Exploitation of commercial services

A large interchange offers many possibilities. At these large interchanges large numbers of passengers will pass by on a daily basis. These passengers usually have to wait some time for their connecting mode that will take them to their next destination. Since they spend some of this time in the interchange area, it would be attractive for them to find a spot that suits their needs, other than transport. Either this is a waiting area, an attractive restaurant or a shop where they can quickly buy a sandwich on the go.

At major interchanges, the interchange manager can organise concessions for the operation of commercial space. A variety of retail and hospitality formulas can be set up as long as they relate to the needs of the travelling customer. This means that a number of different retail outlets and food points are set up at stations to satisfy user needs. The shops will not only generate additional income, but also gives consumers a feeling of security and comfort in a usually noisy and busy surrounding. There may even be entertainment, which will further improve the waiting experience. All of these different outlets can also be operated by the interchange manager, or the operator itself. However, it is recommended to present them in different marketing formulas.


NODES strategic objectiveContribution
Enhance accessibility and integration +
Enhance intermodality 0
Enhance liveability ++
Increase safety and security conditions +
Increase economic viability and costs efficiency ++
Stimulate local economy --
Increase environmental efficiency 0
Increase energy efficiency 0

Good practice

This tool has been applied in several locations. One very good practice can be seen in the Netherlands, where Dutch Railways (NS Stations) have their own department, NS Retail.  NS Retail focuses on passengers from the consumer’s point of view. Nevertheless, their main goal is to make sure that the entire interchange area looks like one where passengers can feel safe and welcome. In the Netherlands, over 5000 people work for NS Retail, which operates some 20 different marketing formulas, including both food and non-food stores. This includes NS Retail’s own formulas, as well as outlets owned by well-known retailers, such as the Dutch supermarket (AH–to-go), Burger King and Starbucks.

NS Station is a consumer-driven company where all the focus is on the experience of the passenger. As a result, the shops are open 365 days a year and the focus is on the creation of happy customers in every outlet, at every station. NS Station is constantly developing and improving the package of formulas it offers to increase passenger satisfaction. Growth in profit and results will follow naturally.

Passengers can find and purchase products and services they want to consume during their journey, as well as take with them home. In addition, staff at the retail outlets are able to inform passengers about the continuation of their journey.

The focus used to be primarily on foods, reading material and fast consumer products. Nowadays, though, passengers demand a more enjoyable stay when they are at stations. This has resulted in the creation of more attractiveness by introducing more and more shops of a non-food character.

NS has its own formulas, which are commercially and operationally run through NS Retail. These are:

  • De Broodzaak
  • Julia’s
  • Kiosk
  • RailCatering
  • Smullers

NS also operates a number of franchises based on the concepts of other well-known Dutch retailers:

  • AH to GO
  • Burger King
  • HEMA
  • La Place Express
  • Paperchase
  • Rituals
  • Seats2meet.com
  • Sissy-Boy
  • Starbucks
  • Ola Happiness.

In total, there are more than 300 outlets at the various stations. There are more than 250,000 transactions per day. NS Retail employs a staff of over 5,000. Out of the 1.2 million passengers a day passing through the interchange, 82% make at least occasional purchases at station retail outlets.

There are also other innovative ideas in place. A well known concept is the virtual Tesco shop in South Korea, Tesco virtual shopping walls . The Virtual Supermarket at Seoul metro station was opened in July 2011. The project was implemented by Tesco Home Plus at Seolleung Station, an interchange between Line 2, Bundang Line and a very busy railway station. To shop on the move, commuters simply have to scan the product’s QR code. The items purchased are saved in the shopping basket and charged to the shopper’s account at the virtual store. To check out, shoppers can use the T-money payment device also installed on their phone. Once the purchase has been completed, the products will be shipped to a chosen address. Of course, the virtual store cannot fully replace the vibrancy and personal dimension of shopping physically. Yet for commuters who have to travel long hours and live a busy life, it provides a convenient option. The service adds further value to the public transport journey and creates another reason for commuters to spend time at the public transport interchange.

In Japan, the national railway company JR East generates 31% of its income from non-transport activities including optimizing the use of space in the stations and developing commercial
and shopping activities.


Potential interchange performance improvement

A number of non-transport related services can significantly upgrade the attractiveness of the interchange as a destination, including for non-travellers. Nevertheless, it needs to be remembered that the travel experience should remain the priority of interchange functionality


Resources

Specific resources and knowledge are required to be able to operate commercial spaces and concepts effectively and without losing money.  Significant revenues can be generated, yet above all (when not closed), these outlets add significantly to the customer’s feeling of safety and security, as well providing a retail experience and convenience.

References

Netherlands Railways – www.ns.nl