caterers alike, and with
time inbuilt between check-in and boarding having something to eat, particularly
for those on short-haul no-frills
flights, is often an obvious entertainment option.
●
High street brands help to dispel
perceptions of expense and reassure consumers of quality, whilst the expanding
choice of niche chains such as Rhubarb helps to make airport catering appear
more innovative and exciting to passengers.
●
Budget travel continues to drive
appeal for grab-and-go options from
airport caterers (as long as they can demonstrate better value for money than
onboard offerings).
Weaknesses
●
Vulnerable to
downturn in air travel.
●
Preconceptions of
expense and
fears from passengers of being exploited with higher prices than the high
street continue to dog the market, particularly in regards to the older
generations such as third agers.
●
Few consumers think
their holiday starts at the airport as increased security checks and
fears over unforeseen/uncontrollable events (eg disruption from snow or
strikes) add to travelling anxiety.
●
Retailers (eg newsagents)
offering cheaper, easily portable alternatives
represent significant competition to traditional catering outlets at
airports, and with continuing passenger
confusion about what they can and can’t take on board, it is often the
catering outlets that lose out.
