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Airport Retailing: Exploring new channels of retail

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Growing air travel in India will drive airport retailing so much that by 2015, over 50 per cent of revenues of the Airport Authority of India (AAI) are expected to come from non-aeronautical activities, with airport retailing contributing a mammoth 27 per cent, says a study.

Non-aeronautical retail activities in airport retailing are likely to grow to an extent such that other revenues sources for AAI would trickle down to hospitality (1 per cent), office (17 per cent), trading concessions (9 per cent), public admission fees (1 per cent) and miscellaneous (45 per cent), adds the joint study by industry group ASSOCHAM and global research firm KPMG.

Releasing the study, Sajjan Jindal, president, ASSOCHAM said that air travelers no longer perceive airports to be waiting lounges between one city and the next. Today, this perception has given way to one in which travelers expect much more out of an airport in terms of facilities offered, quality of service and support infrastructure.

“Travelers have enough time at airports and they would like to spend their leisure time in retail and discount stores and even luxury hotels within the airport premises. It is in view of this that airport retail would grow phenomenally,” said Jindal.

According to the study, this trend is already visible with the coming up of Bangaluru International Airport, where more than 40,000 square feet of retail space is planned in the first phase. However with airport privatisation and coming in of new managements focusing on boosting revenues, this trend is fast catching on. Airport managements are looking at retail players who have international experience in airport retailing as well as an understanding of Indian consumer dynamics.

The scenario has paved way for joint ventures where foreign players have tied up with Indian retail giants to bid jointly. As more airports move towards privatisation, this trend is likely to continue with the traditional duty-free store being replaced by a wide selection of outlets looking to capture the duty free retailing, still regarded as a virgin market.

The global scenario for airport retailing indicates that the segment truly has the potential to become a major revenue generator for retailers and airport authorities alike. Airport retailing, globally a USD 34 billion revenue generator, has the potential to build an entirely new retail channel in India.

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