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Airports - The Next Battleground For Retailers In India?

Thursday, October 13, 2016
By Pankaj Renjhen

Given the increasing number of air passengers every year in India and a crunch for quality retail space being faced by many foreign and domestic retailers across metros, airports are emerging as the next battleground for retailers. Following in the footsteps of major transit points globally, both the Delhi and Mumbai airports now offer a good tenant mix and demand for retail space is expected to rise at other busy airports too.

 The current retail-tenant profile at Indian airports includes brands ranging from apparel to wellness, convenience, travel and books, electronics, fashion accessories, opticals/ sunglasses, watches, jewellery, F&B, perfumes and cosmetics, wine and liquor as also travel accessories. More brands belonging to categories such as fashion accessories, F&B, opticals/ sunglasses plan to expand by opening stores in airports too.

The average store size varies according to the retail category. So while apparel stores can have a store size ranging anywhere between 500 sft and 5000 sft, bookstores have an average store size of 200-300 sft. F&B store sizes are generally smaller as common sitting areas are provided by the airports. In case the F&B store is not in a food court or has limited store formats, it may have a sitting area within the store or if in the food court, reserved exclusively for its patrons.
Going forward
Very high returns for some brands from their airport stores explain why this format is turning so lucrative and in turn, helping transform airport terminals in major metros to retail hubs. Interestingly, the product assortment offered by both international and domestic brands at their airport shops could differ from their other stores and requires research on an ongoing basis as the merchandise mix and type of offers here are geared towards travellers and not shoppers. The primary motive of travellers is flying to their destination and not shopping.

However, thanks to the increase in passenger traffic, it is expected that retail sales would also increase at airports in the future. The retailers need to get their product mix right and airports need to understand the dynamics of maintaining a good tenant mix. If this happens, the future for airport retailing in India looks very promising.

The author is MD, Retail Services, JLL India

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