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Even the biggest listed retailer in the country, Pantaloons Retail Ltd, exited its JV with the Alpha Group Plc. to set up an airport retail venture (“We are completely out of this business now as it doesn’t fit our style of working,” said a company spokesperson). And if you’re thinking that the newly done up (and relocated) airports at Bangalore, Hyderabad, and even at Mumbai, are something to cheer about with respect to retailing, they stand simply nowhere when one compares a walk through the shopping stadiums (if one can use that usage) at Singapore’s international airport, or at Heathrow’s five terminals in London or in the Zurich or Geneva international airports in Switzerland, where most intelligently, to reach the boarding point, one has to first board a train from the shopping area (showing how expansive is the land dedicated to retailing). Anurag Mathur, Joint MD, Cushman & Wakefield deliberates, “Globally, airports derive a large portion of their income from non-aeronautical revenue. Heathrow, San Francisco, Vancouver and Brisbane, bring in as much as 50% of their revenues from retail and other non-aeronautical resources.” But currently, a passenger spends $3 on an average in an Indian airport, which stands too low as compared to the global average of $15.
However, despite the most discouraging response of private companies to airport retail tenders, market experts are still optimistic about the growth of the segment. Binit Somaia, Director, CAPA, comments, “The airport retail environment will improve significantly as the airport development projects move ahead. At non-metro airports, this trend is likely to progress more slowly and less dramatically, however we will nevertheless see changes in these locations as well.” Cushman & Wakefield estimated in a September 2008 study that India will have seven new airports by 2015, by when, even the 40 currently operating airports will need (and hopefully undergo) huge upgradation. And if that goes as per estimations, the non-aeronautical revenues will shoot up to a gargantuan 54% of gross airport receipts. But the segment will take much more time to match up to western levels of 70%.
There is no denying that airport and petrol pump (or gas station) retailing are still at a very nascent stage in the country. But keeping in mind the overall growth of the retail sector, one does wonder logically why private companies are playing doppelgangers when it comes to exploiting an available and purchase ready captive audience. Perhaps it will still take a lot of time for Indian retail companies to actually think beyond selling wafers and water bottles at airports and petrol outlets.
Perhaps a final port of call might convince private players. Forbes has rated Indian airports as being the most delayed ones in the world! Rather than looking at this negatively, imagine the possibility. A traveller who normally would’ve spend just a half hour looking around, now gets perchance beyond that! How much more ‘boomeranged’ karmic could that get?!
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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