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Jan, 06 2014

Airports, the best runway for biz growth

Don’t even think once before booking your space at any of the airports across India as there is nothing better than having a franchisee-run store at the airport. A good number of business giants in the franchise Industry are opening their outlets at the m

Airport retail business in India topped $1 billion in revenue during 2011, on the back of robust growth in passenger traffic and more people shopping on the go. The business is growing at 17-18 per cent annually, emerging as a viable platform for retailers and operators, according to a Bangalore-based consulting firm Asipac Projects. With extensions and revamp in full swing, airport trend is attracting more and more retailers. Right from fashion retailers to florists, jewellery to luxury chocolates, from cosmetics to cookies, airports have it all for the avid shoppers who rather than rush to a high street or malls, prefer an easy shopping experience at the airports.

Driving factors

Modernisation of airports, Increase in passenger traffic and increase in the disposable income of passengers has been the key drivers of this segment.  Driven by intense competition and choosy consumers, most retailers have adopted innovative retail formats to increase the value of the shopping experience. Airport retailing in India has been growing steadily over the last few years. Several domestic and international franchise brands across categories have set up stores at airports. In fact a few of these brands have reported that their stores at the airports have the highest per square foot sales.  Florista started franchising at the Mumbai Airport in 2007. According to Smriti Dalvi, CEO and MD, Florista: “Factors like Impulse purchases, special occasions, and festivals are certainly driving forces for airport retailing.” Subway opened its first airport restaurant way back in 2002 and now has presence at six airports in India.  The brand acclaims its success to its franchise-based business model. The driving factors responsible for the growth of any quick service restaurant brand are its brand promise, business model and consumers focus.

High Streets or Airports

There used to be days when franchisors were rushing to open an outlet at any high street or a major mall but with the changing retail scenario the focus has been shifted to Airports. Brands like Mont Blanc, Cartier, and Tag Heuer have come to tap the Indian Market via Airport outlets. For a brand like Hidesign where customers are constantly traveling, it's a great opportunity to be present at the airports.  Airports are learning for them. Dilip Kapur, President and Founder, Hidesign says: “Hidesign is present at several airports in India and Internationally at London, Sydney, and Melbourne. Specifically in India Hidesign has five exclusive stores at Delhi Domestic Airport, Hyderabad Domestic, Cochin Domestic & International Airport. We have another exclusive store opening at Bangalore International (January 2014). The opportunity of interacting with our ideal customer, the well-informed, career oriented, cosmopolitan consumer who appreciates well-made, handcrafted products and is sensitive to ecological issues has encouraged Hidesign to be present in all major airports across India.”

For florist chain, Florista a good brand visibility was the factor for choosing airports. The brand believes that with airports the business may not scale up to a great extent. Opening of a store purely depends at what stage is the business in and what makes better sense.

For Cookie Man, apart from high footfalls and visibility, airports have a high concentration of its target customers. The design and format of the Cookie Man kiosks are also very well suited to the airports. Anupam Saluja, CEO, Cookie Man asserts: “Opening Cookie Man kiosks/stores at airports has definitely worked for us. In fact 18 percent of our sales are from these outlets. While, in general, it seems like a good idea to open a store, every brand/business operates differently and faces different challenges. What works for one does not necessarily work for everyone. Companies need to evaluate all these aspects before setting up their stores.” On the other hand, the leading F&B name Subway, found the nontraditional locations like Airports more attractive and chose to be present there.

Potential in India

Most big brands either have their stores at the airports or they are planning to get one. Because of the escalating spending power of the flyers, brands are bound to open outlets at the airports. Manpreet Gulri, Country Head, Subway says: “Subway has presence at numerous new airports that are comparable to international standards. SUBWAY is an important part of overall food-court concession program and provides a viable, healthy alternative to the travelling public. Indian Airports hold a great potential.” For Hidesign retailing at an airport represents a major addressable opportunity because more Indians are travelling now. For them there are exciting opportunities for growth in the airport retail sector in India. Provided the regulatory environment is right and the necessary airport and airline investment takes place, growth in India for airport retailing is inevitable. Accompanying that, with profitable, sustainable retail growth offers the opportunity for increasing the commercial viability of the sector and enhancing the travel experience. But this requires an informed and considered approach if travellers are to be converted to shoppers.

Challenges for airport retail

  • Value- Successful retailers need to develop strategies that offer customers greater value over their rival.
  • Being Innovative- Retailers must continuously implement new ideas or else their customers will definitely prefer the other brand.
  • Cost Control- The retailers need to control their prices a bit at the airport outlets too. Though there is an increase in the number of buyers but retailers need to understand the value for their customer's money too.

Expansions

Cookie Man opened its first Airport outlet in 2004 in Chennai and now the brand is making plans to make its presence at all the major airports in India. Hidesign is also on an expansion spree and currently has 72 stores across India out of which 4 are franchisee owned.

Therefore, doing business at the airport would be an apt choice for prospective investors as it is on of the most profitable runways for business growth.

DILIP KAPUR, President and Founder, Hidesign

“Hidesign is present at several airports in India and Internationally at London, Sydney, and Melbourne. Specifically in India Hidesign has five exclusive stores at Delhi Domestic Airport, Hyderabad Domestic, Cochin Domestic & International Airport.”

G S BAWA, General Manager, PR, Airports Authority of India

“Most of the top brands are already at the Airports. The competitors are striving for airport visibility.  I just want to say that the demand is enormous.”

SMRITI DALVI, CEO and MD, Florista

“Factors like Impulse purchases, special occasions, and festivals are certainly driving forces for airport retailing.”

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