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 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 5,000 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.
India versus international transit airports
Delhi International Airport Ltd (DIAL) surpassed the 48 million passenger mark in FY16, witnessing a growth of 18 per cent in traffic over the previous year. Also, Indian airports are witnessing tremendous commercial transformation through public-private partnerships, which is resulting in the development of such dedicated retailing areas.
Retail developments such as Worldmark at Aerocity (near Delhi airport) are good examples of the potential for branded retail to come up around these facilities. It would be interesting to see if some other airports see similar developments, especially the upcoming international airport near Mumbai.
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The major brands operational at airports currently include: Marks & Spencer, Shoppers Stop, Mango, Superdry, Lacoste, Armani Jeans, FabIndia, Tommy Hilfiger, United Colors of Benetton, W, Zodiac, Madame, Victoria’s Secret, in fashion and apparel; Da Milano, Hidesign, Ethos, Hugo Boss, Metro Shoes, Basecamp, Samsonite, Fossil, Tresmode in fashion and travel accessories; Swarovski, Tanishq in jewellery; Croma Zip, Samsung in electronics; Sunglass Hut in opticals; The Body Shop, Forest Essentials, Parcos in cosmetics; Theobroma, Starbucks, Costa Coffee, McDonalds, Burger King, Punjab Grill, Café Delhi Heights, The Beer Café, Dominos, Haagen Dazs, KFC, Mad Over Donuts, Pizza Hut, Subway in F&B.
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 main motive of travellers is flying to their destination and not shopping. However, thanks to the increase in traffic, it is expected that retail sales would also increase at airports. 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.