MUMBAI| BENGALURU: With the number of air passengers rising every year in India and a crunch for quality retail space faced by retailers across metros, airports are emerging as the next battleground for retailers. Given the huge demand for retail space, the current vacancy in Mumbai, Delhi and Bengaluru varies from 0-5 per cent in international and 5-10 per cent in domestic terminals.
Considering airport-specific dynamics, rentals for retail space at international terminals in Mumbai and Delhi are hovering at Rs 3,000-3,500 per sq ft a month. In comparison, rentals for space on the ground floor of a grade A luxury mall are Rs 850-1,250 per sq ft a month on carpet basis, showed data from JLL India.
“Stores at airports are all about efficient spaces as the customer base is focused with a limited time and hence merchandising is also done accordingly which has quick turnarounds. The rents and revenue shares at airports generally tend to be higher compared to malls due to efficiency of spaces and high quality traffic,” said Pankaj Renjhen, MD -Retail Services, JLL India.
Delhi International Airport (DIAL) crossed the 48 million passenger mark in 2015-16, registering a growth of 18 per cent in traffic over the previous year. Also, Indian airports are going through tremendous commercial transformation through public-private partnerships, resulting in development of such dedicated retailing areas, Renjhen said.
Following in the footsteps of major transit points globally, Delhi and Mumbai airports now offer a good tenant mix. Demand for retail space is expected to rise at other busy airports as well. “As a touch point, airports have the opportunity to create an attractive commercial environment for the well-heeled traveller.
At GVK’s Mumbai and Bengaluru airports, response to retail space has been good, although travel retail as a concept in India is nascent and still evolving,” said a spokesperson of GVK that operates Mumbai and Bengaluru international airports.
More than 30 brands have made their foray into domestic travel retail through new T2 terminal at Mumbai international airport. According to GVK, most of the stores and outlets at Mumbai airport are performing above expectations, while the Duty Free stores and F&B outlets seem to be the primary drivers of business at Bengaluru airport. However, recent trends indicate growth in lifestyle and personal products like cosmetics, fragrance, fashion and accessories.
According to Rajesh Jain, MD &CEO of French lifestyle brand Lacoste India, which has two boutique stores in Mumbai domestic airport and Hyderabad international airport, these stores help connect better with the target audience.”A lot of impulse shopping takes place at airports. We have been able to break even across our boutique stores. Profitability is a focus area and we believe in bottom line,” he said. The company also has two stores in Bengaluru and Mumbai international airport, and is evaluating opportunities at other large airports as well.
Thanks to the increase in passenger traffic, it is expected that retail sales would also increase at airports in the future. “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,” said JLL’s Ranjhen. The current retail-tenant profile at Indian airports includes brands ranging from apparel to wellness, convenience, travel and books, electronics, fashion accessories, sunglasses, watches, jewellery, F&B, perfumes and cosmetics, wine and liquor as also travel accessories.
Credits ET Realty