Business Information Session Terminal 4 Retail Phoenix Sky Harbor - - PowerPoint PPT Presentation

Business Information Session Terminal 4 Retail

Phoenix Sky Harbor International Airport July 22, 2014

2

Administrative Points

• Everything presented in today’s meeting is

subject to change

• Please turn off all phones and electronic

devices

• Today’s PowerPoint presentation available

at:

• https://www.phoenix.gov/solicitations/35

3

Introduction of Phoenix Team

• Tamie Fisher, Assistant Aviation Director
• Roxann Favors, Deputy Aviation Director
• Paula Kucharz, Terminal Concessions Manager
• Valerie Churchwell, Outreach Project Manager
• Angela Booker, Equal Opportunity Department

4

Purpose of Meeting

• Setting the stage
• Program goals
• Existing retail program
• Market Research
• Contracting
• pportunities
• RFP process/terms
• Small business

component

• Future meetings
• Preliminary RFP

schedule

5

Communication Links

• www.skyharbor.com/about/airportstats.html
• www.phoenix.diversitycompliance.com
• www.skyharbor.com/about/securitybadging.html
• https://www.phoenix.gov/solicitations/35

6

Setting the Stage

• Why Sky Harbor?

– Sky Harbor is the gateway to our City, State and the entire Southwest – Tremendous sales environment – National and international visibility

7

Setting the Stage

• Terminal 4 (T4) is home to:

– US Airways/American – Southwest Airlines – British Airways – Aero Mexico – Air Canada – West Jet – Volaris

8

Setting the Stage

• T4 Passenger Activity

– 33.1 million total passengers – 16.5 million total enplaned passengers

• Enplaned Passengers

– Travelers boarding a flight – These travelers spend!

• Airside vs. Landside

– Airside is post-security (on the concourses) – Landside is pre-security (in the Lobby)

9

Setting The Stage-Definitions

• Enplanements

– Another way to express those passengers boarding a flight

• MAG

– Minimum Annual Guarantee paid in monthly installments

• Percent Rent

– Landlord shares in the success of the shops;

• ften called overage rent

10

For Example ONLY

• Calculations for this example

– 1000 sq. ft. location – MAG is $100 per sq. ft. – 10% percentage rent – 1000 x $100 = $100,000 MAG rent per year; $8,333 paid monthly (plus taxes) – Annual “natural breakpoint” = $1,000,000; monthly “natural breakpoint” = $83,000 – If $2,000,000 gross sales; total rent $200,000 ($100,000 in MAG rent; $100,000 in percent rent-

plus taxes)

11

Setting The Stage

• How is operating at the airport different from

shopping mall or other retailing?

– Logistics – Operating hours – “Hurry” factor – Employment – Security – Delays

12

Setting The Stage

• All concessions space is offered through a

competitive Request for Proposals (RFP) process

• The City does not direct negotiate for

concessions space

• RFP will provide all specific details, including

locations that will be offered

13

What Does It Take?

• The ability to…

– Provide an experienced team – Develop-plan-design-construct a retail concept – Operate a high quality unit generating high sales volume

• Financial resources

– Construction costs-$350/sf – A 1,000 sf store would cost no less than $350,000 in construction costs – No tenant improvement allowance-improvements vest to the City

14

Goals of the Retail Program

• National, regional and local brands and concepts

and current trends

• Optimize sales and revenues
• Increase opportunity for local and small business

participation

• Increase number of national brand name stores
• Raise quality and uniqueness of souvenir

merchandise

• Phased implementation to maintain customer

service

15

Existing Program

• Approximately 35, 331 square feet

– 14,308 sf or 40% pre-security – 21, 023 sf or 60% post security

• Gross Sales

– CY 2012: $47.2 million, $1,335/sf, $2.86/ep – CY 2013: $46.8 million, $1,323/sf, $2.84/ep

• Eight operators
• 20 contracts
• 38 existing units
• Units are 7-10 years old

16

Market Research

• Online surveys

– Summer, Fall and Spring – 50,000 surveys completed

• Intercept surveys: October– November 2013

– 4,000 surveys completed

• Focus Groups: 2 sessions on April 23, 2014

– Navigators, airlines, travel professionals and the traveling public

Key survey results will be provided in the RFP

17

Market Research Passenger Demographics

• Gender: 53% male and 47% female
• Age: 61% are between the ages of 35-64
• Education: 63% college and higher education, and

21% some college

• Income: 50% have incomes over $75,000, and 20%

have incomes between $50,000-$74,000

• Occupation: 28% professional/technical and 15%

managerial

• Sector of Work: 63% private sector

18

Market Research Traveling Characteristics

• 42% connecting, 33% are visitors flying from PHX,

and 25% are residents flying from PHX

• 29% fly 3-6 times per year, 24% fly once or

twice/year

• 19% are first time travelers, 15% fly weekly/monthly
• 59% travel for pleasure, 27% travel for business,

and 14% travel for pleasure/business

• 7% travel with children
• 86% of passengers are at PHX for over an hour,

and 26% are at PHX for more then two hours

19

Market Research Retail Preference

• Snacks, Bottled Water,

Juices, Sodas 82%

• Reading Materials

53%

• Drug Store Merchandise

33%

• Travel Accessories

24%

• Souvenirs

21%

• Chocolate/Candy

17%

• Electronics

9%

• All other categories

less than 9%

20

Market Research Personal Services

• Power Outlets

53%

• Bank ATMs

36%

• Airport Lounge

19%

• Travelers Retreat

19%

• Massage & Spa Service

13%

• Nail Salon

10%

21

We’re Looking for… Retailer Characteristics

• Experience with retailing and with concept
• Provides quality merchandise and high

customer service

• Understands the needs and preferences of

T4 customers

• Creative in developing a special/unique

shopping experience

22

Minimum Qualifications

• Within the past five (5) years, Proposers are

required to have three (3) years continuous working

• wnership, or executive management experience in

a retail business operation. An individual who holds

• r has held a position of administrative or

managerial responsibility for the operation of a retail business would meet the minimum qualifications.

• If the Proposer is a new business, the previous

executive management and retail business experience of the identified owner(s) of the new business will be considered if it meets the experience requirement above.

23

Contracting Opportunities

• Issue date – early December 2014
• One RFP – potential of three contracting

phases

• 43,307 square feet

– Phases 1 & 2 = 37,667 sf – Phase 3 = 5,640 sf*

*Contingent on space availability

24

Key Terms of the RFP

• Contract Term: 7 years with one 3-year option
• Rent: MAG or Percentage Rent, whichever is

greater

– Percentage Rent ranges from 10% to 16% – MAG set by unit/package – Reasonableness of proposer’s sales projections will be considered

• Minimum Capital Investment : $350 sf

– Compliance with Tenant Design Criteria – Renderings and material board will be required in submittal

• No Food Allowed

25

Key Terms of RFP

• Street Pricing Required
• Employee Retention Plan: Successful proposers

must hire and retain existing staff for a minimum of 90 days

• No exclusivity-no contingencies
• Selection will be based on entire proposal, not just

retailers that show the highest rent

• Proposer can win only one News & Gifts package

in each phase

26

Key Terms of the RFP

• Number of Submittals: proposer and proposer’s

partners can submit only one proposal and be on

• nly one team on each contract opportunity.
• A subcontractor may be on multiple proposals
• Forms: Various forms will be provided in RFP will

be required to be completed by proposers

• Storage Space: Limited space on-site for lease

27

RFP Details

• 18 contract packages (bundles) and potentially 3

phases

• Different size bundles for different size operators
• Packages range in size from 951 sf for a single

unit/package to 4,582 sf for four units/package.

• Pre and post-security units are mixed together.
• News & Gifts and specialty retail are mixed together
• News & Gifts units are included in 7 packages in

Phases 1 & 2

• 11 non-News & Gifts packages. There are no limits
• n the number of packages that a Proposer can win.

*Includes Phase 3 concepts; contingent on space availability

28

Proposed Concepts and Number of Units 43,307 sf

• 9 News & Gifts
• 6 High Tech/Electronics
• 4 Travel Accessories,

Handbags, Leather (national/int’l brand stores)

• 4 Open Concepts
• 3 Chocolate/Candy

(national/int’l or local brand stores)

• 3 Native American
• 3 Men’s and/or Women’s

Clothing & Accessories

• 2 Souvenirs
• 2 Contemporary Art, Art

Glass, Local Crafts, etc.

• 2 Fashion Jewelry

(national/int’l brand stores)

• 2 Duty Free/Duty Paid
• 2 Nail Bar/Massage/Spa
• 1 Non-Prescription Drugs,

Sundries, Snacks, News & Mini Medical Clinic

• 1 Cosmetics/Perfumes or

Sunglasses/Watches (national/int’l brand stores) *Includes Phase 3 concepts; contingent on

space availability

29

Contract Packages – Phase 1

Contract #1

• 1. News & Gifts

N1 2,700 SF

• 2. News & Gifts (wall)

N1 200 SF 2,900 SF Contract #2

• 1. News & Gifts

S3 1,050 SF

• 2. Cosmetics/Perfumes
• r Sunglasses/Watches*

Lby 951 SF

• 3. Men’s Clothing

Lby 948 SF

• 4. Open Concept (wall) N2

200 SF 3,149 SF Contract #3

• 1. News & Gifts

N4 1,714 SF

• 2. News & Gifts

Lby 1,646 SF

• 3. Women’s Clothing

Lby 1,022 SF

• 4. Open (wall)

N3 200 SF 4,582 SF

* Expected to be a national brand concept. ** Expected to be a national or local brand concept.

Contract #4

• 1. News & Gifts

S4 1,050 SF

• 2. Souvenirs

Lby 948 SF

• 3. Women’s and/or Men’s

Clothing N2 1,069 SF

• 4. Chocolate/Candy (wall) **

N3 200 SF

• 5. Chocolate/Candy (wall) **

S2 200 SF 3,467 SF Contract #5

• 1. Electronics

Lby 1,442 SF

• 2. Electronics (wall)

N2 200 SF

• 3. Electronics (wall)

S3 200 SF 1,842 SF Contract #6

• 1. Open Concept

Lby 951 SF Contract #7

• 1. Art & Local Crafts

Lby 1,086 SF

• 2. Art & Local Crafts

N4 1,050 SF 2,136 SF Contract #8

• 1. Massage/Nails/Spa Lby 400 SF
• 2. Massage/Nails/Spa

N4 1,000 SF 1,400 SF

30

Contract Packages – Phase 2

Contract #9

• 1. News & Gifts

N3 2,100 SF

• 2. Fashion Jewelry*

Lby 828 SF

• 3. Fashion Jewelry (wall)* N1

200 SF 3,128 SF Contract #10

• 1. News & Gifts

N2 2,100 SF

• 2. Non-Prescrip. Drugs,

News & Medical Clinic Lby 2,465 SF 4,565 SF Contract #11 News & Gifts S2 1,900 SF Travel Access./Leather* Lby 1,022 SF Travel Access./Leather * S3 1,050 SF 3,972 SF

*Expected to be a national brand concept.

Contract #12

• 1. Native American

Lby 1,066 SF

• 2. Native American

S2 990 SF 2,056 SF Contract #13

• 1. Electronics

N3 1,050 SF

• 2. Electronics

S2 350 SF 1,400 SF Contract #14

• 1. Duty Free/Duty Paid

Lby 1,069 SF

• 2. Duty Free/Duty Paid

N4 1,050 SF 2,119 SF

31

Contract Packages – Phase 3

Contract #15

• 1. Travel Access./Leather**

N3 1,000 SF

• 2. Travel Access./Leather* S2 640 SF

1,640 SF Contract #16

• 1. Open Concept

N4 1,000 SF

• 2. Chocolate/Candy*

S3 500 SF 1,500 SF Contract #17

• 1. Native American

N2 1,000 SF

• 2. Souvenirs

S4 500 SF 1,500 SF Contract #18

• 1. Electronics

N1 1,000 SF *Phase 3 concepts; contingent on space availability

* *Expected to be a national brand concept.

33

Evaluation Criteria

• Evaluation Criteria

– Proposed Concept – Financial Return to City – Management, Marketing & Operations Plan – Design and Quality of Capital Improvements – Qualifications and Experience of Proposer and Proposer’s Partners

34

Small Business Commitment

The City encourages each proposer to include small businesses in its proposal

35

Definitions

• ACDBE – Airport Concession

Disadvantaged Business Enterprise

– Owner is a disadvantaged individual – Owner is in control of business and has required expertise – Owner is U.S. Citizen – Personal Net Worth less than $1.32m – Gross Receipts less than $56.42m

• Averaged over last three years

– Certification based on federal regulations

36

Definitions

• DBE – Disadvantaged Business Enterprise

– Owner is a disadvantaged individual – Owner is in control of business and has required expertise – Owner is U.S. Citizen – Personal Net Worth less than $1.32m – Gross Receipts less than SBA guidelines

• Averaged over last three years

– Certification based on federal regulations

37

Definitions

• SBE – Small Business Enterprise

– Primary location in Maricopa County – Owners are in control of business and have required expertise – Owners are U.S. Citizens – Owners have Personal Net Worth less than $1.32m – Gross Receipts less than SBA guidelines

• Averaged over last three years

– Certification based on city regulations

38

Definitions

• SBC – Small Business Concern

– Gross Receipts less than SBA guidelines

• Averaged over last three years

– Self-identification

39

Definitions

• Goods & Services Suppliers
• Firms that provide goods and/or services that

represent a Commercially Useful Function directly to airport concessionaires

40

Small Business Participation

• Federal Aviation Administration’s mandated

ACDBE Program

• No race- and gender-conscious goals for

retail opportunities

• Race- and gender-neutral measures to

achieve small business participation

41

Small Business Outreach Requirements

Each proposer must:

• 1. Identify small business participation opportunities
• 2. Conduct outreach for small businesses

participation

• 3. Evaluate small business proposals, and
• 4. Notify each small business contacted of the

proposer’s selection decision, whether or not the small business was selected

42

Outreach Requirement #1

• Each proposer must identify business
• pportunities for small business participation

as partners or suppliers of goods and services

43

Outreach Requirement #2

• Each proposer must conduct outreach for

small business participation

– Advertisements – Aviation’s Interest List – Small business advocacy groups – phoenix.diversitycompliance.com

• ACDBE/DBE Directory
• SBE Directory
• Proposers’ outreach efforts are not restricted to

companies registered with the City

44

Outreach Requirement #3

• Each proposer must evaluate small business

proposals

– If a Proposer does not select a small business to participate in the proposal, the Proposer must explain the reason why

45

Outreach Requirement #4

• Each proposer must notify each small

business of the proposer’s selection decisions whether or not the small business was selected

– Document communication

46

ACDBE/DBE/SBE Certification

• Firms seeking certification are encouraged

to apply now

• Online application
• www.phoenix.diversitycompliance.com

47

Documentation

• Start documenting all outreach efforts now
• Outreach Documentation reviewed on a

Met/Not Met basis

• Failure to provide documentation of required
• utreach efforts = rejected proposal

48

Small Business Participation Options

• Proposer (contract holder)
• Sublease operator

– Store location

• Joint Venture partner
• Licensee
• Goods and Services Provider

– Examples: supply product, supply marketing services, provide safety training, exterminator

49

Small Business Participation

• All proposers must:

– Conduct outreach requirements – Demonstrate outreach efforts to small businesses by submitting required documentation – Proposers’ outreach efforts are not restricted to companies registered with the City

50

Partners Need Financial Resources

• Initial capital investment @ $350/sq.ft. = $350,000 for

1,000 square foot unit

• Architectural and engineering fees
• Permit and inspection fees
• Working capital needs
• License or franchise fees (if required)

51

Business Information Meeting Schedule

• Business Information Meetings

– September 16, 2014 – November 12, 2014

52

Workshops/Networking

• Workshops

– August 5, 2014

• Certification 101

– August 20, 2014

• RFP 101

– September 24, 2014

• Concessions 102
• Networking Event

– October 14, 2014

• PHX Fast PITCH

53

Preliminary RFP Schedule

• RFP Issued: Early December 2014
• Pre-Proposal Meeting

– Phase 1: December 2014

• Proposals Due

– Phase 1: February 2015

• Contract Award

– Phase 1: June 2015

• Phase 2 dates will be confirmed in RFP
• All RFP dates subject to change

54

Additional Opportunities

• Additional RFP under consideration for:

– Automated retail vending machines – Shoe shine – Foreign currency – Executive club – ATM’s

• Timeline to be determined

55

Sky Harbor Expects

• WIN for the Passenger
• WIN for the Concession Operator
• WIN for the Airport
• Best of the Best

56

Administrative Points

• Remember – Everything presented in today’s

meeting is subject to change

• Questions on today’s presentation:

– paula.kucharz@phoenix.gov

• Questions on ACDBE, DBE and Small Business

Participation

– angela.booker@phoenix.gov 602-273-2769

57

Thank you

Session is now open to questions