Airport retailing is about to get a dose of cool. Trendy brands including Balenciaga, Acne Studios, Bottega Veneta, Comme des Garçons and Salomon are entering duty-free shopping via a new concept store curated by Highsnobiety.
The streetwear media brand has entered a joint venture agreement with travel retail giant Gebr Heinemann to expand its Gate Zero concept store. The store, currently being tested via a pop-up in the Zurich airport, carries products from over 15 luxury fashion brands not usually seen in duty free shops, which are typically a mix of big brand-heavy beauty, handbags and fragrances.
As part of the 50-50 joint venture, Highsnobiety will lend its curatorial eye and industry credibility, while Heinemann brings its travel retail know-how in areas such as staffing, logistics and operations. The business will be largely concessions-based with a mix of wholesale for smaller labels. Highsnobiety founder David Fischer sees a “gigantic white space” in the travel retail sector.
“You could be at one of the best airports in the world and not be able to find a single brand that you normally shop at in the city you live in. For example, how is it possible that there’s no Aesop or Byredo? These are not niche brands anymore.”
The rethink on travel retail comes as the channel struggles to return to pre-Covid levels with big spenders like Chinese tourists and business travellers still limited. The top 10 tourism markets lost between $1.4 trillion and $1.9 trillion in travel spend in 2020, according to McKinsey and travel retail revenues will remain below pre-Covid levels through 2030, according to Bain. To thrive in the coming decade, brands and retailers need to change not only how they sell but what they sell.
Fischer’s ambition is for retail to account for as much as 30 to 40 per cent of Highsnobiety’s client services business by 2025. “We’re not trying to be another store because there are already great retailers out there. There’s no ambition to carry 800 wholesale brands and ramp up advertising on Google and Instagram,” he says.
Highsnobiety and Heinemann’s goal is to scale the Gate Zero business internationally, starting with a first retail permanent space in Copenhagen’s Kastrup International Airport on 13 May. The Danish city is attractive, not least because of its customer base and positioning within the fashion and design industries, but also because its airport management is “very forward thinking” and “embraces innovation and new concepts”, explains chief executive Max Heinemann, who took on the role at the 142-year-old business in March 2019. “You don’t get that everywhere.” It’s an ambitious project, with three more global retail openings in the works for 2022.
As a non-listed family business, Heinemann, which operates airport boutiques for luxury brands including Hermès and Gucci, has rarely discussed profitability but at a press conference in April 2022 it announced that turnover had risen 31 per cent year-on-year to €2.1 billion. For the next fiscal year, the company is aiming for turnover to hit 75 per cent of what it achieved in 2019, says CEO Heinemann. To get there, it will need to cater to younger, less affluent consumers making short trips — a group that will overtake business travellers and Chinese tourists, historically two of the biggest spenders at airport stores, by 2025, Bain predicts.
The appeal of physical retail
Gate Zero marks Highsnobiety’s first venture into physical retail since the media brand launched a commerce vertical in May 2019. The online store featured collaborations and drops with luxury and streetwear brands, including Prada, as well as Highsnobiety’s private label, launched last year. Fischer says the commerce business is still smaller than client services but is “growing very fast”.
For media companies, the biggest hurdle to mastering commerce is essentially running two distinct business models simultaneously. The outpost in Zurich was “the perfect testing ground” for the concept but it also proved to be more challenging than expected, admits Fischer. “We realised we needed somebody who is an expert in logistics and operations and really knows the ins-and-outs of airport retail,” he adds.
Highsnobiety’s strengths lie in curation and merchandising, apparent in the Zurich’s store retail success, he says, noting that bestsellers include sneaker collaborations such as Comme des Garçons and Converse, Acne Studios scarves and beanies, and Byredo and Aesop beauty products.
Other items that performed well were limited edition and collectible pieces, such as Medicom’s Bearbrick, which have prompted people to purchase plane tickets just to access the product, Fischer says. Highsnobiety has also produced souvenirs like hoodies, T-shirts, caps and tote bags designed specifically for the Zurich airport, which “sells tons everyday,” he says. “City-centric merchandise is normally not good quality nor well designed and our customer cares about that.”
Gate Zero in Zurich operated a concessions model but each new permanent outpost will offer a mix of wholesale and concessions. “We work with established big brands but also young up-and-coming labels who may not be able to do concession deals,” explains Fischer. “Each partnership will depend on the brand, the scale of the buy and what makes sense.”
Luxury and fashion brands appreciate that flexibility. For a handful, Gate Zero is their first airport retail presence, says Fischer. Trust is another key factor, adds Heinemann. “Brands want to test themselves in a competitive environment that speaks of quality. With us, they have two parties they can fully trust.”
Gate Zero in Zurich also features an exhibition space that hosts a new brand installation every one to two months. While that won’t necessarily be replicated at the other stores — it’ll depend on the size of each retail space, says Fischer — exclusive products and unique content, displayed via a multimedia screen space, can always be expected. Fischer hopes this merging of commerce with editorial storytelling will continue to attract potential brand partners to work with Highsnobiety. He envisions the team striking partner deals that involve not just a social media campaign but 360-degree activations that include experiential retail and physical marketing projects too.
Staying true to Highsnobiety’s audience is key. “We’re focused on converting readers into customers rather than attempting to buy consumers to come over. It’s an exercise of growing our business in a healthy way where our high-margin own products and third party products remain in balance. It’s not growth at all costs.”