London Heathrow Pilots New Online-Only Retail Model With Aspinal Of London, Calvin Klein And Tommy Hilfiger

London Heathrow is testing out the idea of introducing prestige and mid-market brands into its retail portfolio without giving them any physical stores at its four terminals, all of which are now open after some temporary closures during the Covid-19 period.

Products from three brands—Aspinal of London, Calvin Klein and Tommy Hilfiger—are currently available to buy online via the airport’s e-commerce portal Heathrow.com. The move has come as the airport has ramped up its shop openings to around 90% in line with the sharp travel spike seen this summer when the hub processed 18 milion passengers.

From losing its top position among European gateways during the pandemic—as traffic fell to levels not seen since the 1970s—Britain’s busiest airport is back to second place on the European leader board, according to summer data from airports association ACI Europe.

To make the most of the high demand from passengers for travel shopping and their increased use of digital platforms before they fly, Heathrow is stepping up its online services such as pre-order.

A digital acceleration is taking place

Earlier this month at the global duty-free trade show, TFWA World Exhibition in Cannes, France, Heathrow’s retail director Fraser Brown said: “Based on our page impressions, we are seeing the acceleration of digital with more experiential than transactional interactions that we used to see pre-pandemic. This includes older generations.”

Before Covid, the airport had a product called Heathrow Reserve & Collect and it is building on that. In Terminal 2, which has a capacity of 20 million, a retail unit has been repurposed as a pick-up point, complete with fitting rooms. Similarly a former bureau de change has also been revamped in Terminal 5 (the home of British Airways), and the airport is looking for spaces in its two other terminals (3 and 4) to create the same service.

Adding online-only brands like Aspinal, Calvin Klein and Tommy Hilfiger with a limited number of skus is potentially game-changing for the airport as it morphs into more of an online retailer. However, for the time being sales are limited to passengers picking up these products at the terminals, not at home—not just yet anyway.

“We have the ability to get the product from ordering to the collection points in 30 minutes,” said Brown. That may sound a tall order, but according to the retail head it is possible because the airport takes stock into the terminal and uses back-of-house storage to deliver a limited range to the pick-up points.

Endless aisles at the airport

“Digital is a great opportunity for us,” said Brown who sees the move to brands with no physical footprint, just ‘endless aisles’ instead, as a step forward. “Augmenting our physical stores with digitally-enabled fulfilment is important from the view of costs but, more importantly, service. It is a way to differentiate ourselves.”

Furthermore, Heathrow’s physical offer is unashamedly skewed to luxury so an expanded online offer allows the airport to introduce more mid-market brands. “You can’t be everything to everybody in a physical space,” said Brown, “but digital unlocks that possibility.”

He added that VAT is now being charged “on everything we sell” due to VAT-free sales being abolished post Brexit. He commented: “The removal of the VAT-free scheme has been a real blow to us.”

Heathrow expects passenger numbers to hit between 60-62 million, approximately 25% below 2019 levels. As headwinds of a global economic crisis, war in Ukraine and the continuing impact of Covid-19 still blow, the airport warned that it was “unlikely to return to pre-pandemic demand for a number of years, except at peak times.”

Nevertheless, retail sales in the nine months to the end of September looked perky at £1.35 billion ($1.6 billion), about 8.5% down on the £1.38 billion in the same period in 2019.