Airport retailing has become a popular concept in the last few years. Often called travel retail (which takes place mostly but not entirely in an airport), it has become one of the important strategies of companies planning to promote and create awareness about their brand. Airports where airfares are low are not able to generate high revenue from aeronautical business. Therefore, they shift to non-aeronautical businesses such as retail shops, restaurant, bars, and cafeterias. Airport retailing can also include services such as hotels, nursing homes, car rental outlets, banks, exchange offices, drugstores, and other stores such as jewelry, books and magazines, gifts and crafts, clothing & accessories, convenience stores, optics, perfumes, and souvenirs.
Airport retailing requires several characteristics for better functioning. For instance, a store needs to be at a convenient location for efficient accessibility. Furthermore, wide range of products and prolonged customer service might attract customer attention at airports. However, the quality and quantity of products in stores located in an airport strongly depend on the number of passengers travelling through the airport, and whether the airport is international or domestic. Retail stores can avail various benefits by establishing an outlet at an airport. Brand recognition and awareness are the most important ones. These provide immense scope for retail outlets to showcase their brand and broaden their customer base.
The airport retailing market is driven by the rise in number of passengers, specifically in countries such as India and China, where the level of commute is high. The airport retailing market is also boosted by travelers’ appetite for shopping on-the-go and retailers’ growing skills for selling products. The time spent by passengers at airports has also increased due to the early check-in times set by airlines due to security and operational concerns. This has offered retailers the scope to sell products efficiently. High disposable income of people in growing economies has provided opportunity for big brands to set up their stores in airport premises. People shop the most in the timeframe between clearing the security-immigration desks and boarding the aircraft. Therefore, airports strive to cut down the waiting times at check-in, security, and immigration queues to maximize this timeframe. Viable prices and the presence of big brands at discounted prices are vital factors encouraging travelers to make purchases at airport retail stores. Retail store at airports are duty-free; this typically means that these stores are exempted from payment of local or national taxes. Thus, travelers can buy products available in these stores at cheaper rates. Brands are customizing their offerings to help improve the shopping experience of travelers.
In order to efficiently compete in the market and create value proposition, retailers are engaged in extensive research to collect data related to flight schedules, number of passengers in the flight, and location. The data is expected to help retailers keep check of their warehouses, adopt price skimming strategies, and conduct promotional activities to create strong customer base.
Key players operating in the airport retailing market are Dufry AG, Tata Inc., Shoppers Stop Ltd, William Penn Ltd., Pavers England Limited, WH Smith PLC, Hidesign Accessories Ltd., and World Duty Free Group.
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