Shoppers Stop is mulling exiting the airport retail business. It may dissolve its JV with Nuance Group, having taken impairment in the value of its investment in its duty-free airport retailing venture for the first time this quarter.

Its standalone net loss of ₹21.43 crore for the first quarter this year was attributed to the one-time provisioning of ₹23.81 crore in its joint venture company with Nuance India.

“When we forged the JV in 2006, there were plans to open stores at five-six international airports, but we are operational in only a couple of airports today. Duty-free retailing is an expensive business. Having taken a one-time impairment, we will re-evaluate this business,” said Govind Shrikhande, Managing Director, Shoppers Stop.

“There is not much scope for cash flow and profitability in airport retailing, which is not helping to get valuations. Today, profitability is small in this segment at less than ₹100 crore and there is a possibility of exiting this business if we get the right valuation,” added Shrikhande.

Its JV partner, Zurich-based Nuance Group, has been awarded the duty-free contract for Bangalore International Airport and Mumbai International airport (fashion, luxury and lifestyle).

Anirban Chowdhury, Country Head of Nuance Group (India), said, “We have not participated in bids that have been opened up for the new international airports in Chennai, Kolkata and Hyderabad. Airport retailing is not an easy business but we have made money in the past.”

Customer behaviour

BS Nagesh, a retail veteran and former MD of Shoppers Stop, said, “Airport retailing is different from general retailing, since the traveller is not visiting the airport for the purpose of shopping. The pressure on time and the traveller’s mindset is very critical. The additional challenge is to understand customer behaviour and how they respond to the offer.”

The airport retail business is estimated at ₹2,000 crore with growth at 10 per cent.

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