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Airport retailing in India has been experiencing significant growth in recent years, driven by the increasing number of air passengers and their changing preferences. With the growth of the middle class in India and rising disposable incomes, consumers are looking for a better shopping experience and are willing to spend more money on quality products. This has led to a surge in demand for retail and food outlets at airports, which has created a vast market for retailers to tap into.
Civil Aviation Minister Jyotiraditya Scindia had in March 2023 said that India had outlined plans to invest billions of dollars in airports, aircrafts, and recruitment. Growth will include new airports, more regulators and air traffic controllers, and new flying schools.
India has proposed to spend $11.88 billion by 2025 to boost regional connectivity by constructing airports and modernising existing ones. Scindia said passenger capacity at the country’s six major airports is expected to grow to 420 million in four years from 192 million today, and Indian carriers’ fleet will grow to 2,000 aircraft in five years from 700.
Retail in airports
India has become one of the fastest-growing aviation markets in the world, and its airports have become the new frontier for retail businesses. Only on November 8, did Prime Minister Narendra Modi inaugurate the newly-constructed Chennai International Airport with state-of-the-art facilities.
The country's major airports have been investing heavily in creating world-class shopping experiences for travellers. The biggest airports i.e. Delhi, Mumbai, and Bengaluru already boast of several retail brands – some luxury, some high-end, and some medium, as well as several QSR outlets, along with fine-dining places.
Challenges
One of the biggest challenges is the strict security regulations at airports, which can limit the types of products that can be sold. However, with the right strategies, retailers can overcome these challenges and take advantage of the opportunities offered by the growing airport retailing sector in India.
Ranodeep Saha, Co-founder of Rare Planet, an airport-specific retail chain that has 35 stores across 31 airports in India, says that the biggest challenge for a retailer is getting all the required licences. “It takes 3-5 months to get all clearances to set up shop at airports. In all, there are 12 certifications. We were lucky that all our directors were Indian origin, so acquiring the certificates was less cumbersome. However, once we set up shop, there is nothing more rewarding as airport retail,” he says.
Saha also says that there are restrictions while selling at airports. For starters, due to security challenges sharp and pointed objects are a strict no. “We’re aware that we are an airport-only set up, and there are restrictions, but the good thing is that once you understand the art of setting up shop at an Indian airport, you can do it anywhere else in the world,” he adds.
Currently, 40 per cent of the stock at individual stores at Rare Planet’s retail outlets are locally sourced, while 60 per cent come from various parts of the country. “The idea is to promote local artisans and give people travelling quality products to give them the idea of what India provides,” he added.
Going beyond the shopping experience
Retailers have also expressed praise for certain brands that have reinvented themselves at airports. Arvind Dadu, Managing Director, Anand Sweets & Savouries uses Starbucks as an example. “Starbucks at the airport is one brand I admire, as they are creating spaces where travellers prefer to spend time, rather than the airport lounges. The product mix, staff training, and the ambience created by Starbucks at their airport cafes caters to a diverse audience comprising various age groups, and welcomes them all to have a good time while they wait,” he said.
Anand Sweets & Savouries, too, has made it a point to focus on an experiential airport retail experience. “We’ve designed special retail packs as part of our Heritage Collection, where we have created specially handcrafted offerings from different Indian states – Karnataka, Kerala, Tamil Nadu, and Andhra Pradesh. Each of these packs features products from the respective regions and they are available only at our airport outlets. In this way, we are able to present customers with an experience they can carry with them.
The growth of airport retailing in India has also attracted the attention of international brands looking to expand their presence in the country. Many global retailers have partnered with Indian firms to establish outlets at airports.
Additionally, airport retailing has created thousands of jobs in India, ranging from sales associates to managers and executives. This has helped to boost the country's economy and create opportunities for many people.
Both Saha and Dadu say that the airport retail industry in India has witnessed an upward trend. Industry reports too have highlighted the growing demand for luxury gifting options in airport retail. Therefore, brands need to cater to the airport retail segment. The way to do so is to invest in a format that is specially customised to be travel-friendly.
These offerings could range from pre-launch sneak peeks into a catalogue extension, to specially packaged products for gifting, to airport-only exclusives that pique curiosity among enthusiasts.
It is also important to maximise the experiential aspect within limited floor space at an airport; however, space utilization also comes into play when packaging the product itself. The retail display too, should focus more on such offerings, by making use of the right height and lighting, along with the right call outs, to guide customers towards what make for ideal purchases.
Challenges and opportunities
Dadu points out that in a post-COVID-19 world, there has been a marked shift in the passenger demographics; today we are seeing a younger, less affluent audience. Even as this youthful cohort of digital natives tends to seek variety and options online, given that a large portion of this audience segment is given to aspirational spending, there is also much demand for experiential formats, which allow one to try the product before completing a purchase.
“Airport operators are becoming more cognizant of changing consumer preferences, and allocating more floor space to retailers. In recent times, many brands have created pop-up stores for promotional purposes, giving travellers a chance to try their offerings while at the airport, or introduced walkthrough formats that allow waiting passengers to get a taste of the brand’s offerings first-hand,” he says.
With the aviation industry growing, and India witnessing more fliers, Saha also adds that there are purchases made in the 90-minute window that exists after checking in and boarding your flight. “Customers are fine walking and browsing stores, and the better experience they get also means that the greater the chance that they will buy a product,” he says.
The rapid expansion of the aviation industry in India presents remarkable opportunities for the growth of airport retailing. With evolving consumer preferences and an increasingly younger and aspirational demographic, retailers must adapt their strategies to deliver unique and experiential shopping experiences to passengers. Despite the challenges posed by strict security regulations and the need to acquire multiple licenses, the rewards of successfully establishing retail spaces in airports are immense. By focusing on customizing product offerings, maximizing space utilization, and enhancing the overall shopping experience, retailers can capitalize on this booming market. As airport operators become more aware of the changing preferences, they are allocating more space and opportunities for retailers to innovate and connect with customers. This trend not only contributes to the economic growth of the country but also establishes Indian airports as global retail destinations.
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