Flight Plan

Retail therapy

| Updated on April 03, 2018

Delhi’s Indira Gandhi International Airport handles 55 million passengers annually and retailers are having a field day   -  YMZK-photo

Indian airports are witnessing a shopping boom, and retailers are cashing in on the opportunity to make passengers spend more time and money at duty-free outlets, writes Bindu D Menon

There is a silent but significant change taking place at airports across India. Most frequent flyers would have noticed that every time they pass through Delhi’s Indira Gandhi International Airport (IGIA), it appeals to them more that their previous visit with a fresh array of retail outlets.

There are the typical food and beverage options, perfumes, liquor, chocolates and electronics that are commonly found in airports across the world. But more significantly, there are also others vying for space at the airport. The country’s largest duty-free retail space at IGIA has over 1,000 brands and more than 43,000 products. It leads in retail sales with ₹400 crore in annual sales.

Industry watchers 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 match up to the international airports in Dubai and Singapore.

Reasons for success

Growth in passenger traffic backs such thinking. Take Mumbai’s Terminal 2 airport which has an annual footfall of 45 million passengers; Delhi’s IGIA handles close to 55 million passengers annually – the passengers that pass through these airports are ‘captive audiences’ for those setting up retail stores.

“Clearly, the availability of time triggers both gift and guilt-shopping. Also, the trading density at an airport is at least 80 per cent higher compared to a mall or a high-street,” says Sushil S Dungarwal, founder, Beyond Squarefeet Advisory, a retail advisory.

Ajay Kapoor, President, Retail, Fabindia, agrees. According to him, their footfall versus transaction ratio is almost 90 per cent. “One normally enters the store as a last-minute impulse purchase with a specific target in mind. The time available is limited, so the transactions are faster, too,” he says.

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. The collective spend on duty free, duty-paid and food and beverage is expected to touch $3.5 billion by then.


Seeing the potential that exists in airports, retailers are fine-tuning their act. “With airport retailing we see very different retail metrics, which are significantly higher compared to what we see in a mall or other high-street stores. With smaller store spaces available, it is important for retailers to plan and execute well to derive maximum efficiencies. The cost of occupancy is high in airports, so having the right category mix is very critical,” says Kapoor.

Airports, on their part, too, allow shops to experiment with formats, either as a shop-in-shop, kiosk or larger stores (about 2,000 square feet), with rents between ₹3,000-5,000 per sq feet.

“The occupancy at airports is close to 95 per cent. While metro airports fare extremely well, Tier 2 airports can also grow with public private partnerships,” says Aditya Sachdeva, Director- Retail, Knight Frank India.

Some companies are also using airports for brand engagement and concepts are being used to pique travellers’ interests. For instance, Pepperfry set up a furniture studio curating its products, and automobile designer Dilip Chhabria displayed a sports car as a part of brand engagement at Mumbai’s T2 International airport.

In an interview with BusinessLine late last year, DFS India, which owns and operates Mumbai Duty Free, had said that the airport was looking at creating value for its customers through vouchers and discounts.

“Over the past couple of years, discounting pressures have been created in the industry. A customer of ours has a choice of buying from us or from other duty-free shops. Our revenue is largely from in-bound travel, with close to 67 per cent of the business coming from there. Most of our buyers are Indians and they tend to buy while coming back to the city,” Manishi Sanwal, Managing Director, DFS India, had said. DFS operates a 65,000 sqft space in Mumbai airport with 13 fashion stores, 3 large duty-free stores and a packaged food outlet.

Improving business

Others point to more ways of improving business. George Fenergi, Senior Manager, Business Development, Airport Solution Line, Middle East and Africa, SITA, says that the strategy of an airport should be to let passengers spend most of their time at retail outlets.

“The quickest a passenger can finish the check-in, security and immigration, the more time he gets at the duty free. You can introduce self-service ande-gates, use technology to minimise the time that a passenger spends checking-in and increase time at duty-free stores. This serves two things: first, statistics from one European airport shows that 10 minutes more at the duty free will see retail sales go up by 30 per cent. Second, if you are frustrated by the queues, you do not feel like buying anything. If you are happy unconsciously, you go and eat and buy,” he says.

He also suggests that airports use passenger flow management systems to track where passengers are spending most of their time.

Published on April 03, 2018

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like