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Why sky is the limit for airport retail

By Payal Gulati | September 10, 2019

Indian airports are witnessing a shopping boom and retailers are leaving no stone unturned to make passengers spend more time and money at their stores. Read on as Retail4Growth gets some brand perspectives on this and lists down the factors that make airport retail space such a promising opportunity.

MuftiLuxury goods, apparel, footwear, watches, accessories: Everything is a fair game at the high-flying shelves of airport stores. More and more brands are turning towards airports as an opportune location to make passengers spend more time and money at their stores. Despite higher rentals, brands are keen to be present at airports because they have access to a highly segmented audience.

India’s largest duty-free retail space at Indira Gandhi International Airport (IGIA) in Delhi has over 1,000 brands and more than 43,000 products and it leads in annual retail sales worth of Rs. 400 crore.

The Centre for Asia-Pacific Aviation (CAPA) estimates that the duty-free spend at Indian airports will reach $1.6 billion by 2021 - an eight-fold increase spread across a decade. The collective spend on duty-free, duty-paid and food and beverage is expected to touch $3.5 billion by then.

Travel retail is completely dependent on the travelling population. With 300+ million passengers in FY 17-18 travelling to/ from Indian airports, growing at 16.5 percent YoY, and travel retail projections indicate that this is bound to grow by leaps and bounds. India’s largest duty-free retail space at Indira Gandhi International Airport (IGIA) in Delhi has over 1,000 brands and more than 43,000 products and it leads in annual retail sales worth of Rs. 400 crore.

pumaAs per the report of Technavio, global travel retail market is expected to grow by 8 percent YoY upto 2021.

Industry experts say that this is just the beginning of a retail boom at airports, and that it is just a matter of time before retailing in India grows to be at par with the international airports in Dubai and Singapore.

What the retail brands say

Sharing his thoughts on this, Sanjay Roy, Executive Director, Puma India, says, “Over the last 5 years, airport retail has been seeing an upward trend in India. The privatization of airports has allowed more brands to leverage the opportunity to access a highly segmented audience. Travel retail in India is growing at a fast rate with local and international brands eyeing for a retail presence across key airports. This trend will only continue to accelerate over the coming years.”

Echoing similar views, Kamal Khushlani, Founder & Managing Director, Mufti, says, “Over the last decade, we have witnessed a spurt of travel which has now become synonymous with work, experience and an essential way of living. This has brought about a growth in airport retail industry in India. While waiting for a flight, be it stopovers or layover, the preferential purchasing pattern has always been fashion, accessories and food, with the high-ticket products being watches, perfumes and apparel.”

MAdame“Hyper connectivity is one of the main factors to this profound growth seen in airport retail. The connectivity of tier-II and tier-III cities to international destinations has increased the potential of airport retail in these areas as well, which was once considered to be nominal. Our stores at the Vizag, Nagpur and Pune airports indicate this shift in trend,” Kamal Khushlani adds further.

Sunil Kumar Sharma, Regional Manager, Madame, agrees, “Mass volume of potential customers with increasing air travel day by day and lead time before flight boarding are the key enablers converting airport zones as good retail hubs. Passengers, with increased disposable incomes, are deliberately utilizing their times by meeting their shopping requirement.” From vacationers to business travelers, airports provide brands an opportunity to engage a large captive consumer base under one roof. Additionally, infrastructure has significantly improved over the last few years which have made airports attractive shopping lounges drawing consumers with high disposable income. However, Harkirat Singh, Managing Director, Woodland Worldwide, believes that stores at airports mostly “serve the branding purpose for a brand rather than conversions or sales”.

The footfall versus transaction ratio airport stores is almost 90 per cent at, say retailers. The customer normally enters the store for a last-minute impulse buy with a specific product in mind. The time available is limited, so the transactions are faster, too.

Read the full story in the September 2019 edition of VM&RD.

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