15 November, 2011
By Melody Ng in Kuala Lumpur
Malaysia Airports last week unveiled its retail proposition for klia2, the new permanent Low-Cost Carrier Terminal at Kuala Lumpur International Airport (KLIA) set to open in October 2012.
The airport operator has projected RM1.2 billion (US$380 million) in retail sales from the terminal in its first year of operations, and urged retailers to work together with it to shape new trends in travel retail shopping.
The retail preview followed the Concessionaires Conference 2011 held the day before, where Malaysia Airports proposed a new concessionaire partnership model that defined how the airport operator and each of its concessionaires can play a role in driving profitability, bringing value and sustaining growth for mutual benefit.
The 10 November event was attended by close to 600 attendees representing over 500 potential partner companies – a larger turnout than initially expected.
In his welcome note, Malaysia Airports Managing Director Tan Sri Bashir Ahmad said that that Malaysia Airports’ objective is to leverage on the popularity of low-cost travel and transform klia2 into a destination that provides opportunities for leisure, shopping, tourism, business opportunities and employment.
“klia2 is designed to maximise on its present and future commercial value,” Tan Sri Bashir Ahmad declared. “It will be the standard bearer of future low-cost carrier terminals to come, changing the face and concept of low-cost terminals. Together with AirAsia, AirAsiaX and other low-cost carriers, we will help to transform KLIA and klia2 into a successful major regional hub for Asia Pacific.
“Malaysia is well poised to take pole position in the race for a more substantial share of the low-cost travellers’ wallet size. After all, we are home to one of the world’s largest and the most successful low-cost carrier airlines.”
Approximately 83% of international passengers traveling with low-cost carriers travel within the Asia Pacific region, with budget travellers representing over 40% of total travel in Malaysia, he underlined. In presenting the retail branding of klia2, Malaysia Airports Senior General Manager – Commercial Services Puan Faizah Khairuddin revealed that the terminal will be a technology-driven, shopper-oriented travel and lifestyle hub infused with a youthful culture.
“In klia2, we are creating an exciting retail adventure that embodies a new and differentiated retail experience, where services are a step ahead, facilities are future-oriented, offerings are robust, and experience unforgettable.
“klia2 is not just an airport. It is an airport in a mall designed to maximise commercial offerings. klia2 boasts one of the highest percentage of retail space offered by any commercial airports and will be the ultimate travel retail platform to showcase brands, products and services.
“klia2 will offer both the space and facilities to accommodate huge numbers of passengers. A klia2 retailer can expect to be part of a thriving shopping scene that will see a projection more than RM1.2 billion in sales in the first year alone,” said Khairuddin.
klia2 will offer 35,200 sqm of commercial space, spread across 225 tenant lots for retail (118 lots), food & beverage (80) and services (26). All these will be at high traffic and high visibility areas, each ranging from 15 sqm to over 300 sqm in size. The offerings will be in the form of open bars and island cafes, duplex storefronts and a duty free walkthrough placed at the start and end of the Sky Bridge, linking the main terminal, flight zones and satellite area. Additionally, the new hub will incorporate a movie and sports lounge and a kids’ zone providing retailers with a more thematic or destination retail approach.
As part of its corporate responsibility programme to support the development of SMEs (Small Medium Enterprise), Malaysia Airports will also be dedicating 5% of the commercial space to new entrepreneurs, providing them with valuable businesses opportunities in an international airport environment.
According to a survey undertaken by Malaysia Airports on low-cost travellers, 67% of them are between the ages of 22 to 44 travelling an average of once every two months. Additionally 43% of the travellers are white collar with high disposable income and the average amount of time they spend at the airport is two hours. All in all, these are premier travellers that would be passing through klia2, and with passenger movements in klia2 set to hit 30 million in five years, there is a huge opportunity to tap on the potential of this consumer group, Khairuddin said.
“Our aspiration is to change the mindset of these travellers, making them realise that their vacation begins and end at klia2,” she said. “We want to engage them and give them an experience that is ELITE – Experiential, Liberating, Innovative, Thrilling and Ever-changing – so that they will keep coming back to find out more. In short, we want them to be ‘Be Curious’.”
Malaysia Airports unveils its ‘Be Curious’ retail branding for the new klia2 at a special preview launch
Khairuddin urged potential retailers to keep those five elements in mind when conceptualising their stores for klia2, i.e. ‘Destination: Curious’. “Curiosity is a way of life. It’s what keeps your business fresh. It’s what keeps your shoppers coming back. Curiosity makes klia2 what it is,” she declared.
“The commercial spaces will be designed for success, balancing the needs of retailers and customers. We will work together with retailers to stimulate customers’ senses and empower them to do things their way. Opportunities will be there to maximize on technology, marketing platforms, trends and services.”
Open tenders for klia2 will be carried out beginning of next month, and the entire tender exercise is expected to be completed by July next year, Khairuddin revealed.
Because of the festive season, tenders will be carried out in two batches: the first batch beginning in December (before Christmas) and the second on 15 February 2012 (following the Chap Goh Meh celebration).
The airport operator aims to clear 20-30% of the tenders during the first round, and the rest in the second round.
On how the evaluation process will be carried out, Khairuddin said the evaluation committee will be made up of different functions and selection will be “outcome-driven”, based on optimal value to both the airport and to passengers.
Existing tenants at the current Low-Cost Carrier Terminal (KLIA-LCCT) will not automatically be granted a space in the new terminal, Khairuddin said. While a good working partnership is useful, they will still have to go through the tender process. KLIA-LCCT has 61 outlets across 9,259 sqm of commercial space.
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