New York-based duty free retailer International Shoppes has opened an expanded, upgraded and redesigned duty free store at the JFK American Airlines Terminal 8. The location is highlighted by a 15-foot wide LED display at the storefront and a series of high-end beauty boutiques.
The new boutiques — including Kiehl’s with Lancôme, Dior, Chanel, MAC, and Estée Lauder, which features its brands Clinique, Jo Malone and La Mer — allow passengers to walk through into the duty free space (except for MAC).
Independent and family-owned, IS has almost doubled its footprint in the American Airlines terminal, with the 5,800 sqf duty free store and 4,500 sqf spread across five specialty retail stores. Stand-alone boutiques for Bulgari and Ferragamo, located across from the duty free store, opened earlier this year, and Tag Heuer /Mont Blanc, Michael Kors, and Hugo Boss will open by the end of 2016.
“We have redeveloped the whole retail landscape in the terminal. We wanted to feature high-end, recognizable brands that would not only draw international passengers into the store, but also domestic passengers,” IS Vice President Matt Greenbaum told TMI. “We have found that sometimes the words duty free put American travelers off. So we introduced these unmistakable world-class brands to bring in all passengers.”
“I think not having the word duty free there also takes down some of the borders. In the US there are so many millions of people traveling – the American Airlines terminal has almost 5 million passengers – but half of them are domestic and head for the hills when they see the word duty free,” says IS Vice President Scott Halpern.
“We tried to design something that would give everybody a comfort zone, not just the select few traveling internationally. From the first week of sales it has been a nice success so far.”
The duty free store increased personalization for many spirits and fragrance brands, taking IS’ previous store redesigns to the next level.
“Everything is new. It is all LED lighting, and massive personalization. This store continues the redevelopment we started in Boston, then applied in Philadelphia and JFK Terminal 5. It keeps evolving. This is the latest version. The storefront is totally new, especially with the 15 foot wide, 8 foot tall digital display at the front,” says Greenbaum.
For a local feel, IS features small batch and craft brands in the store, as well as spirits from the New York area.
“We have a lot of key global brands and players – the Jack Daniel’s, the Johnnie Walkers, the Glenfiddichs – these brands are available across the board and they do great. We also have the consumer who is looking for something a little different. We’ve been playing around in the small craft category for a while across all categories: gin, vodka, bourbon. We’ve gotten to the point that we have so many that we decided to give them their own home. And many of them fetch quite a nice price.”
IS has also created tasting bars in all of its stores where the customer can try what is promoted that month.
“We have a great sales force who tries to upgrade that consumer and convert them from a browser to a shopper,” says Halpern.
IS partnered with JTI to develop the tobacco section in its store.
“JTI has done a really good job making the tobacco section look more elegant, while also complying with the non-self service regulations. They work with us to make sure that all the brands we want to feature, not just their brands, have the right exposure. It has been a successful partnership,” says Greenbaum, who adds tobacco still plays a very important role in the IS stores.
“Tobacco is in the center of the store, you can see it from everywhere. We still believe the tobacco category drives a lot of the traffic into the store and we know that tobacco customers will generally buy other things in addition to tobacco.”
IS is also devoting more space to the confectionery category than ever before.
“I think confection was undersized and not very well placed in the last version of this store. We have seen an explosion in confection sales company-wide over the past few years, so we are emphasizing confection in a way that we hadn’t previously,” says Greenbaum.
The area around the cash wrap is all confectionery, with a large New York-themed visual display behind the registers supplied by the Otis McAllister Group featuring all of its confectionery brands.
“This has created tremendous impulse buys throughout the checkout process,” says Halpern.
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Cathay Pacific
The new IS Terminal 8 duty free stores are opening just a few short months before the terminal welcomes a new airline with an important passenger base: Cathay Pacific.
Cathay Pacific, which currently flies four flights a day from Hong Kong to JFK T7, will begin flying to Terminal 8 in January, and will expand to five flights a day next spring.
“It is perfect timing to have an airline move in that changes the profile of the store and have the store all ready for that airline. International Shoppes feels very grateful for American Airlines, for Westfield, and for Cathay Pacific who made this a reality,” says Michael Halpern, International Shoppes President. “We changed the building before the passenger mix warranted such stores and now we are going to benefit.”
“We’ve designed this store specifically targeting those airlines we knew Westfield and American Airlines were talking with. They did a wonderful job of bringing us one of the best airlines at Kennedy Airport in Cathay Pacific,” says Scott Halpern.
“Four flights a day to Hong Kong is a tremendous route. And we have Joe Malone, La Mer and other high-end luxury brands like Ferragamo and Bulgari. We are really targeting that consumer base.
“We have a great new partner moving into the terminal. Cathay is new business that is not only going to 
benefit us, American Airlines, and Westfield, but is going to benefit Cathay Pacific because their passenger is getting a complete luxury experience. The consumer is used to seeing certain worldwide brands and we are able to offer them from all categories.”
‘It is perfect timing,” says Greenbaum. “All the boutiques and stores will be open for the first Cathay Pacific flights in January.”
“When you had Cathay Pacific in the British Airlines terminal the passengers had to transfer to go to other cities. Now they can stay in the building and go to the entire country. It is a brilliant marketing plan from both Cathay Pacific and American Airlines’ point of view,” says Michael Halpern.
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Boston
The opening of the new stores in Terminal 8 is just one of a number of exciting projects IS is working on in the northeast.
IS began operating in Boston in 2012 in Terminals E and B working with AirMall and has since expanded into Terminal C and, most recently, into Terminal A. Today the company is the exclusive duty free operator at Logan International Airport.
“We increased business the first 2 years about 50%,” says Greenbaum. “Boston has been a great story for us. They’ve added some major airlines since we’ve moved in: Cathay Pacific, Hainan, Turkish, Japan.”
“The city is growing tremendously and has brought in a number of world class airlines that has mirrored that growth. GE moving to Boston is a huge win for the city,” says Scott Halpern.
“We have been working very closely with Massport, Airmall, and Westfield to reconfigure the brands that we have to meet the needs of the consumer base. We are in the process of bringing in La Mer and MAC. We are bringing in Chanel and Dior. We are doing a lot to maximize the revenues for the consumer base that is coming through Boston.”
IS is currently building a new store for the C-E Connector, which connects JetBlue’s Terminal to the International Terminal.
“The connector will allow Jet Blue’s passengers to connect to all the international flights and vice versa. It opens up a big market for JetBlue with the passengers never exiting the security checkpoint,” says Greenbaum.
“Later in September we are opening up a duty free store of around 1,000 sqf in that new part of Terminal E.”
IS has also added a brand new airport to its northeast portfolio, and starting in the end of September, IS is expanding into Hartford, Connecticut at Bradley International Airport. Aer Lingus will begin service four flights a week from the airport before going to daily flights in the spring.
“Bradley International Airport also has, depending on the time of the year, 7-8 flights a day between Toronto and Montreal. There is also a Saturday flight to Cancun,” says Scott Halpern.
“We are quite excited about Hartford. It is not the size of a Boston or a JFK, but the airport really wants to expand its international footprint. They have watched JFK have explosive growth over the last few decades and Boston over the last few years. We trust that they can hopefully bring in more international carriers and we can develop that business more as they grow.”
IS has also grown its business in Providence, Rhode Island since opening there a year and a half ago.
Airlines in Providence fly to Cape Verde, the Azores, as well as to Germany. The airport is undergoing a runway expansion which will allow the city to accommodate more flights in the future.
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JFK Terminal 5
IS is opening a new space in JFK’s Jet Blue Terminal 5 in October, turning a sunglasses and watches kiosk into a more permanent space.
“The new sunglasses and watches store is in a great part of the terminal that goes into their new T5I concourse. JetBlue has expanded its facility to accommodate a customs hall and more flights,” says Greenbaum.
“We’ve noticed a tremendous increase in the volume of passengers going down that way over the last year since JetBlue opened. Our revenues have climbed quite a bit, and now with a finished looking store, we are confident that they will keep going up.”
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JFK Terminal 1
IS’ other big project at JFK is the expansion of its space in Terminal 1, which will double the retailer’s footprint in the terminal.
IS is redeveloping the former Japan Airlines lounge, located immediately post security on the opposite side of the central rotunda from its current duty free store.
Greenbaum calls the new area 7,700 sqf of “prime retail space.”
“We are removing the beauty category from the duty free store and creating a series of personalized shop-in-shop style boutiques featuring 21 full-line luxury beauty brands,” he says. “We’ll start construction in October and we look to open in the first quarter of next year. Once that is complete we are doing a gut renovation of the existing duty free store. And since beauty will be removed we will have room to expand the remaining categories: fashion, luxury, confection, liquor, tobacco.”
The beauty boutiques will run in size from 115 sqf to 425 sqf, while the duty free store is 6,000 sqf.
“We will have an enormous footprint in Terminal 1, which is all international and features Japan Airlines, Korean Air, Air France, Luftansa, Alitalia,” says Greenbaum.
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Philadelphia
The announcement in August that DFASS had been awarded the duty free and specialty retail concession at Philadelphia International Airport ended more than a decade during which IS held the concession at the airport.
“We’ve been in Philadelphia for 13 years and we saw a lot of growth. The last few years had negative growth. We’re investing a lot in our other operations that are generating increasing revenues. It is unfortunate that we are not there, but you can’t invest everywhere,” says Greenbaum.
“We are pretty choosy about where we go. We get calls from other airports to come take a look, but unless we can operate it as well as our existing operations, we won’t seriously consider them. We are very interested in JFK Terminal 7, which is out to bid now.”
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New offices, expanded warehouse
IS moved into new office space in Valley Stream, New York in the end of May, allowing the company to expand its warehouse footprint, and set itself up for future growth.
“This is really a first class office facility that brings us into the 21st century. We picked up about 11,000 sqf of usable space in the warehouse. There was 25,000 sqf of space before,” says Scott Halpern. “The office space is 22,000 sqf – 11,000 per floor. We doubled the size of our offices, giving us the ability to grow over the next decade. We have a next phase for the warehouse to raise the roof and pick up more cubic space.”
“We’ve digested a lot of growth over the last 10-15 years. Now, especially with this new office facility and expanded warehouse, we are set up to continue that trend. I think we are in as good of a place as can be,” says Greenbaum.
“We put ourselves in the position to fully capitalize on the opportunities that lie ahead. We set ourselves up with an infrastructure that can support any growth that we choose,” says Michael Halpern. “Logistically Valley Stream is a great place for us. Logistics is just as important as being able to operate a retail store. This facility takes us to the next level. We attract people from New York City. You take the Long Island Railroad and you are 31 minutes from Manhattan. We attract good talented people on Long Island.”
The new offices are next to IS’ old offices, allowing the company to stay close to its “backyard.” They are a 10 minute drive to JFK. IS intends to bring vendors back to the office and conduct trainings there.
“It is also convenient to get down to Washington, to Boston. It is a nice central location. For us, it was important to stay close to the airport and grow here,” says Scott Halpern.
JFK is indeed IS’ backyard. The retailer has been at the airport since 1960, when it was still known as Idlewild Airport.
“We’ve seen it all. We’ve adapted. We were the first ones to have beauty products. We were pioneers. In the old days we did not have liquor, tobacco, and confectionery items. Our roots are really in luxury goods,” says Michael Halpern.
“We are always looking for products that are creating that next level, creating retail excitement. It is very hard to compete with the internet, but you can’t buy liquor or tobacco on the internet. We have to latch onto those products that are being helpful to us.
“We always believed that it was a partnership between our vendors and ourselves. Without them we have nothing to sell. We are grateful as a company to have such great vendor partners. The companies want to grow with us because they see what we are doing. They see the results in Boston, saw the results when we were doing our programs at JetBlue. We brought our vendor partners along with us. They are willing to go with us and take a shot with International Shoppes because they know that we understand New York, understand Boston, understand where we are growing and the passengers that are coming through our terminals.
“I don’t think the company is going to be going in a lot of areas outside the northeast, but certainly as a northeast powerhouse we feel comfortable and there is plenty of business here.”
“Over the last two years and going forward over the next twelve months, we’ve touched just about every location to have more or less complete renovations. We’re poised to grow over the next few years,” says Scott Halpern. “I think we build exceptional stores. We play close attention to the smallest things. Those are the little details that separate us from the cookie cutters. We are constantly evolving what we do as a company and making sure we are putting a better product for the customer and the airlines.”
“We have a lot of ‘what’s nexts.’ We’ve done a lot these past couple of years, but we still have a lot more to come,” says Greenbaum.
“We want tour customers to feel better when they walk out of the store than when they walked in,” says Michael Halpern. “And with a little less cash in their pocket.”
