The final moments of any destination experience are among the most memorable. Yet across North America, airports are missing critical opportunities to optimize this “last mile” of the customer journey—not through oversight, but due to complex operational realities that reveal fascinating insights about the future of destination retail.
A recent evening at Victoria International Airport (YYJ) perfectly illustrates this challenge. As passengers waited for late departures, retail spaces had transitioned to their after-hours mode, creating an environment that sparked important conversations about how airports balance operational efficiency with customer experience. Rather than a failure, this scenario represents a case study in the intricate economics of travel retail and points toward innovative solutions already emerging across the industry.
The Hidden Economics of Airport Retail
Industry veterans consistently point to staffing costs as the primary challenge. Despite appearing to have captive audiences, the economics often reveal little to no profit potential for extended hours operations. This reality check illuminates why seemingly obvious solutions—simply staying open longer—aren’t as straightforward as they appear.
Airport retail operates under fundamentally different economics than street-level retail. The reality is stark: many airport retailers are forced to close during off-peak hours simply because they lose money staying open. High rents, specialized staffing requirements, and fluctuating passenger volumes create a complex profit equation where extending hours often pushes operations into the red. Industry analysis reveals that many airport retailers historically viewed these locations as brand visibility opportunities rather than highly profitable ventures. This legacy mindset, while understandable, may no longer serve the modern traveler’s expectations—yet the economic fundamentals remain challenging.
Victoria International Airport exemplifies these challenges perfectly. Local market conditions create unique staffing constraints—the region maintains one of Canada’s tightest labor markets, compounded by airport-specific requirements like mandatory security clearances. These operational realities create barriers that don’t exist in traditional retail environments.
The Rent Challenge: Rethinking Airport Commercial Models
The fundamental challenge isn’t operational complexity—it’s simple economics. Airport retail rents have reached levels where many retailers actively lose money during low-traffic periods, making closure not a choice but a financial necessity. This creates a cascade effect where high rent structures designed for peak-hour traffic actually undermine the very customer experience that drives passenger satisfaction and repeat visits.
However, this rent-driven reality opens opportunities for innovative commercial models that could benefit airports, retailers, and passengers simultaneously:
Dynamic Rent Structures Airports could pioneer variable rent models that adjust based on operating hours and passenger volume. Lower rents during off-peak periods would make extended hours financially viable while maintaining peak-period revenue. This approach mirrors dynamic pricing in other industries and could transform the economics of airport retail.
Shared Operating Costs Rather than individual retailers bearing full staffing costs for extended hours, airports could facilitate shared-service models where multiple brands pool resources for skeleton crew coverage. A single staff member could manage several adjacent retail concepts during low-traffic periods, dramatically reducing per-store labor costs.
Airport-as-Retailer Models Some airports are experimenting with direct retail operation during off-peak hours, essentially becoming the retailer rather than just the landlord. This allows airports to capture revenue while providing passenger services, using economies of scale that individual retailers can’t achieve.
Technology-First Rent Reductions Airports could offer significantly reduced rents for fully automated retail concepts, acknowledging that lower operational costs should translate to more accessible lease terms. This creates incentives for innovation while maintaining service availability.
Technology as the Economic Solution
Given the rent-driven economics forcing closures, technological solutions become not just convenient but essential for maintaining passenger services. Automated retail options, particularly models inspired by Japanese transit systems, represent the most viable path forward for bridging the gap between passenger needs and economic reality.
This isn’t merely about replacing human service with machines—it’s about creating economically viable alternatives that can operate profitably under current rent structures. Industry experts recognize this as an opportunity to develop automated retail programs that can support early morning and late night flights while maintaining positive unit economics that traditional staffed retail cannot achieve during these periods.
Japanese transit hubs offer compelling precedents where sophisticated vending ecosystems operate profitably 24/7 by eliminating labor costs and reducing rent pressure through smaller footprints. Their automated systems don’t replace human-staffed retail but complement it, ensuring availability of essentials while maintaining premium staffed experiences during peak hours. This economically sustainable approach could transform how airports think about service continuity and rent optimization.
Larger airports like Vancouver International Airport demonstrate how market size enables extended operating hours well past midnight. This contrast with smaller airports reveals how passenger volume and market scale create different operational possibilities and economic thresholds.
This contrast illustrates a broader principle in destination retail: one size doesn’t fit all. Victoria’s intimate scale actually creates opportunities for more personalized, technology-enhanced experiences that might be harder to implement in larger hubs. The key is developing solutions appropriate to each market’s unique characteristics rather than applying universal standards.
Regulatory Complexity and Market Access
Perhaps the most overlooked aspect of airport retail challenges involves market access and regulatory requirements. Industry analysis reveals how established airport retail operators maintain significant control over market entry, while security requirements create additional barriers for new retailers and innovative service models.
These regulatory frameworks, designed for security and operational efficiency, inadvertently limit innovation. Understanding these constraints is crucial for developing realistic solutions that work within existing systems rather than requiring wholesale regulatory overhaul.
The Customer Experience Opportunity
Despite operational challenges, the customer experience opportunity remains significant. When retail spaces close during passenger wait times, it can create an unintended “ghost town” atmosphere that impacts overall destination perception—similar to how downtown areas feel when weekend retail closes.
The goal isn’t necessarily to replicate high-street retail availability, but to thoughtfully design experiences that acknowledge both operational realities and customer needs. This might involve:
- Curated automated retail offering destination-specific products and essentials
- Digital experience extensions that allow customers to engage with local brands even when physical stores are closed
- Service consolidation where remaining open services expand their offerings during off-peak hours
Innovation Models from Other Industries
The challenge of providing service during low-traffic periods isn’t unique to airports. Hotels have solved similar problems through 24/7 front desk service, late-night room service menus, and automated amenities. Hospitals maintain essential services around the clock while scaling specialized services to demand patterns.
These industries offer templates for thinking about airport retail differently—not as traditional retail that happens to be in an airport, but as a specialized service category that requires innovative approaches to availability and customer service.
Technology-Enhanced Human Service
Rather than viewing technology and human service as opposing forces, the most successful future models will likely combine both strategically. Victoria’s compact size makes it an ideal testing ground for innovations like:
- Smart retail walls that activate during off-hours with curated local products
- Virtual concierge services connecting passengers to local businesses and services
- Mobile commerce integration allowing passengers to order from closed retailers for pickup or delivery
The Destination Branding Imperative
From a destination marketing perspective, those final airport moments carry disproportionate weight in forming lasting impressions. The challenge is ensuring these moments reflect positively on the destination while acknowledging operational constraints.
Victoria’s approach to this challenge—whatever solutions emerge—will influence how visitors remember their entire British Columbia experience. This elevates airport retail from a simple commercial consideration to a destination branding imperative.
Looking Forward: The Innovation Opportunity
The conversation sparked by Victoria’s evening retail landscape points toward a broader opportunity for innovation in airport commercial strategy. Rather than viewing operational constraints as insurmountable barriers, they become design parameters for creating new types of retail experiences.
The airports that will thrive in the next decade won’t necessarily be those with the longest operating hours, but those that most thoughtfully design experiences around their unique operational realities and passenger needs.
Victoria International Airport, with its manageable scale and engaged community of retail professionals, is positioned to become a testing ground for these innovations. The insights generated could influence how smaller airports across North America approach the challenge of balancing operational efficiency with customer experience.
vThe goal isn’t to solve airport retail’s challenges overnight, but to foster the kind of thoughtful industry dialogue that leads to sustainable innovations. Sometimes the most valuable conversations begin with a simple observation: “Why is everything closed when passengers need it most?” The answer, as Victoria’s case demonstrates, is more complex and more interesting than it initially appears.
