AIRPORTS: WHERE RETAILING TAKES TO THE SKIES

Guess what India’s millennial population swears by? To travel is to live – that’s the philosophy! This, along with lower air travel costs, rise in middle class, urbanisation, etc., has led to a tremendous increase in the number of air passengers, which ultimately has resulted in airports emerging as the next battleground for retailers. With retailers already saturating the malls and the downtowns, airports, in fact, remain the best resorts for these brands. According to IATA, India is predicted to overtake the UK as the third largest aviation market in the world by 2025. And a number of national and international brands are trying to tap this opportunity. While most of the Indian brands are going for the company owned stores, foreign companies seeking to have retail presence at the airports are mostly opting for franchisees. In fact, Puma India has both of its airport stores – one in Delhi and another in Hyderabad – owned by franchisees.

Very high returns for brands from their airport stores explain why this format is turning so lucrative. Farah Malik, Managing Director and CEO, Metro Shoes Ltd., says, “Airport retailing is a way forward for retailers around the world and India is no exception. The growth will continue at a rapid rate for the next few years based on a few significant factors.” Besides, an airport provides a filtered lot of audience which has a higher ticket value, is intent on buying and has a lot of time in hand to browse. “Also, since airport retail space is very limited, the number of brands present is comparatively less as well and so the mindshare available to a particular brand is much higher,” affirms Sanjay Roy, Executive Director-Sales, Puma Sports India.

Consumer Experiences and Preferences

India’s airport retail story really took on its wings post the multibillion dollar upgrades among other things, and like every retail scenario that exists in the world this too works on consumer preferences. “The most important aspect we focus on is to ensure that we service our consumers quickly and not cause them any delays in their travel journey. We do not compromise on customer service and experience in our stores. Besides, creative store design can enhance both brand identity and local character,” says Farah Malik.

According to Sahil Malik, MD, Da Milano, “Consumers mostly shop for beauty and cosmetics, perfumes, wine as well as liquor. They even prefer shopping for luxurious handbags, wallets as well as travel bags at airports.” For Puma, 75% of their consumers at airports comprise men who prefer buying apparel rather than footwear.

Changing Store Formats

While airport retailing is definitely the new opportunity that retail majors are trying to grab, what store format would exactly be the one to go for? So while apparel stores can have a store size ranging anywhere between 500 to 5,000 sq. feet, bookstores have an average store size of 200-300 sq. feet. And this definitely makes sense since the rentals for retail space at airports are much higher than some of the luxury malls and high streets. Informs Farah Malik, “Airports allow shops to experiment with formats, either as a shop-in-shop, kiosk or larger stores such as about 2,000 sq. feet.”

Challenges and Road Ahead

Stores at airports are all about efficient spaces as the customer base is focused and has a limited time. Hence, merchandise with a quick turnaround time is what flies off fast. While brands go for regular replenishment, Sanjay Roy asserts, “The challenge remains that you have to go through an elaborate security check and it takes 24 hours post arriving at the airport for the merchandise to reach the outlet.” For retailers in airport space, adapting and making the most of the smaller retail areas is crucial to their success. “Airports must strike a balance between retail space and passenger facilities. In addition, to get regulatory approval for an airport store is very cumbersome. The clearance process can be timeconsuming as well,” informs Farah Malik. However, if retailers get their product mix right and airports understand the dynamics of maintaining a good tenant mix, the future for airport retailing looks promising.

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