Home Retail Transit Retail: Optimising revenue potential and passenger experience

Transit Retail: Optimising revenue potential and passenger experience


The Yesteryears… It is always interesting to revisit the pages of history to know the origin of things. The journey of travel retail is in its 71st year. The Shannon airport, in Ireland, is where the first steps were taken in 1947. This airport served as a transit stop for flights between Europe and North America. Once the passengers had passed passport control, they could shop to their hearts content without ending up having to pay taxes and duties on their purchases.

Transit Retail: Optimising revenue potential and passenger experience
It goes without saying that airports and metro stations offers exciting opportunities for retailers

The concept caught momentum in 1960s when two American entrepreneurs – Charles Feeney and Robert Miller – started DFS (Duty Free Shop). Hong Kong was their first destination followed by fast-paced global expansion. Today, DFS stands as one of the world’s largest and most influential retailer.

The India Story

In India, the history of airport retail isn’t very old. The major turning point that gave a boost to travel retail (specific to airports) in the country was with the emergence of PPP airports. Saloni Nangia from Technopak elaborates, “In India, the focus came only a few years ago, with the PPP Airports (New Delhi, Mumbai, Bangalore and Hyderabad) and some AAI Airports taking a lead. So the years from 2008 onwards, when the new PPP airports came up, were the starting point. The experience and business model has evolved since then.”

To hear it from the spokesperson of GVK – the company which leads Mumbai International Airport Ltd. that manages and operates the Chhatrapati Shivaji Maharaj International Airport, Mumbai, “Travel retail is completely dependent on the travelling population. With 300+ million passengers in FY 17-18 travelling to/ from Indian airports, growing at 16.5 percent YoY, and travel retail projections indicate that this is bound to grow by leaps and bounds. As per the report of Technavio, global travel retail market is expected to grow by 8 percent YoY upto 2021.”

According to GVK, the future of travel retail holds lots of potential. As per RedSeer Research, India will be amongst the top 10 global duty-free markets by 2025. This is well accentuated by the fact that today airports have evolved from being a pure utility to destinations offering various services, facilities and conveniences under one roof.

As the spokesperson adds, “With this evolution, passengers not only decide the airline they want to travel on but also select the preferred airport(s), depending on the transit patterns. In India, the airport infrastructure is continuously growing. Not only the metro airports but Tier II/ III airports are expanding their infrastructure, followed by the service offerings. This is considering the fact that there is a significant jump in the travelling population with an increase in the purchasing power, more business needs, etc. At Mumbai Airport, our observation is that more than 98 percent passengers spend an average of one hour at the airport for domestic flights, while 83 percent passengers spend around two hours for international flights.”

Talking about the conversion rate, the GVK spokesperson points out that given the right product assortment, a passenger can easily be converted from a window shopper to an actual shopper. Though he points out that in India, the conversion rate is still low compared to major global airports – less than 30 percent, but we are gradually seeing an increase in conversion rates.

The privatization of airports began in India in 2009. This was also the time Travel Food Services spotted the opportunity offered in the space of food retailing and took the leap of faith to be a part of the revolution and evolution of Airport Retailing in India.

Gaurav Dewan, Chief Operating Officer & Business Head – Travel Food Services shares, “We had started in the initial days, when airports were just getting privatised and not many options were available in terms of retail or F&B. Back in those days, the challenges were many, right from getting and creating brands to supply chain, everything was nascent. There was not a single day we did not learn, and we are still learning.”

Sharing details about the customer differentiation, he adds, “The profile of a person who goes to a first-class lounge is completely different from a person who eats at a food court. We plan our outlets as per the customer preferences, the right mix of partner brands, in-house brands and local favourites. Partner brands are similar, like a Dominos that appeals to all classes of TG. At the same time, we also introduce local favourites; for instance, Visakhapatnam has Sai Ram Parlour, Kolkata has Kusum Rolls, Delhi has a DilliStreat and so on.”

Scouting the Opportunities

It goes without saying that airports and metro stations offers exciting opportunities for retailers. The same cannot be said about highways and railway stations. Before we get into the why of this, it is interesting to hear from Saloni Nangia on the opportunities all of these offer together. “There are multiple opportunities for retail and food services in travel retail, including airports, railway stations, highways, bus stations, and now metro stations in many cities,” she says.

But then have these been well utilized? Nangia is of the opinion that the opportunities haven’t as yet been truly capitalized upon. “While there are basic retail and food services options available in most of these cases, these opportunities have not been designed or planned to create experience/ convenience for the passenger and generate additional revenue for the travel operator. Worldwide, non fare revenue (revenue generated through all other activities apart from the travel fare) can be as high as 55-60 percent of the total revenue generated by the travel operator,” she explains.

Lakhs of passengers use the metros, railways and highways on a daily basis. This is reason enough to catch the attention of a discerning retailer and plan out a retail format that can be replicated across the country. According to Panneerselvam Madanagopal, Chief Executive Officer, Stakeholder Management Consulting, the Reliance A1 Plaza was supposed to be a game changer but then the project fizzled out.

Challenges of Travel Retail

Talking about the challenges transit retail faces in India, Nangia says, “Transit retail, especially in airports, is not of the same scale as we see in some key transit hubs across the world. Usually passengers get to spend time in transit airports across the world which helps in increasing travel retail revenue. Indian airlines and airports have not been able to develop any of the Indian cities as an international transit hub, so there is negligible revenue opportunity there. In the domestic market, some of the larger airports (Delhi, Mumbai) have become transit airports for domestic air travel and offer a good retail option for the transit passengers. Their role as transit hubs might become lesser with many more short haul flights being introduced by the airlines between smaller cities and with the Udaan scheme gaining momentum.”

And like at malls and high streets, is there a concept of ‘suitable shopping time’ within the airports? According to GVK, it is more related to the product mix. Explaining this, the spokesperson shares, “This is true as more the number of passengers, more will be the shopping and higher the conversions. However, there are other parameters which need to be kept in mind apart from the concept of ‘suitable time’. Conversions are directly related to the type of products offered, value deals and the overall assortment of commercial offerings. For example, if there are no product offerings which cater to the requirement of business traffic, despite the fact that there are business travellers, it will be difficult for an airport to see higher conversions.”

So, what actually pulls the shoppers to shop at airports considering that the similar brands are present at malls and high streets? Is it the pricing or the need? The GVK spokesperson strongly attributes the answer to the overall experience.

“Today’s intelligent customer looks for the value in each transaction, whether at the airport or outside. With more travel, airports are becoming destinations in themselves and passengers spend considerable time at the airports. With these three key variables, it is incorrect to say that there is more of need based shopping at the airports. In case of products where pricing differentiation is high compared to city side pricing (e.g. liquor), passengers tend to shop at the airport. Also, overall experience of the passengers at the airport is significantly higher compared to downtown/ malls, thereby further alleviating the tendency to shop at the airport,” he says.

Just like it happens in malls, the brands and the developer here work in sync as well to promote consumerism. There is a contract in place and the brands receive a thorough hand holdings and when needed. The GVK spokesperson shares, “A typical contract duration is for 5 years however the duration varies if in case it is a master concessionaire. We have a mix of revenue sharing and minimum guarantee models. We work on the premise of ‘win-win’ with our brands. Through various measures we ensure that the brand continues to perform well at the airport, maintaining a long-term relationship. These measures include routine reviews, promotions, marketing, etc. Discontinuance is the last, extreme step.”

On the zoning, the spokesperson explains that zoning is dependent on what are the varied categories of passengers and their requirements. Accordingly, various commercial categories are formed. As detailed by the Airports Council International (ACI), there are typically six categories of commercial offerings – Sit down restaurants, fast food restaurants, convenience retail, specialty retail, duty free and services. Basis passenger travel behaviour, the zoning takes place. Some examples are: basis Passenger Journey Chart, passenger anxiety levels are highest pre-security/ immigrations.

“Thus, having various commercial offerings in that location may not be fruitful. Similarly, essential passenger services (forex/ ATM, etc) are required at multiple locations. Convenience retail seems to be beneficial at gates or at arrivals. Moreover, similar categories are zoned together. It is to be noted that airport zoning is very much different from other commercial setups, e.g. malls. In a mall, it is the area that drives sales whereas in the airport environment, it is the sales that drives an area,” the GVK spokesperson states.

Understanding the Distinction

As Madanagopal puts it, broadly speaking, the two categories that help understand the difference between travel and transit retail can be classified under – Functional and Experiential. According to him, “Where metro stations and highways can serve the customers with goods and services that are more need based, airports usually house retailers with products that fall under the experiential category which include more of lifestyle products. He further says highways can be perfect destinations for promoting local handicrafts and local food as well besides being a general hub for foods and refreshments.

Nangia elaborates on the category distinctions, “Categories for travel retail can be broadly divided into 5 : Convenience led/ basic necessities, including pharma, personal care, travel accessories, water, books, gifting among others; Browsing/ impulse/ gifting led including mobiles, computers, gadgets and accessories, fragrances, watches, jewelry, toys, writing instruments – these are also attractive for passengers from smaller cities transiting through bigger travel locations as their reach might be limited in smaller cities.”

Highlighting an interesting point, Nangia further shares, “At times brands are present at the airport as a marketing investment as well, for the consumers to see and connect with the brand; local food / craft products which are local specialties; services including spa, entertainment including screens, among others and food, including convenience, café, fast food, food courts, local cuisines, bars among others. For international travel, duty free is a significant category, especially for alcohol, tobacco, chocolates, fragrances and beauty products. It extends to luxury and bridge to luxury brands as well.”

Talking about brand and category mix at airports, according to GVK, inclusion of regional brands/ stores gives a local, distinct offering to the passengers, especially to those passengers who are not from the local region. This category of offering also helps in differentiating the overall commercial offerings of an airport from the other. For example, at the Chhatrapati Shivaji Maharaj International Airport, Mumbai, there is a healthy combination of Indian/ Maharashtrian art and craft, souvenirs, food, etc.

The spokesperson elaborates, “Not only this, our promotions and events also focus on popularising the local flavours. We work very closely with the local brands who can showcase their unique products to the passengers along with the required commercial viability. The incentives for such concessionaires cannot be similar and depending on the requirement and mutual discussions, the required action is taken.”

Sharing details on the how best they go about choosing the right mix of food brands, Dewan states, “Our brand mixes are developed with a lot of consumer surveys, internal and external stakeholder’s deliberations and so on. We look at creating experiences – food is close to our heart and changing the scenario at travel ports across India is something we are very passionate about. Therefore, we carefully pick and choose brands for a particular geography. It is a mix of international, national, local favourites and in-house bespoke; to quote an instance – in Kolkata, we have Dominos, KFC, The Coff ee Bean & Tea Leaf etc. from international brand partnerships. Then there is Café Coff ee Day, Wow Momos from national brand partnerships and finally there are some local favourite like Kusum Rolls from the streets of Kolkata, and Flury’s a local favourite bakery. At the same time there are Biryani Bhai an in-house bespoke concept, The Irish House and Copper Chimney for North Indian tastes.”

Exploring In-flight Retail

The joy of shopping mid-air can be blissful provided that options given are alluring enough. No one wants to keep looking at a catalogue that has nothing better to offer than the same old pearl set or his and her wrist watch set.

“The product mix has to be meaningful. Only then inflight retail can be successful,” shares Madanagopal. He minces no words when he talks about how airlines in India haven’t truly capitalized on the opportunity before them. “It is just that the prohibitive prices keeping the customers away. If they get their pricing strategy right they can capitalize on the passengers they are flying. The logistics and managing should be done in a very professional manner. It can become a strong revenue stream for airlines if done and managed well.”

Sharing his list of airlines that can be an inspiration for other airlines, Madangopal is all praise for Emirates, Qatar and Qantas airlines. He says, “Emirates remains the undisputed leader when we talk of in-flight retail, but I am very impressed by Qatar’s offering of content and shopping catalogue. The shopping catalogue has a range of products to choose from including fi ne wine and electronic gadgets.”

He further highlights an important category that has yet not been capitalized upon by any airlines – the kid’s wear category. “There are a lot many business travelers and they would want to go home with a gift for their children. No airlines offer things a man or woman can take home for his/ her child.”

Dos & Don’ts

Anand Kumar, Executive Director – ABRA, a Dubai based firm that has to its credit designing a host of stores across 17 airports to date discusses in depth what brands need to keep in mind while setting up their storesat airports and other travel hubs. “Brands have to be selective in what they decide to sell in travel retail, it’s a niche and is not to be treated as another point of sale, as in a new domestic location. They must not go in with their full portfolio, as people tend to look for novelty and travel retail exclusives, for which many brands do successfully with specific sizes and promo-packs (mainly in beauty and confectionery products). This also makes way for different price points that cannot be compared with what is available in the domestic retail,” he says.

“Last minute gifting represents a huge opportunity for travel retailers, when the customer might not have the time to pick up something during their hectic trip and the airport represents a last opportunity to make a purchase to take home, and hence brands must appeal to this audience with the right assortment of products. Finally brands have to make it convenient for the shopper to pick and go, as there is limited time to engage the customer or try a product and hence the merchandisers in travel retail have to be trained to manage a customer that’s in a hurry, to avoid a lost sale,” he adds.

On the designintricacies for food stores at the airport, Dewan says, “Airports today are equipped with more experience zones than a mall or high-street. Basis the location of the outlet and passenger preference, we design our outlets, and some of them are notch better than those at a mall or a high-street. For instance, the experience one gets at our DilliStreat outlet at IGIA T3 departures, GVK Lounge at CSIA T2 departures, or Irish house are incomparable. At the same time, we have take-away counters and food courts, wherein look and feel and ambience are all similar. However, the menu is designed basis a travel port.”


It is interesting to visit the history books of brands and their journey of having stores at airports and other travel/ transit retail destinations. To take an example of Almond House, one of Hyderabad’s most coveted dessert and bakery delicacies brand, the journey to have a store at the Rajiv Gandhi International Airport in Hyderabad began in 2015. And just within three years today, they have four stores at the same airport.

Citing the journey so far, Chaitanya, CEO – Almond House, says, “In July 2015, we started operations in Domestic Terminal in RGIA Hyderabad, essentially as a mechanism to boost the brand visibility among our target customers. Having an airport store also reiterated our super premium positioning of the brand, also experience and the ambience at an airport rendered itself well to our positioning as well. However, it turned out to be positive contributor to our top-line as well, since then there has been no looking back. As we speak, today we are working on our 4th store in RGIA Hyderabad and we are in talks with Delhi and Mumbai airports for launching our stores.”

And the journey doesn’t stop there. According to Chaitanya the brand is also liaising with international airports such Singapore and Dubai for Almond House stores. But then no journey comes without its share of challenges. Though Almond House has not much to lament about except the fact that they a minimal time window to let know the customer who they are and the quality of the products.

Elaborating on their product portfolio, he shares, “Our stance is that we are a ‘Gourmet brand from India for the Global palette’, hence we always did products that suit a wider audience, today we offer Vegan Sweets, Gluten Free that are becoming mainstay across the globe. We have absolutely fresh products that are pre-packed in travel friendly packaging that are easy for the customers to pick n go! We offer special combination/ assortment packs for the travellers to the best of our offering at one go.”

BIBA, a brand that resonates with chic Indian ethnic wear has been attracting a lot of attention at the airports with their swanky designs alluring women to have a look at their collection. Siddharth Bindra – Managing Director, BIBA shares, “We have our presence across all metro cities. Our stores are located at majority airports like Delhi-2, Mumbai-2 and Goa -1.”

On the key things to be kept in mind, Bindra says, “A good mix of all variants from all collections i.e. from ethnic to Indo-western to western wear need to be stocked. The availability of products in all sizes is also to be kept in mind. The store display needs to be given extra care. It needs to be appealing and easy to explore for customers, as you get a very little time to attract and engage the customers at such places. The staff should be well equipped with language and should be extremely disciplined, polite and helpful.”

For the brands, one of the challenge that hits them the most is with regards to the operational cost. There is no dearth of customers but then to maintain the ROI with the high operational cost does create a roadblock for growth.

Chaitanya says, “Given the high operational costs it does take little longer to break even than our high street stores. Higher operational costs are owing to special packaging, logistics and staff who are to be verified for security etc.”

Talking about the most prominent challenges, Bindra says, “Stores open earlier and stay open till late, which means more shifts and odd hour shifts, though there is minimal staffing, as stores are small. Staff members need additional security checks to work inside the airport, so recruiting and on boarding takes longer. Some airports and stores even need multilingual staff members and lastly the supply calendars have to be planned far in advance as delivery times are strict. This leaves little room for ad hoc re-supplies.”

Hidesign as a band has earned an international reputation for itself with a presence overseas so the brand’s presence at the airports is well received by the passengers. Dilip Kapur, President Hidesign, says, “In India, we opened our second outlet at the Hyderabad Rajiv Gandhi Airport International Departures area, the first one is in the Domestic Departures area. We are planning to open new stores at airports and malls by this year December end. We will open stores at airports in Bangalore, Mumbai, Delhi and Kochi, while other stores we plan to launch them in Tier I cities.”

Sharing details about their foray into airport retailing, Kapur says, ‘We got into airport retail way back in 2009, as we understood the importance of the airport stores since then. We believe that airport is a very significant platform for our brand as our ideal Hidesign customer is well-travelled and successful. We are currently present in 12 airport stores and this year, we plan to double that number. We do significantly well at the airports.” According to him, with the decision to privatize retail at more airports there will be no more roadblocks only opportunities.

Talking about the highest selling SKUs at the airports, Kapur reveals, “Products for personal use such as wallets, shoes, laptop bags and travel bags are an easy fit and also make great gifts. Travel themed products are another great option.”

Going by its name, one would have expected The Bombay Store to have their presence at the Mumbai Airport but their foray into
airport retailing began its journey with a store at the Hyderabad Airport on June 09, 2018. Samson Peter, General Manager, Operations – The Bombay Store, shares, “The Bombay Store opened its first Airport Retail Store in SRA (Security Restricted Area) of Domestic departures of Hyderabad Airport on 9th June-2018, we had forecasted a great opportunity into this business model at Airport Terminals where the brands recognition products and value can be driven across the country and overseas through all our Airport Customers travelling to various destinations within India and globally. We had a great learning and opportunity to understand on how an Airline Customers are inclined towards our category of products and how they shop differently from our Airport Store vis-à-vis our other Mall or Stand-alone store.”

Elaborating on this, he explains: “Airport stores are an ideal shopping location for passengers with a holiday mindset, inspiring them for more impulsive shopping with better deals around the store.”

Logistical Roadblocks

Besides having to deal with bureaucratic formalities, the private players operating in transit retail hubs which come under government control, there are logistical challenges that retailers need to overcome before they are able to set the ball rolling in true sense for travel retail in India. This applies to transit retail as well to some extent.

Nangia says, “The biggest challenge in India is the lack of recognition of the fact that well planned travel retail and food services in a travel hub can be a big revenue contributor to the travel operator, therefore there is reluctance in investing and developing the right plan and infrastructure for it. This should ideally be done at the planning and construction stage. Even though there is a large amount of new travel infrastructure which have been developed in the last decade (airports, metro stations, highways, some train stations among others), there is still a very limited focus and thought into this aspect.”

Reiterating this is Chaitanya, “Availability of the real estate within airports are critical for growth, as major international airports are designed with a non-aero revenues in mind, in India it is still a work in progress.”

Elaborating on the role played by the government that if reversed and revised upon can be a boon, Nangia reveals, “Most of the travel hubs are owned and managed by the Indian government. There is very limited focus on creating the right commercial model for the travel hubs, with no planning. The retailers and food service companies are selected through a bidding process, with the highest bidder getting the contract to operate the space.”

Adding further on where we stand as compared to the international dynamics, she says, “To plan and manage the business as a key revenue contributor and segment, both for the brand and the travel operator vis a vis just an opportunistic channel.”

Peter talks about what makes airport retailing a difficult process to get through for brands saying, “Getting into an airport retail business in itself was a great challenge. Commercial airport terminals are most secured and protected locations in the country. As a standard process, each retailer has to undergo a specific verification process by the Ministry of Civil Aviation and other agency responsible for airport’s security, which in itself was quite a new and challenging task for us. We also had a challenge of planning and executing our supply chain management and on how quickly and effectively we can replenish the right stock to the store at right time without disturbing the sales opportunities.”

Marketing & Promotions

No matter where the store is housed, no brand can afford to neglect indulging in marketing and promotion initiatives to attract the shoppers. The store design too needs to be chic and to an extent eye catching.

A pre-requisite for an airport store in terms of design and service according to Chaitanya is, “It has to be precise and laser sharp in communicating the positioning of the brand, clubbed with a superior experience by the staff which facilitates conversion in the shortest span of time. Engaging a wide range of customers is not an easy task, from a first-time traveller to a CEO, the staff needs to be ready take on any queries from informed and innocent customers. Engaging and connecting the customers where he is in a hurry to get to their boarding gates is never an easy task and hence great body language helps to establish the positive connect faster.”

Elaborating on marketing initiatives that the brand undertakes, he says, “We do occasional marketing activities within the airports especially during the festive season such as Raksha Bandhan, we offer free Rakhis for the customers and Diyas for Diwali as a token of our thanks to customers which has been now a regular affair for many years at our high street stores.”


On a concluding note, Nangia shares, “Success of travel retail lies in understanding the basics of the business: It is important to understand the profile of passengers traveling from each travel location, the journeys/ routes they undertake and the time available to them. It helps in understanding their requirements for retail and reasons for shopping/ eating at the location. This requirement is then extrapolated on the space available at each travel location for developing the right infrastructure and experience for travel retail. Based on the categories relevant for each location, the space is divided optimally to maximize the productivity and revenue potential for the retailers and the location overall. Therefore, it is important that travel operators and retailers jointly work towards optimizing the revenue potential and passenger experience.”