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 The Brancatelli File

joe A PACKET OF FILE FOLDERS
AND A FLIGHT TO BOSTON


BY JOE BRANCATELLI

August 3, 2000 -- As far as anyone can tell, business travelers have been using office supplies for as long as there have been offices and supplies. And as far as anyone knows, business travelers have been flying since about 20 minutes after the Wright Brothers slapped wings on their bicycle.

Almost a hundred years later, someone has finally figured out that business travelers would buy office supplies at the airport if anyone at the airport sold office supplies.

This long-overdue Eureka! moment occurred last year to someone at Staples, the $9 billion office-supplies chain, and the company has been slowly opening airport shops ever since. The first premiered last September in B Concourse at Philadelphia International. Another opened last winter in Terminal C at Logan in Boston. Newark's Terminal C got one last month. The fourth is due to open within the next few days at the Airmall in Pittsburgh.

George Pennington stumbled on the Staples in Philadelphia recently when he was rushing to make a US Airways flight home. "I was surprised to see it directly outside my gate," says Pennington, director of sales and marketing for the Apex Consulting Group. He ducked in, picked up some batteries and a package of cassette tapes and, "I heard people saying the same thing all over the store: 'What a great idea!' "

Pennington and the rest of us frequent flyers are exactly the type of customers Staples expected to find when it began peddling file folders, pens, computers and other day-to-day business basics inside the terminal.

"We always look at putting Staples in places where our customers already are and it's obvious that our customers can be found at the airport," says Patty Yerxa, senior vice president of sales and operations for the Massachusetts-based retailer. "We want to be where we can capture business professionals."

Yerxa says she doesn't know who first hit on the idea of putting Staples shops in the airport, but she's quick to explain why it has taken so long. Everything about airport retailing is daunting, she says.

"The lease requirements are difficult, there are lots of unique financial hurdles and clauses about what you can't carry if some other airport retailer is already selling it," she says. "And it's difficult logistically to get product on the shelves at a store in an airport."

Then there's the really big problem: the ferocious cost of airport retail space. That's especially true for a chain like Staples, which has previously placed most of its 1,100 cavernous superstores in less expensive suburban locations or the lower-cost districts of major cities. Yerxa estimates square footage at Staples' airport shops costs about 50 percent more than a standard Staples operation.

That partially explains the minuscule size and limited selection of the airport Staples. With only about 20 percent of the items available at a traditional Staples location, these places are decidedly not superstores. Compared to the 24,000-square-foot size of an average Staples, the Philadelphia shop is just 1,500 square feet. Each successive airport Staples has been smaller: Boston is 1,400 square feet, Newark measures 1,330 square feet and the new Pittsburgh location will cover just 890 square feet.

The trade off is that retail prices and margins per square foot at the airport shops are higher, too. Besides, Staples needs less space at the airport because business travelers on the fly don't want the huge quantities sold at traditional Staples stores. The company always figured the airport shops would sell smaller sizes--10-packs of file folders rather than 100-count boxes, for example--but Yerxa admits even Staples has been surprised by the demand for the equivalent of single-serve packaging.

"We really didn't go deep enough on this convenience stuff," she says. "Our airport customers quickly told us that we needed to be selling small packages of things and convenience items that they could consume almost immediately. So we're adapting."

One example of our passion for convenience items: Pre-charged batteries for cell phones are hot sellers at all the airport stores, but Staples doesn't even sell them at their superstores. Also big at the airport: self-service copying, faxing and shipping.

Staples has learned something else about business travelers: We're voracious consumers of high-technology tools and we'll gleefully shop for new gadgets between flights. "New technology is big at the airport," Yerxa says, sounding amazed. "We didn't think people would be buying technology between flights. But they are."

Every airport Staples shop also features a kiosk linked to the Staples.com website and a direct telephone connection to Staples catalog operators. But those areas have done less well than expected, Yerxa says, partially because business travelers aren't interested in stocking the office back home while they're running through airports.

The airport shops have done well enough that Staples is planning to expand to other cities and maybe even open at major train stations, too. But there's no master plan--or none Staples is willing to disclose.

"We've obviously targeted a lot of the major airports," Yerxa says. "But it's a matter of real estate. Does it have the right visibility? Can we do a lease at a practical price? I suspect we'll only be opening them one at a time, as conditions permit."

This column originally appeared at biztravel.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.