Aug. 17 (Bloomberg) -- German bratwurst and Hugo Boss suits are set to vie with croissants, camembert and other French staples in shops at London’s Channel Tunnel terminus as the station prepares for direct trains from Cologne and Frankfurt.
Eurostar Group Ltd. has been operating to Paris and French-speaking Brussels for 16 years, giving St Pancras International a distinctly Gallic air. That will change in 2013 when Deutsche Bahn AG adds the new routes, while Eurostar itself aims to reach Germany a year later and may also serve Amsterdam and Geneva.
St Pancras is already reviewing its retail lineup ahead of the influx as it seeks to maximize returns for HS1 Ltd., which paid 2.1 billion pounds ($3.5 billion) for a 30-year concession including the station last November. Wendy Spinks, the company’s head of revenue development, said the aim is to adapt shops to the evolving passenger base while persuading people to part with more cash by creating an airport-like shopping experience.
“Bringing in Deutsche Bahn adds to the international mix,” Spinks said in an interview at the Searcys Champagne Bar which overlooks the station’s continental platforms. “We really try to cater to all our audience, as well as to create an environment where people are tempted to make impulse purchases.”
St Pancras, which attracted 40 million travelers and shoppers last year, features 90,000 square feet of retail space housing brands ranging from shirt-maker Thomas Pink -- a unit of Paris-based Christian Dior SA -- and shoe store LK Bennett Ltd. to the coffee kiosks and newsstands more typical of stations.
Continental-style outlets include Sourced Market, which features a charcuterie and fromagerie -- meat and cheese counters -- and branches of Belgian chocolatier Neuhaus and Le Pain Quotidien, a boulangerie and patisserie that sells baked foods including croissants, baguettes, tartines and pains au chocolat, as well as hot meals and predominantly French wines.
Spinks says studies show 84 percent of people using the station, including travelers to the English Midlands, belong to high-income demographic groups. Shops are let for three to 16 years and generate 110 million pounds in annual revenue. Vendors pay a percentage of takings, with a guaranteed minimum fee.
Discussions with German retailers are “ongoing,” said Ben Ruse, an HS1 spokesman, while declining to specify which companies are involved until contracts are signed.
Deutsche Bahn will probably begin services through the Channel Tunnel late in 2013, spokesman Andreas Fuhrmann said today. An Anglo-French safety committee has given the go-ahead for the use of “distributed traction” in which engines are located below passenger cars, but has yet to approve shorter trains requiring modified evacuation procedures, he said.
The Berlin-based company plans to run two 200-meter (650-feet) train sets, one from Amsterdam, the other from Frankfurt, which would be coupled in Brussels before running through the tunnel. The trip from Frankfurt will take about five hours.
Planet Retail analyst David Gray said the relative health of the German economy will provide a boost for St Pancras, with gross domestic product up 2.7 percent in the 12 months through June versus 1.6 percent in France and 0.7 percent in the U.K., though the new shoppers may not be the most free-spending.
“German consumers recognize a good deal, so from a grocery point of view they’re not the best customers,” London-based Gray said. “But the German economy is growing slightly more strongly than the U.K. so it’s good news having that new market.”
French visitors preparing to board Eurostar trains at St Pancras yesterday expressed little enthusiasm for German fare.
The station’s shops are attractive -- “sympa” -- said Ludivine Decaux, a Paris student who bought lunch at Marks & Spencer Group Plc. Belgian Franz Vanheygen, a retired grain trader, said he eats at St Pancras when visiting with his grandson. Asked whether his appetite might extend to bratwurst, he laughed and said: “I’m not going to comment on that.”
Spinks, who headed London Heathrow airport’s retail team before joining HS1, aims to encourage travelers to spend more time in shops by applying concepts from Europe’s busiest hub, which generated 393 million pounds in retail revenue last year.
German trains should pull in people who previously made the trip to London by plane and who are already amenable to airport-style shopping, she said. To encourage that trend St Pancras has begun displaying information on screens inside shops rather than on a single large board outside so that passengers can spend longer on purchases without worrying about their departure.
“We like to push the boundaries,” Spinks said. “It’s about understanding people’s behavior and what they do when they’re travelling. If they don’t have information on when their train departs it will change their mood and whether they shop or not.”
Outlets at travel hubs, even ordinary railway stations, are generally “very high margin” and outperform those elsewhere, Planet Retail’s Gray said, though convenience items do better than bigger-ticket purchases such as clothing and electronics.
“These are prime locations where retailers can charge a lot more and the customer is very attentive,” he said. “You get a lot of volume because you get a lot of passing trade.”
WH Smith Plc, a U.K. magazine retailer and stationer with more than 1,000 stores, gets better margins from outlets serving travelers, while Tesco Plc, Britain’s top retailer, opened a branch at Glasgow airport last year, Gray said. Retail sales at St Pancras are generally “trending ahead” of city-center shops, HS1’s Ruse said in an e-mail.
Owned by Canadian funds Borealis Infrastructure Management Inc. and Ontario Teachers’ Pension Plan and named after the High Speed 1 line to the tunnel, which is part of the concession, HS1 also aims to lure people to St Pancras who live or work nearby.
BNP Paribas SA, France’s largest bank, agreed in December to buy an office development in the area, while Saint Martins art college is relocating there in October. Guardian Media Group Plc moved 1,700 people to the nearby Kings Place block in 2008.
“The area is nice enough to sit around and it’s a good place for people who work locally,” said Isabel Cavill of Planet Retail. “I don’t think it’s a matter of catering for French or German tastes but positioning as the gateway to Europe.”
Some people, though, may take more convincing. Charles Detain, from Mitry-Mory, 24 kilometers (15 miles) northeast of Paris, said he admires the station’s Victorian architecture but that its food offerings are inauthentic and poor value.
“I know the food of France and for me this is for the tourists,” he said. “I’d prefer a McDonald’s. It costs less.”
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