First-Ever Department Stores At Sydney Airport Open The Door To Domestic Retail Market

Sydney Airport plans to open Australia’s first department-store style retail outlets at its two domestic terminals next year in partnership with the hub’s existing core duty-free concessionaire, Gebr. Heinemann. This gives the German travel retailer a foothold in the domestic market, initially through home delivery.

Together, the new stores in terminals two and three will span 24,500 square feet and the first one is scheduled to open in July 2023. They will sell the typical categories found in international duty-free stores ranging from fashion, accessories, watches and jewelry, to perfumes, cosmetics, skincare, plus confectionery and wines and spirits.

T2 will house the largest unit spanning 19,000 square feet, with a much smaller footprint of 5,500 square feet allocated to T3. According to a statement from Sydney Airport, a mix of “iconic Australian brands” and international bestsellers will be available across both terminals, with the retail mix adapted to each one’s passenger profile.

For example, the T2 store will source heavily from designer streetwear and athleisure brands, as well as in-demand product categories such as niche fragrances and clean beauty. The aim is to offer a more playful retail environment serving a chiefly leisure-oriented traveler who is younger and more conscious of current trends.

The smaller T3 department store aims to deliver an upscale, luxurious design with a retail offer focused on premium and high-end fashion, accessories and beauty brands that appeal to more seasoned business travelers and higher-spending shoppers.

A five-year concession and home delivery

The decision to go for an all-in-one shopping concept is a big win for Heinemann which will operate the two new stores on a five-year concession. The deal means the travel retailer can expand into all three of Sydney Airport’s terminals, extending its footprint from the current duty-free concession at the T1 international terminal, which runs until 2029.

Sydney Airport’s executive general manager – commercial, Mark Zaouk, commented: “Heinemann delivered a strong vision for what we wanted to achieve, and it was a natural fit to extend our partnership to T2 and T3 to provide a cohesive shopping experience across the airport.”

Heinemann Asia Pacific’s CEO Marvin von Plato described the new domestic concession at Australia’s busiest airport as “a step change in our regional business model.” He added: “It is a huge opportunity to engage with customers well before and after they actually travel.”

That engagement will create a potentially much closer relationship with Australian consumers as well as new brand partnerships thanks to the wider category remit for the retailer. George Tsoukalas, Heinemann Australia Managing Director, said: “We are now able to offer more brands and value-added services like (Australia-wide) home delivery.”

The retailer’s full domestic terminal product assortment will be available to buy through its online shop and it will also deploy its Heinemann & Me loyalty program in its airport department stores enabling it to build up datasets and shopping profiles of individual customers.

The decision to take a department-store approach comes as the flagship T1 retail offer has also been undergoing a significant luxury transformation, the latest opening being the largest standalone travel retail store from Louis Vuitton, first announced last summer. It appears that Sydney Airport wants to recreate the vibe of T1 in its other terminals. Zaouk said: “The retail experience in our international terminal is among the best in the world and I’m excited that we are now able to bring a similar experience to domestic passengers.”

In addition, due to the slow return of air travel in the wider Asia Pacific region, domestic travel in Australia is far busier than international right now. October year-to-date domestic passenger numbers of 17 million far outweighed the six million international. Even if the ratios return to 2019 levels next year, a more targeted retail plan for domestic travelers makes sense as they make up the biggest passenger volumes at Sydney Airport in regular non-pandemic times.