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Summer 2000 The Tourist Trade

Tourists spend money. Surprising money. Their expenditures account for 8.2 percent of all retail dollars spent in the US. They’re obviously spending money on more than T-shirts, shells and mini-replicas of the Statue of Liberty.

According to the Travel Industry Association of America (TIA), domestic travelers spent more than $35.4 billion in retail purchases in 1998. International tourists spent $19.4 billion here. Clearly, tourist spending has exploded—but why?

Two factors in particular seem to motivate tourists to spend money out of town: to preserve the vacation experience (souvenir items), and to score bargains (non-souvenir items). Cathy Keefe, TIA spokeswoman, says American tourists shop to get a sense of local flavor, “and to take some of that regional feeling home.” To a lesser extent, the business traveler shops to have something in hand in response to the “Mommy/Daddy, what did you bring me?” question. International shoppers, on the other hand, cite bargains on brand-name products as their primary motivation; nine out of ten international visitors to the US said they plan to shop during their vacations.

According to the TIA survey, shopping consistently ranks as a top planned vacation activity. Whether a sightseeing tour, beach vacation, golf outing, resort stay, “adventure” vacation, or overnight road trip to visit family, 45 percent ranked shopping as number one, topped only by dining out (48 percent) which, after all, can be as often as three times a day.

The ubiquitous tourist

Tourists are everywhere, and specialty retail serving that market is flourishing. With nearly 50 million people planning a trip of 100 miles or more to the beach in June, July and August, traditional beach retail—T-shirts, sunglasses, water toys, souvenirs, even saltwater taffy—is thriving. Somewhere in the middle is the family “attraction” destination—Walt Disney World, Busch Gardens, Six Flags and the like—and historic destinations like Williamsburg and Plymouth. Over the years, these venues have turned tourism retail into an art. Every imaginable item under the sun is imprinted or otherwise branded—even the ice cream bars at Disney parks are shaped like those famous “ears”—then tagged, often beautifully merchandised, and sold. It’s not just kid stuff, either: from T-shirts in extra-large sizes to high-end collectibles from Swarovski crystal and Lenox china, adults buy for themselves and for adults back home.

At the other end of the vacation-venue spectrum are pricey resorts that cater to the upscale market segment, often more adult-oriented than kid-friendly. Hilton Head Island (SC), for example, draws more than 2.4 million tourists a year. Hilton Head’s The Mall at Shelter Cove, the only enclosed mall on the island, offers the affluent tourist a high-end retail experience with shops like Polo/Ralph Lauren and Williams-Sonoma. Tourism has such an impact on destination markets like Hilton Head that in each month of the high season (June, July and August), The Mall at Shelter Cove’s sales equal its December holiday sales.

Some vacation destinations are known for their specific retail personalities. While the geography and natural attractions are similar, the shopping in the New England seaport villages of Freeport, ME, and Rockport, MA, are quite different. Freeport has grown around the draw of L.L. Bean, the mail-order company’s retail store. Streets lined with outlet stores bearing famous names and stylish graphics lure tourist-shoppers, who park in large, well-lit lots and spend the day bargain-hunting.

By contrast, the shops on Bearskin Neck, Rockport’s tourist retail focus, have no parking lots. The tiny buildings clustered together on this spit of land have no heat and no plumbing, but they, and the seasonal specialty shops inside, have a charm all their own. Rockport was originally a fishing village, and shops are located in buildings that once housed fishing operations. One shack still sells steamed lobsters fresh off the boats. The local attraction for sightseers today is a fishing shack hung with colorful buoys. The town has long been known as an artist’s colony, as well, and the fishing shack is said to be the most commonly depicted artist’s motif in America. Rockport artists own and operate galleries of their own work, as well as collective galleries. Small gift shops and seafood restaurants round out the retail community.

At the other end of the tourism spectrum is Las Vegas, where specialty retailers are hitting the jackpot. “Vegas” the gambling mecca evolved into a shopping destination as an outgrowth of the huge numbers of people drawn there to win big: in 1998, 79.2 million visits included gambling as an activity. And where people gamble, they also shop. “Specialty retail and tourism are a perfect fit,” says Dianne Simmons, director of retail services for the Tropicana Hotel. “In the tourist business, it’s easier to grab them with one great idea than develop a shop that will cause them to spend time making buying decisions.”

Some tourist destinations are “all-inclusive” packages that are planned and balanced to provide visitors with everything they need in one place. Cruise ships, of course, are a prime example, as are classic resorts of old. In the late ’60s and early ’70s, the Club Med chain was among the first to do this in a big way on land. Today it’s a commonplace concept, from Sandals resorts for a little romance to Disney World packages for family fun. “Vacationers no longer want to pitch their umbrella and sit on the sand for two weeks,” says Marie Cechvala of Intrawest Squaw Corporation. “Today’s traveler is far more sophisticated, and seeks a multi-faceted experience when they travel. They want dining, they want culture, they want adventure, they want variety and, of course, they want great shopping.”

To reach this market, Intrawest develops resort communities like the one in Squaw Valley, CA. The area draws winter skiers and summer hikers to its spectacular natural beauty. When complete, the resort will include 640 homes, and 80 boutiques and restaurants. Resort villages like this one offer retailers access to an extremely affluent market—a target demographic with a median income of $200,000, and who spend 99 percent more than the average American.

Event as venue

Tourists are drawn to events that often incorporate specialty retail venues: 21 percent of American adults attended a festival while on a trip last year. That’s a total of 31 million adults attending art, music, ethnic and folk-heritage events, state and county fairs, parades and food festivals. The Norwalk (CT) Oyster Festival, for example, draws about 90,000 people to its waterfront site for two and a half days. The festival offers retail opportunities for 225 craft exhibitors and a few themed specialty retailers.

The temporary nature of festivals creates a sense of urgency: tourists buy on impulse because they know they won’t have access to those products after the event ends. And they’re in a festive mood. Think musical events: people buy huge numbers of T-shirts, CDs, posters and all manner of related paraphernalia to celebrate the moment and remember the day.

Entertainment retail concepts like Mall of America tap into a similar dynamic, creating the perfect atmosphere for the tourist shopper. These venues provide visitors with dining and entertainment, plus activities for non-shopping members of the party, thereby extending the length of stay. The tourist shopper can plan a complete day, with shopping at the core of the visit. “When people come to the Mall of America, they expect something to happen,” says Robbin Halverson, specialty leasing manager. “Right down to the carts, we try to entertain them, to make that ‘something’ happen.”

Staging an event that stylistically fits your marketplace and your demographic mix can create a successful attraction for the tourist shopper. For example, The Mall at Shelter Cove attracts the upscale customer by offering swing dance lessons and concert performances in the mall.

Getting in on the action

Mention souvenirs, and the first thing most people think of is a classic memento—like the plastic Empire State Building. The plush lobster from Maine. The Mt. Rushmore snow dome. Mickey’s ears. The full gamut of ubiquitous T-shirts, spoon rests, key chains, hand-painted clam shells and all the rest from Everywhere, USA—we love them still for the same campy souvenir appeal they’ve had for 40, 50, 75 years.

The localized product is the name of the original game, often wearable or in some way useful. The next generation of retail souvenir are those that bear the name not of the tourist destination town or city, but of a commercial establishment at the destination: for example, the golf shirt embroidered with the name of a resort, the beach tote printed with the name of a hotel, the wine glass stamped with a restaurant name.

Items that commemorate an event have been successful since the early ’60s, if not before: the New York World’s Fair, for example—or Woodstock. Today, golf tournaments and other sporting events, concerts, festivals of all kinds—even a visit from the pope—spawn souvenirs of all kinds, and have become a major category of tourist retail.

Not every purchase is just for “back home,” however. Many tourist dollars are spent on items for immediate use. Some are standard, small-ticket consumables like film and snacks. Yet the sunglasses-and-beachball market, long a staple of tourist shopping for immediate use, has an upscale side, especially with casual clothing—Hawaiian shirts, for example. Sandals, bathing suits and costume jewelry are major categories.

And don’t overlook the “hidden” tourist market—like the Florida grandma visiting the Kentucky grandkids. Countless individual, “quiet” visitors want regional mementos and goodies to take home, too. And they buy with enthusiasm.

For retailers considering products with “local flavor,” take the term literally. Food specialties from the region appeal to tourists in a big way: maple syrup from Vermont, lobsters from Boston, chicory coffee from New Orleans restaurants, Jamaican jerk spice are just a few bring-home favorites from their locales of origin.

The work of local artists and industries is also an important category for tourism retail. The gift shop of the Visitors Center of Corning Glassworks (Corning, NY) offers a complete shopping experience, from imprinted marbles at 50¢ each to renowned Steuben glass and fine American artists’ one-of-a-kind glass art. Filling the mid-range are casseroles, wine glasses, jewelry, Christmas ornaments, and handcrafted blown-glass paperweights. By emphasizing the local industry theme and addressing varied price points and the interests of the tourists, Corning Glassworks created a tourist shopping venue with as much appeal as the exhibit itself.

Capturing the tourist dollar

Specialty retailers in carts, kiosks and in-line stores can take advantage of the tourist market and the programs that draw tourists. By choosing your retail site carefully and focusing on a product mix that serves the tourist, specialty retailers can develop a successful marketing strategy. While a small retailer can’t develop partnerships such as Bloomingdales has done with an airline and hotel chain, a small retailer can observe and mimic the movements of large retailers and take advantage of the customers they draw.

FAO Schwartz, for example, developed a strong position in the Orlando and Las Vegas tourist markets. To position itself successfully, FAO Schwartz and other major retailers work with local marketing departments and visitors bureaus to attract bus tours that will benefit all the retailers in the program. Pointe Orlando, the center in which FAO Schwartz is located, also has a specialty retail program. Judy Batson of Cartworks cites adding local flavor and filling gaps in the center’s merchandise mix as two of the goals she keeps in mind as she leases this program, which is directed in large part at the thriving Orlando tourist trade.

When the tourist market is an important segment of your customer base, a specific program to serve those customers can enhance the success of the temporary tenant program. Stephania Russell of General Growth Properties, Inc. shared the vision and creativity behind a new and successful marketing/specialty-leasing alliance in the Grand Traverse Mall (Traverse City, MI). The mall had a specialty retail program in place. Management noticed a significant increase in sales coinciding with the summer tourist season. Facing the constant challenge of increasing income and trying to achieve the best asset management, a team came together and brainstormed the program and the basic question, “Why do people come here?” They came up with a fresh idea for an existing marketplace: the creation of a designated market area in the center.

The carts were leased to tenants as “Up North” Summer Specialty Shops. Tenants included downtown Traverse City retailers: those who understood the positive impact of tourism and were recruited to take part in the cart program. As with the holiday season, the carts were leased for a set rent and block of time—in this case, June, July and August.

Signage was developed to identify the location of the cart area. To support the program, signs and maps throughout the mall featured the locations and themes of the carts. To add thematic support, visual merchandising developed themed toppers for participating carts. Live trees and traditional Adirondack-style chairs were grouped in the common area to create a “Northwoods environment” feel. Boats and nautical elements were added to tie in with local Lake Michigan surroundings.

The effort was a great success. The mall program achieved 100 percent occupancy during a time when the program would not ordinarily have been full. The retailers were pleased with the mall market, and some became holiday tenants as well. Even the holdover period of September-October experienced higher occupancy based on the success of this program.

The idea of developing a “second season” based on events and patterns of a particular locale can give specialty-leasing programs added revenues and a higher profile within the mall. Localized programs can, in fact, help a shopping center differentiate itself from others in the area. To offer something special, something not found “back home,” increases the tourist’s shopping experience satisfaction.

The happy away-from-home experience is precisely what drives the tourist to visit new places, see new sights—and shop. And the satisfying tourist-shopping experience is what drives the lucrative tourist trade.

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