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Expansion 2018-07-25

How Travel Retail is changing the Food Retail Biz

Airport retail is expanding at a very fast pace as souvenirs shops, luxury goods to F&B outlets and other brand experiences.

By Travel Food Services
How Travel Retail is changing the Food Retail Biz

The Indian Food and Beverages service industry has seen a remarkable growth in the recent past and it continues to expand rapidly. It is known to be one of the most dynamic industries in the country. The food and grocery retail sector accounts for 16 per cent of India’s GDP and by 2020, is pegged to contribute to 66 per cent of the total revenue of the retail sector. And with the food retail spurt the industry, which stood at USD 641 billion in 2016, is expected to rise to USD 1.6 trillion by 2026.

This sector has drastically evolved over a decade, by giving rise to exciting new concepts in food and beverage offerings and innovative service elements. As per India Food Service Report 2016, full service restaurants and quick service restaurants together account for a majority of 73 percent of India’s food service industry. The reason for this changing scenario is to be attributed to the changing demographics, increase in disposable incomes, rapid urbanisation and growth of organised retail.

A rise in the young population along with a fast-paced trend of eating out and experimenting with different cuisines has provided a plethora of growth opportunities for food service business operators in the country. Considering India having a substantial food loving consumer base, this in turn leads to a significant potential market for F&B growth. Also, the globalization due to extensive travels which have evolved the Indian palate considerably are an important factor in the growth story. According to the National Restaurant Association of India(NRAI), Indians on an average eat not more than two times a month, compared to 40 times a month in Singapore. This consumption gap proves that India also has a huge market opportunity in the industry.

The F&B consumption during travel is following a similar trend where convenience, food experimentation and quality are ruling the roster of reasons for growth. This makes airports, railways and highways a high potential revenue generator. This sector has paved way for brand new opportunities for the retailers to reach out to their consumers travelling for business or leisure.

Gone are the days when the travellers were limited to home cooked food and airplane food. Today, passengers are nothing but spoilt for choice with the plethora of culinary options available, including fine dining restaurants, franchises of popular pubs and premium lounges. Today’s traveller community considers time and convenience as their biggest motivations. For this convenience, the travellers do not mind paying a premium and this has given rise to brands which are specific to the travellers’ needs.

Airport retail is expanding at a very fast pace as souvenirs shops, luxury goods to F&B outlets and other brand experiences, retailers try and take advantage of the captive audiences during the time they have between security check, boarding time and layovers. With an increase in traveller more and more people are bound to delays and layovers which leave them wandering the place, during such time retail travel proves to be of great help. At airports apart from the comfortable and clean premises, passengers appreciate the quick service. Travellers also value the quality of food and drinks being served.

Railways and highway travel experience is also being transformed. Railway stations are now embracing well-known brands like KFC, McDonalds at the station. Earlier passengers would have to depend on their own home cooked food due to poor hygiene and low quality of food provided at the local food stall. The latest trends for railway lounges and railway food courts have made different F&B brands a common sight at the station. In addition to hygienic food, brands are constantly innovating to offer customised options to match competitive pricing and cater to all consumer profiles. With the help of eCatering services which enables passengers to order meals of their choice by simply making an order on the phone or through online booking where their meals will be delivered right to their seat. These advancements are encouraging more and more brands to associate with railway food retail business.

Food retailing at highways are also picking up in an organised manner which is also emerging as a unique sector. Today with the entire food retail sectors transformation, one does not have to worry about the availability of food. The F&B outlets in highways cater to travellers looking for good quality refreshments as per their convenience. Due to improvements in infrastructure and roads and people now opt to travel by road. This enhances the scope for food retail services in the highways. As the roadways and highways are being improved across the nation, there has been an increase in vehicular movement. People travelling by road now expect better privileges and services along the highway. These eating and refreshment points have proven to be rejuvenating points for the weary traveller.

As the F&B industry is booming it has a direct impact on the travel retail space. There is an increase in the number of travellers, a ride in disposable income and thus the travel and food retail sector is sure to grow exponentially.

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