The early stages of travel-retail growth were driven just by retailers’ and suppliers’ vision to exploit the novelty of airport retail. However, air travel is no longer considered to be expensive and there are frequent travelers. Hence, quite a number of retailers are considering the opportunity available at airports.
Retail has always been about two primary things: consumer’s time devotion (the time they spend at the store) and the point of sale (the area, space, and format). Travel retail is unique as it best uses both these factors. Travel or airport retail comprises of regular retail shops, duty free shops and food retail outlets. These are the three primary retail options one can look forward to and expect at airports.
Retailers are encouraged like never before
Travel retail in India is booming making airports the new retail destination in the country. Brands are expanding their footprint at key airports across India, thereby reaching out to the well heeled traveler, who is looking for premium products in potential retail environments. What lies in store is not only high number of footfalls but also getting the right consumer mix, including the high disposable income group besides, of course, the elite class. Another factor which encourages retailers to focus on airports is that there has been a major transformation in the look of airports which is “upmarket” and offers a great shopping environment.
Sahil Malik, Managing Director, Da Milano shares, “We are opening exclusive brand outlets at airports and our store size varies from 300 square feet to 1000 square feet.” Nikhil Ranjan, Managing Director William Penn- The World Pen store says, “The usual size store is 400 to 500 sq ft. Till now, we have stores formats at all the airports but with the new international airport at Delhi we are coming up with a specially designed kiosk format.”
It is noteworthy that in order to open such stores it is imperative to have the right product mix and stocks. At airports people indulge in impulse buying, therefore, it is crucial for the layout of the store to be attractive so as to attract customers. On the same lines, Ranjan opines, “The airport is a very sensitive area. The company and its directors need to be security-cleared by the BCAS – Bureau of Civil Aviation Security. Further, all staff working at the airport have to go through a rigorous back-ground check and a safety training program.”
Handling the diverse crowd requires training
Catering to the diverse crowd that walks in at a retail store at an airport is very different from what a retailer receives at a high street outlet. Malik comments, “Yes, since the operations are very different from that of high street, there is a separate training module required for the airport store staff.”
Ranjan opines, “We have a specialised training program that consists of training on product-selling and soft selling skills. Apart from this, the Airport Authority arranges for a detailed training on safety measures to be practiced and things to be careful about.”
A few recent initiatives
Travel retail is headed to explode and a lot of initiatives have and are being taken in this regard. A major development, which is set to act as a catalyst is the emergence of T3 – the state-of-the-art integrated terminal of Indira Gandhi International Airport (IGIA) in New Delhi. The terminal is expected to be the world’s third-largest in terms of size (after Dubai in the United Arab Emirates and Beijing in China). As a result, IGIA’s capacity would be increased to 60 million passengers annually (from 23 million) post the commencement of its commercial operation in July 2010.
Malik affirms, “We have recently opened our exclusive store at Terminal 1B of the Domestic airport in Mumbai. By July 2010 we will have two stores operational, one each at the Domestic and International Terminals at the Indira Gandhi International Airport in New Delhi. We are also looking at opening stores in Bangalore, Chennai and Hyderabad airports.”
However, Ranjan comments, “The investments would be in terms of store fixture and furniture. The other variable nature of expenditure would be the stock. The cost would be typically about 60-70 lakhs per outlet of 500 square feet including the furniture, fixtures and stocks. This year we will take the World Pen Store Concept international with two more pen stores opening at the new DIAL (Delhi International Airport Ltd.) T3 in July.”
Footfalls, conversions and revenue generation
Malik says, “Our target group at airports is the upwardly mobile consumer who is a frequent traveler. Airports are high traffic zones since footfalls are high. Conversions at airport seem to be high since travelers are looking at making purchases while waiting for flights or in case of flight delays. The store staff needs to convert customers within a short span of time to ensure purchases.”
Ranjan precisely puts it, “Our TG is predominately male individuals above the age group of 25 years, sec A1 / A2 with monthly income of Rs. 30,000/- +. They are status conscious, upwardly mobile; having an opinion of their own, mainly decision makers, like to keep abreast with the new trends and fashion. Delhi Airport witnesses the highest footfalls, followed by Hyderabad, Mumbai & Bangalore. The conversion rate is 60 per cent.”
Regarding the revenue generation, Ranjan shares, “The average bill value is about 25 per cent higher compared to non-airport stores.”
Marketing: Begins way before they reach the airport
An interesting point to note here is that airports, retailers and suppliers take an initiative to interact and communicate with their target audience prior to embarking on a business venture at the airport. This is done online, wherein they tap those people who book their tickets online. The more the number of people book their tickets online, the greater lays the opportunity for retailers to communicate with them directly. It is thus understood that marketing begins way before the customer arrives at the shop.
Travel Retail offers a tremendous opportunity to target customers from different nations, cultures, religions and ages – all looking to kill the spare time!