Meeting Host and Presenting Sponsor

“Preparing the Emerging Business

Owner for Participation in the

Concession Space”

Presented by: John Cugasi, SVP Planning and Development, The Paradies Shops December 3, 2012

Meeting Host and Presenting Sponsor Overview • • • • • Airport vs Street business model differences Concept Strategy Due Diligence efforts Adding Value as an owner (Roles and Responsibilities) Preparation – Steps you can take now

Airports vs Street – Know the Difference!

Key Business Model Differences • • • • • • • Sales per square foot Margin/Pricing Rent Labor Cost Operating Hours Construction Costs Distribution

Concept Strategy Considerations • • • • • • Enplanements Capture rate Historical spend Business vs Leisure Dwell Time Airport Preferences • Detailed specifications • Local vs national • Design Criteria and Branding

Concept Strategy Travel Store/Convenience – Z Market

Concept Strategy The Decline of Books and Reading Materials

Concept Strategy Localized Travel Market – Sweet Auburn Atlanta

Concept Strategy Food focused concepts - Napa Farms SFO

Concept Strategy Electronics Explosion

Concept Strategy Jewelry - Pandora

Concept Strategy Personal Care – Kiehl’s

Concept Strategy Fashion – Michael Kors

Due Diligence Efforts

Due Diligence: Do you understand and agree with the pro forma?

• • • • Sales per enplanement rationale Margin - does it reflect pricing strategy?

Expense items – in line with historical experience?

Capital investment levels – realistic and reflecting airport environment and size of store?

• ROI and payback – are these acceptable and consistent with your business plan?

Due Diligence: Are you intimately familiar with your lease?

• • • • • • • LOD and lease line considerations Operating hours Use Clauses Take back or use of additional space CAM, Marketing or other charges Distribution charges and policy Protection in event of serious traffic loss

Ownership Responsibilities - Pro Rata investment in all aspects of the business • • • • Capital Contributions Roles and Responsibilities – day to day management of the business Major business decisions Ongoing communication

Attributes of a Successful Airport Retail Business Owner • • • • • • • Knowledgeable and conversant with business details Strong and consistent presence in the business Customer focused Responsive to the business and airport’s needs Innovative – Continuously looking for improvement Outstanding communication skills A passionate sense of community

Community – a key differentiator!

What can you do now to prepare for a possible opportunity?

• • • • • • • • Get Certified - Codes matter!

Meet with the airport Attend all relevant public meetings and outreach events Obtain a list of attendees, research them and reach out to those of interest Spend time watching and observing airport businesses Get copies of airports concessions reporting (if available) Get a copy of a recent airport lease and review carefully Develop and continue to own your business plan