NEW DELHI — The biggest retail space in India, with more than 320,000 square feet offering both global and domestic brands at The Indira Gandhi International Airport’s Terminal 3 — better known as T3 — has been a work in progress since the time it opened last July.
But with more premium and luxury brands adding to the 1,000 or so labels available at the airport’s 250 stores, the focus is on raising the bar and filling in the gaps.
Fashion and beauty is the new growth area, both in the premium and the mass segment, and airport authorities have been coming up with novel ways of attracting bargain-hunting travelers.
It is the first time Indian travelers have been exposed to this kind of retail offering at an airport. The customer spend is growing fast, observed Abhijit Das, head of marketing, Delhi Duty Free Services Pvt. Ltd. DDFS is a joint venture company between DIAL (Delhi International Airport Limited), IDFS (Indian Duty Free Services) and ARI (Aer Rianta International).
Unlike many other airports, where customers usually spend in the departures areas, 65 percent of the spending at New Delhi’s T3 is in the arrivals area.
However, beauty, which accounts for about 20 percent of sales, performs much better in the departures hall, where it covers an area of more than 730 square meters, or about 7,900 square feet. Perfumes are still the best performing category. “Color cosmetics is growing fast, but we are still trying to understand the skin preferences of the travelers; the demand for colors in India is quite different from international markets,” said Das.
In fragrance, Chanel, Christian Dior and L’Oréal Luxury (mostly Armani) are the top three sellers.
To further grow this category, DDFS is developing some marketing initiatives. “While other airports promote liquor and tobacco, we are doing a special promotion on beauty for the month of June. This would include makeovers, promotions and a lot of offers,” he said.
In the fashion category, five stores opened at the end of March, marking the first time premium and luxury brands have been available duty free in India. Covering an area of 280 square meters, or about 3,000 square feet, are Hugo Boss, Swarovski, MCM, Montblanc and Samsonite Black. “Very few people know that the bulk of the shops in the retail area are not duty free,” added Das. The brands are now on offer at more than 30 percent cheaper than at regular retail.
Other additions from DDFS include two last-minute shops near the departure gates, which stock many of the fastest-selling categories, including made in India products, fashion goods and liquor.
Although DDFS runs more than 60 percent of the terminal’s retail area (of which more than 95 percent is duty free), the space has had many other first-time retailers within an airport environment in India.
The Body Shop is one of these, having taken a firm positioning as one of the only beauty retailers with a stand-alone position at T3. The chain has more than 60 stores throughout India. Marks & Spencer opened its first store in an airport at T3, part of its strategy of customizing to the Indian market. This is operated by Marks & Spencer Reliance India Pvt. Ltd., a venture formed in April 2008 between Marks & Spencer and Reliance Retail. There are more than 20 M&S stores in India.
Spanish retailer Mango has stores in both the domestic and international parts of the New Delhi airport, as does Italian brand Boggi and Reebok, while Versace is in the international departures area. Abhay Gupta, executive director, Blue Clothing Co., which is the exclusive franchisee for the brand, said, “We are going aggressive on the airport retailing segment since it will allow us a wider brand presence.”
He said airport retail stores could be expected to contribute 20 percent to total company revenues in the next three years. The company has other brands such as Sisley and Corneliani in the domestic retail sector of the airport.
Indian fashion brands that have been doing well at the airport include Kimaya and Fab India, and the accessories segment is growing fast.
“We are also adding categories in our stores,” said Das. “These include watches, which were there more as a market test earlier, but we are now growing the category. We are having a healthy conversion in sales and growing every day as we understand consumer trends.”
The terminal is expected to handle 34 million passengers each year. In total, the terminal covers 5.4 million square feet, with 78 aero-bridges, 168 check-in counters, 92 automatic travelators and a five-level baggage screening system with a capacity to handle 12,800 bags an hour.
Will the terminal really generate the estimated first-year sales of 10 trillion rupees, or $222 million at current exchange, as officials are predicting?
“The entire concept of travel retail in India is so relatively virgin that the sky is the limit,” observed Akash Gupta, an independent retail analyst.