Specialty and convenience retail, plus food and beverage, are included in the categories covered in the tender released this week. The photo was taken by Nils Olav Mevatne.
Norwegian airports operator Avinor has just launched a major tender covering 62 speciality retail, convenience and food and beverage outlets that has sparked strong interest from potential partners in Norway, Europe and around the world. F&B locations at Bergen Airport are included in the contract packages.
The Moodie Davitt Report is partnering with Avinor to promote the sale of around 830 million over the five-year term, starting from January 23, 2023.
In this interview, the Executive Vice President for Commercial Areas, Joachim Lupnaav Johnsen, and the Bergen Airport Head of Commercial Aina Tysse discuss the opportunities, explain why bidders should be attracted by flexibility in the contract model, and assess the potential for market recovery and growth in
Fashion and accessories are projected to sell around 100 million over the next five years.
There are strong categories for bidders.
It's a big tender for us. We are launching 38 contracts across multiple categories at the same time, and we are bringing the biggest airports in the network into play. The state-owned airports company in Norway launched a major tender for retail and dining outlets at its largest airports.
It is seeking local and international partners with inspiring and sustainable concepts within retail and F&B that elevate the travel experience for our passengers.
This is the most recent major commercial bid process for the airports in Norway. Travel Retail Norway and Airport Retail Norway won the key contracts in January of 2021.
The focus now is convenience, fashion, accessories, consumer technology, destination merchandise and food and beverage. Each of these represents a sizeable business in its own right, made more attractive by a simultaneous launch of 38 concessions across multiple categories, allowing partners to choose whether they want to bid for one or more contracts in one or more airports.
Johnsen notes that these are strong categories for our business and a healthy proposition for our vendors, and together these will help improve the offer to our passengers.
There is convenience at the core.
The convenience and travel essentials category has the highest turnover with over 340 million in estimated sales over the term. When other services were closed during the Pandemic, Johnsen says convenience was the most important aspect of commercial activities. They are an important part of the service expected by customers who are looking for snacks on the go.
A good selection of products, a good selection of service, and a good value for money are what's important here.
The category of books and news is around 83 million. These stores are part of the offer but we want to find new ways to sell them. How can we make it more interesting? Johnsen notes that these are questions they have been having with various vendors.
The future of fashion.
Travel Retail Norway will be opening a new store at the central square of the airport that will be integrated into the core duty free shops.
The multi-brand fashion concept will remain a focus, according to Avinor. Johnsen wants vendors who can bring a high-class shopping experience. Multi-brand shops have been shown to work well for airports because they are too small and specialized for this market, and mono-brand stores were too small and specialized for this market.
There are still opportunities for brands that address emerging consumer needs. Johnsen says that they have five lifestyle stores where they are flexible on what the final concept will be. According to Jensen, the sales of 49 million from these could be an opportunity for an emerging trend to be represented, for example outdoor or activewear which is a growing area. We have set out what we think are interesting areas to pursue. We put the questions, but we believe there are different answers and we will hear what those are.
Some of these categories lend themselves to click and collect, which has grown during the Pandemic. You could order a dress and collect it at home. It is also about trying to expand the assortment through digital spaces by using the logistics capabilities that we have put in place.
It comes down to why you are at the airport, as a brand, and we have been talking to brands as well. Some are there to shift volume. It is going to be interesting to see how this falls out in the competition. I am excited to see what comes back to us, especially on the fashion side.
More pop-up spaces for trial and testing are added at airports.
A soon to be reconfiguration of departures space at Oslo is a big opportunity for fashion and other specialty retail.
It may be possible to combine a permanent location with a pop-up space to host launches or seasonal campaigns. That could be pretty cool. This layout could be used to take advantage of promotional spots and add a new experience.
The tender timetable.
January 2022, launch date.
Information meeting and virtual airport tours on January 19
The submission deadline is 8 March.
Presentations followed by negotiation in late March.
May decision on winning bidder.
June contract signing
The contract start date is in 2023.
The two locations included in the tender for consumer tech are Bergen and Oslo. Johnsen says that they had strong interest in this category. Demand for on the go electronics and accessories is increasing.
There are two souvenir shops in Bergen and one in Oslo.
The food & beverage opportunity is estimated at around 140 million with most of the business on offer at Bergen Airport.
Johnsen says there is a chance to include a Norwegian touch, feel and local flavour. We want more choices and offers that are good value for money, which is important to regain traction in F&B.
There is a difference in Bergen.
Bergen Airport is a big opportunity and the largest units are available at the key gateway of Oslo.
There are ten F&B concessions that go to market. All non-duty free retail is included.
Aina Tysse says that this is a very important tender for Bergen Airport. We need to add more retail so we are converting some spaces. One F&B space will become an activewear concept. Our region is well known for nature and many of our visitors want to experience it. That has led to demand for travel gear, so we look forward to seeing the concepts that are put forward for this.
We need to include a souvenir store in the international area of the terminal. Many tourists visit our region and this will serve their demand.
Tysse says that F&B is a big part of the travel experience. On the one hand, we need to cater to those who want a quality meal with a glass of good wine when time permits, but also on the other to serve a quick coffee and snack to the business traveller heading to Oslo or elsewhere. The price and mix must be right.
New concepts will be introduced to meet changing consumer demand, but the footprint for F&B at Bergen Airport will remain the same.
Tysse says that Bergen Airport has identified a need for an enhanced fast casual food offer and that Asian and healthy food concepts are also in demand.
She says that Sense of Place is added because of the freshness and quality of seafood in Bergen. We will keep the concept of a catch-all restaurant with pizza, pasta and burgers.
We didn't have a branded fast food outlet over the past five years, so that has been added to the area plan. How we present healthy food is something we have been discussing a lot and we will address this in the tender.
Bergen Airport requires a blend of local and international concepts in its commercial mix. We have a strong international traffic base and a high number of travellers from the region. We have to fulfill the wishes of both target groups. Sense of Place is important in store design and in the offer. We hope the partners will use the information we give them to improve their experience and enhance passenger satisfaction.
Structuring the tender.
Johnsen wants to have a good mix of operators in the future. We want to get international interest in building scale and volume. We must encourage local players with high quality opportunities. Competition is important to ensure a wide offering that meets the demands of travellers.
In announcing the tenders, the company says it wants to attract the widest possible field with contracts that are based on variable rent, risk-reducing measures and competitive terms.
Johnsen says that they are taking a similar approach to what they did for duty free. There is no fixed rent on sales premises, only back office space and storage.
The variable concession fee will be the part of the deal that includes a simplified MAG threshold. If the passenger numbers go up, both parties benefit. Both of us face the same challenge if numbers fall. If passenger numbers are less than estimated, it may be possible for the bidder to walk away from the contract.
The core Norwegian market is very strong, says Avinor as bidders assess the rate of potential recovery.
Johnsen says that this approach addresses the big question that potential bidders put to Avinor, which is whether or not the contract is safe in an uncertain time.
They see the opportunity and the dynamics in the market, but they also appreciate the path we are taking. As soon as the restrictions are loosened, we see a rise in sales volumes.
The core Norwegian market is very robust. In the domestic market, we see this in travel retail. Visitors to Norway have high interest. We have high expectations for the Summer season ahead, the airlines are making plans to extend frequencies, and we now have a direct New York to Bergen air route.
Even with the recent downturn in Omicron and the possibility of new COVID variants emerging, the outlook for the years ahead is still solid. In the first quarter of 2022, international travel will make up 30% of the numbers, but in the second and third quarters of the year, the company is expecting a recovery to around 85% of traffic.
The recovery that occurred last Summer and Autumn mirrored that optimistic view. Tysse says that calendar week 45 saw volumes reach 85% of the levels of 2019. The airlines are talking about a return to high levels of traffic once restrictions are loosened.
Projections show that the network is on track for a full recovery by the year 2024, with a further year of growth in 2023 assuming that travel doesn't stop for long periods.
Travel retail at Oslo has a new stage.
The introduction of a central square concept at the airport will represent a completely new stage for travel retail in the country. By the time new contracts begin in January of 2023, half the square will be complete, with the final additions before the Summer season next year.
Johnsen says integration is the key word. It means the integration between food and beverage, retail, pop-up concepts, entertainment, all within a nice, comfortable environment. We want to give the travellers choices. You can either spend time there and be entertained or you can walk through the gate.
The classic funnel thinking is behind us, which forces customers through the space to buy something. This will be an open space where you can buy your duty free, book, jacket, or coffee and a beer, as well as relax and have a drink in one of the adjacent spaces. Walls and barriers are traditionally used to channel travellers through the space. It will be a big change. Freedom of choice is something we believe in and it is an experiment for us.
Johnsen says that new contracts allow for more flexible operations. We are changing retail guidelines to make it all look less stiff, you can use your own logos, and you can try new ways to dress your front window. We want to facilitate the best possible customer experience, and we want the retailers and the concepts behind them to be the heroes.
Encouraging international interest.
The team is trying to get as many candidates from overseas as possible to complement the local interest in the concessions. Understanding their requirements to come and bid in virgin territory, and for contracts that don't include duty free, is one way to do that.
Johnsen says that some people missed out on duty free, but they are taking a longer view and will be in the market in five years. The simultaneous launch of 38 contracts across multiple categories opens interesting opportunities for large, international players in the other concessions. We hope they will stay in Norway for a long time. The main question for them is the swine flu. Norway is attractive to our travellers because of its high spending power and income per passenger.
We have made concrete moves to attract the local players and we need the competition, including from local champions, to offer quality concepts that also create interest for the consumer.
The proof will come when we open the documents in March, but for now we have seen good levels of interest.
The future will be created by co-creating it.
To facilitate what it calls the next generation travel retail, Avinor plans to develop an enhanced customer data and analysis platform. It says that customer insights will be shared with them to enable optimisation of operations and store offerings, as well as customisation of marketing and customer communication.
Johnsen says that we need to be present along the customer journey to take advantage of the digitalisation wave. We want to increase the operational and commercial capabilities of our partners. We aim to deliver the best insights into our customers to help our partners maximize revenues.
This can be done in two different ways. What can we do to help our tenants become more efficient? How do we make them sell more?
The solutions range from early signals on bookings, security control, waiting times, customer flow, all elements that help them plan or react better. It is also about using data sources to create better offers for consumers. You should be able to buy a fast track through security and a breakfast at the same time.
We will be doing a lot of work on data and digitalisation in the next year.
Johnsen says that the tender opportunity is a high value market. The sales volume in the Norwegian airport industry is huge when everything goes according to plan.
We will rely on the power of the consumers after we get through the Pandemic because it is temporary. The travel appetite is there and we have seen how quickly the market recovers.
If there are no passengers in the terminal, you don't have to pay. This is a big opportunity for potential partners.
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