Sydney Airport to open department stores at its domestic terminals
An artist impression of the Sydney Airport and Heinemann department store concept for the airport’s domestic terminals.

Sydney Airport to open department stores at its domestic terminals

Sydney Airport is upgrading the retail offerings at its domestic terminals with the opening of department store-style shops in a deal with Heinemann, which operates the duty-free outlet at the international terminal.

Under the deal with Sydney Airport, Heinemann will open the new concept stores in July next year over a combined 2,270 square metres across both terminals – 1,765 square metres in T2 and 506 square metres in T3 -, which is a massive expansion from the average size of a typical airport retail site, which is about 100 square metres.

The move comes as wait times at airports have blown out since the pandemic, due to flight disruptions and lengthy queues through security gates due to staff shortages, boosting demand for what is called transit retailing.

In some cases, brands are seeing higher sales at airports and train stations now than in traditional shopping centres, although they were hard hit during the pandemic when borders were closed.

Sydney Airport’s executive general manager commercial Mark Zaouk said Heinemann will operate the stores on a five-year concession, expanding its footprint from its current duty-free concession which runs to 2029 at the T1 International Terminal.

The department store in T2, where Jetstar, Virgin and regional airlines are based, will focus on designer street clothes, active wear and “niche fragrances”, while the one at T3, where Qantas domestic is based, will be aimed more at the business traveller with premium and luxury fashion, accessories and beauty brands.

“Heinemann delivered a strong vision for what we wanted to achieve, and it was a natural fit to extend our partnership to T2 and 3 to provide a cohesive, high-quality shopping experience across the airport,” Zaouk said.

Sydney Airport data shows that before COVID-19 emerged, retail sales came in at $374.9 million in 2019, or 24 per cent of the airport’s total revenue. Two years into the pandemic, retail revenues had slumped to $165.8 million in 2021.

The airport operates on a calendar year, so no figures aren’t in yet for this year. But there has been an 80.4 per cent rebound in domestic travellers, which it says augurs well for the new stores.

Heinemann Asia Pacific CEO Marvin von Plato said the company will extend its loyalty program to the domestic terminal shops and offer Australia-wide home delivery of goods bought in transit.

“Our new domestic concession in Sydney is a step-change in our regional business model and is a huge opportunity to engage with customers well before and after they actually travel,” he said.