Home / Industry / Retail /  Foreign fashion labels eye airport shops for India entry

New Delhi: A captive consumer base of air travellers, increase in sales volume and spendthrift shoppers are tempting foreign lifestyle brands to open stores at emerging airports in the country. US-based lingerie and beauty products retailer Victoria’s Secret is close to opening its first beauty and cosmetic store at T3, the international airport terminal in New Delhi.

Even Armani Jeans, a fashion brand marketed by Genesis Luxury in India, is opening a stand-alone store at the Delhi airport. Both brands are being channelled through Delhi Duty Free Services Ltd.

Although an email sent to Limited Brands that owns Victoria’s Secret remained unanswered, two people familiar with the company’s plans said the lingerie maker had been “seriously" eyeing entry into India.

To be sure, agreements with Delhi Duty Free allows these brands to open stores on airport premises only. The stakeholders in Delhi Duty Free include Delhi International Airport Pvt. Ltd, GMR Group and Yalorvin Ltd, a 100% subsidy of Aer Rianta, an Irish travel retailer that manages and operates duty free and duty paid airport retail outlets in Europe, Asia and the Americas.

It is easy to see why companies are coveting retail space at airports. They find an attentive and confined set of customers often with spare time on their hands to shop. Besides, newcomers exploring retail space at airports may have been impressed by Benetton and Samsonite’s high-performance stores at airports.

“Stores in airports are a highly profitable business," said Suresh Menon, managing director for South Asia at luggage maker Samsonite South Asia Pvt. Ltd that currently operates 7 stores at different airports. The company’s next store at the Mumbai international airport is due to open soon.“Our stores get about 5 times the footfalls at airports and the conversion rates are much higher."

For the retailer, the Delhi airport store at the T1 terminal, for instance, is one the most successful stores in the country, with an average ticket price of close to 8,000. The company will continue to open more stores in airports, said Menon.

“Airports are the most concentrated spaces to find your business customer," explained Dilip Kapur, president and founder at leather goods manufacturer Hidesign, which sells its goods in major airports such as Bangalore domestic, Cochin, Delhi (domestic), Hyderabad (domestic) and through so-called shop-in-shop outlets in Shoppers Stop at Raipur and Bangalore International. For Hidesign, the business is driven by business bags and gifting. What’s propelling airport sales for brands is the increase in corporate travel, especially among women. “That is fuelling demand for categories such as single malts and beauty products," said Abhijeet Das, who heads marketing operations at Delhi Duty Free. “Such consumers are often pressed for time otherwise and end up making high ticket purchases at the airports," he said.

Even though rentals remain exceedingly high for airport shops, retailers do find the investment worth their while.

“Airports are among the most expensive retail spaces in India, and profitability can be tough, especially since traffic has not grown as was projected," said Kapur. However, for certain brands it is a good place to meet customers, he added.

It also helps that these stores run 24x7, Dipak Agarwal, chief executive at DLF Brands that operates two stores of European fashion label Mango at Delhi’s domestic and international airports. The stores have done well for the brand, he said. In fact even the marginal increase in domestic travel projected recently will boost sales for airport shops, retailers say. On 17 February, consultancy firm Centre for Asia Pacific Aviation (Capa) said that in 2013-14 domestic traffic was up 6% while international traffic, for the first eight months, was up 10.7%. The firm said it expects domestic growth to be in “low single digit" at 1-5% for the coming fiscal year but projects international traffic to grow at 10-12%.

To be sure, the number of high-density airports in the country are still limited. The Airports Authority of India (AAI) manages a total of 125 airports, which include 11 international airports, eight customs airports and 81 domestic airports. It is in the process of privatizing 15 of its most profitable airports starting with Chennai, Kolkata, Ahmedabad, Guwahati, Jaipur and Lucknow. The privatization process has been delayed owing to the general elections this year.

Cosmetics, perfumes and single malts fly off the shelves at Delhi Duty Free. Now even luggage and apparel demand is picking up.

“In perfumes and cosmetics, brands such as MAC, Chanel and Dior remain popular. The sales at Duty Free for some brands in perfumes and cosmetics are much more than their sales at stores across India," said Das.

The Armani and Victoria’s Secret stores, which are likely to open by middle of the year, come at a time when foreign brands, driven by the country’s more liberalized foreign investment policy (FDI) in single brand retail, are seeing the potential of India’s fast rising consumerism.

Sweden’s fast fashion label Hennes and Mauritz said it would invest 700 crore to open 50 stores in the country.

The first store is likely to open by end of the year, according to a February report by Reuters.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout