The Hindu Business Line : Luring the spendthrifts

Countries such as Dubai, Malaysia and Singapore are attracting tourists with shopping festivals. Indians are a good target as they don’t hesitate to indulge when they see value..

Anjali Prayag
Anjana Chandramouly

According to Tourism Statistics 2006, the total expenditure of visitors (TEV) to Singapore was S$690.6 million and Indian tourists spent the most on shopping (S$364.3 million), compared to other expenses. In fact, shopping constituted the highest pro portion, almost 53 per cent of the TEV.

Retailers in the country and tourism boards abroad are convinced that not only do Indians view retail as therapy, but they are, as a consuming community as resilient today as they were before the slowdown.

“India and the outbound Indian traveller remain as resilient as before. This is testimony to the fact that our travellers are value-for-money-conscious and thus will not shy away from spending when they see a strong value proposition,” says Carl Vaz, Director - India Representative Office, Government of Dubai - Department of Tourism and Commerce Marketing. Indian travellers are amongst the highest spenders opting for the best of luxuries, be it star category accommodation, shopping, entertainment or any other indulgences, according to P. Manoharan, Director, Tourism Malaysia, India. Branded watches, jewellery, branded fashionwear, lifestyle accessories, electronic gadgets and toys make up a large portion of Indians’ purchases. It also helps that most Indians travel with their families and, therefore, their average expenditure is significantly higher.

Tourism-oriented retail ambience

According to management consulting firm Technopak, the outbound Indian tourist, on an average, spend $900 on shopping, and their estimated overall shopping spend would be around $1.7 billion annually. In fact, tourist destinations such as Dubai, Singapore and Malaysia have built their tourism promotions based on the shopping themes. Take the case of the Dubai Shopping Festival. Unofficial estimates, based on general feedback from tour operators, suggest that the shopping spends vary between $1,000 and $1,500 per person during a three- or four-night tour of Dubai. However, during the Dubai Shopping Festival, the per diem spends would increase sharply on account of the lucrative offers. “Dubai is a very attractive shopping destination for the discerning Indian traveller on account of Dubai’s low import duties and no corporate tax or income tax regime. Furthermore, the large array of brands and quality serve as a strong influence on purchase decisions even though some brands are available in India,” says Vaz. In addition, these countries also build a retail ambience around holidays that include visits to malls like the Ibn Battuta Mall, Dubai, one of the world’s largest themed malls. The Ibn Battuta Mall has a tourism-oriented theme, which is significant considering the fact that Dubai earns considerable revenue from tourists. Siam Paragon, a shopping mall in Bangkok, Thailand, which is also one of the biggest shopping centres in Asia, records a footfall of about one lakh people a day running up an average bill size of $500, with some of them spending close to $2,000 on top global brands. And estimates suggest that about 25-30 per cent of these visitors are Indians.

To enhance tourism yields and position Malaysia as the premier shopping hub of South Asia, the Ministry of Tourism, Tourism Malaysia and the Shopping Malaysia Secretariat have turned shopping in Malaysia into year-long events with three main shopping festivals: Malaysia GP Sale, held as part of the F1 Grand Prix celebrations; the Malaysia Mega Sale Carnival, a 59-day shopping festival held from July to September; and Malaysia Savings Sale, the year-end sale when most items from apparel, accessories and home décor to holiday packages as well as leisure and dining activities are offered at discounted prices through the sale period.

The India context

As of now, there are no such festivals or malls themed on tourists in India, but the ones such as the Forum and Garuda malls in Bangalore and Inorbit in Mumbai do attract visitors to the city. However, the number would not be very significant.

“Visitors to the city, both domestic and international, would constitute about 30 per cent of our footfalls, though it has come down now, thanks to the slowdown,” says B. G. Uday, Managing Director, Garuda Malls, Bangalore.

According to Saket Bhatnagar, Principal Consultant, Technopak Advisors, travel retail for inbound tourists in India should be viewed from two perspectives: The so-called modern retail presence (malls) in the country has been in the larger cities (metros and mini-metros). “In the last one-two years, it has started showing its presence in the State capitals and Tier II cities as well. Thus we are talking about a universe of about 40-50 cities,” he says. The business model for shopping malls is planned on a catchment area, which is usually a part of the city only. Thus any additional revenue in the form of people visiting from outside the city is incidental. Visitors to a city could be classified as domestic and international tourists. The international tourists generally do not visit a mall in the city as the merchandise mix in malls in India is skewed to cater to day-to-day needs (hypermarkets), lifestyle needs (apparel, jewellery, electronics and so on) and leisure needs (multiplex, eating out). For domestic tourists (coming from places where there are no malls), the mall could be a great place for fulfilling lifestyle as well as leisure needs. “However, the contribution of these visitors to the mall’s revenue would not be very high, could be even below 10 per cent,” says Bhatnagar.

Analysts say mall owners in India are attempting to get travellers to a city to visit their malls through tie-ups with travel agents and tour organisers. International tourists now have a choice of a couple of premium malls such as the Emporia in Delhi and the UB City in Bangalore housing several global luxury brands such as Louis Vuitton, Tag Heuer, Burberry, Lancome and Hermes. Does this make India attractive for foreigners to buy premium brands that are far more expensive in London and New York? And what about the attitude towards foreign brands made in India or China? Bhatnagar observes that in the present scenario, premium brands may not be less expensive in India, except in maybe a couple of cases. High-end watches, for instance, at a duty-free shop in an Indian airport, would be cheaper as compared to Europe due to the European Union coming into existence (which has diminished the appeal of European duty-free shops). Otherwise this will not be the case anymore.

A De Beers report on luxury retail says that as more luxury goods companies move production overseas, consumers are beginning to pay more attention to the country in which the product is made. Findings also show that 60 per cent of all luxury goods would be made in mainland China in the next one year and so it will be less about ‘made in and more about made how.’ Retail, therefore, could be a more significant reason for travel in the near future than it is today.

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