Airport becomes Singapore's premier shopping mall

If Singapore is a shopper’s paradise, Changi airport must be its golden gate.

With its plush carpeting, smartly dressed sales staff and modern decor, Changi could be mistaken for a chic mall along the Orchard Road shopping belt were it not for the signs pointing to flight boarding gates—and the jumbo jets parked beyond the glass walls.

Globetrotting shopaholics do not even have to leave the airport premises to buy a staggering range of products, from a diamond ring costing more than $100 000 to a can of soda worth 70 cents, or an electronic massage chair than can be delivered to your home.

“Changi is the largest shopping mall in Singapore in terms of sales,” Jeffrey Loke, assistant commercial director of the airport’s operator, the Civil Aviation Authority of Singapore (CAAS), said.

The CAAS declined to disclose total annual sales, citing competitive reasons, but said one-third of its revenues of more than $500-million in the year to March 2005 came from shop rentals and a percentage of their receipts.

More than 30 000 square metres of space in Changi’s two terminals—a third is under construction—are dedicated to retail and food and beverage concessions.

Tired shoppers with time to spare can go for a foot massage, have their nails done or check into the airport hotel for a nap.

Business booming

In 2004, Changi enjoyed its busiest year yet, handling a record 30,35-million passengers, and 2005 is shaping up as another strong year. In the eight months to August, 21,12-million passengers passed through Changi, up 7,3% from a year ago.

“About 70% of all travellers buy or eat something in Changi,” Loke, of the CAAS, said in an interview.

Europeans burdened by high taxes at home are the biggest duty-free shoppers in Changi, followed closely by Singaporeans and other wealthy Asians.

Including retail and food and beverage earnings, about 60% of the CAAS’s revenues are derived from “non-aeronautical” sources, the reverse of the usual revenue ratio for major airports, which earn most of their money from airline-linked services.

More than half of retail sales in Changi are contributed by liquor and perfumes, with watches and tobacco also high on the list of popular items.

In the first six months of this year, retail sales grew 13,3% over the same period in 2004 and 67% over the same period in 2003, the CAAS said.

Following an upgrade launched in 2004, some of the world’s most-coveted designer brands have opened plush outlets in the airport.

They include Prada, Gucci, Bulgari and Hermes, which sells silk windbreakers for $3 750 and lambskin shoulder bags for $3 000.

Over at a liquor concession, a limited-edition bottle of Remy Martin Louis XIII cognac in a special decanter with a diamond embedded in the stopper is priced at more than $8 000. Five bottles have been sold so far.

Competition

Singapore competes with other duty-free havens such as Hong Kong in Asia and Dubai in the Middle East.

Loke said that among major international airports, Changi enjoys “one of the highest concession revenues per passenger in the world”.

Singapore is the main hub of the so-called Kangaroo Route—the long-haul travel zone stretching from Australia and New Zealand to Europe—and Changi’s shops aim for the busy transit-passenger market.

“These are the people who will have more than two to three hours to spend here or are travelling between Europe and the region,” Loke said.

Wealthy people from developing Asian countries are among the most avid shoppers in Changi.

One Indonesian woman spent more than $100 000 at the Lee Hwa jewellery shop while waiting for her flight. Shoppers from China and India, Asia’s most dynamic economies, are also becoming key customers at Changi.

“Indonesians don’t buy a lot of items, but they buy the very expensive stuff,” said Loke.

The Japanese used to be known as the most lavish spenders among Asian travellers, but Loke said that “somehow their spending is not coming back as strongly as other nationalities”.

Singapore Retailers’ Association executive director Lau Chuen Wei said Changi “is certainly one of the larger up-market shopping malls in Singapore” and it does not hurt city retailers, some of whom have outlets in the airport.

“So, no, it does not take away very much from the downtown retailers, and especially not those who cater to the mass market,” said Lau. “And yes, retail sales generated at the airport are still a contribution to Singapore’s economy, hence a strong component of Singapore’s retail industry.”

With more than eight million visitors entering Singapore every year, tourism accounts for about 5% of the city-state’s gross domestic product and is being given high priority in long-term development plans.

Singapore, which has only 4,2-million people, aims to double tourist arrivals to 17-million by 2015, and many of them will surely be spending money in Changi airport.—AFP

 

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