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The Future 'Retail' Airport

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Baskar Rengaiyan, Head - Travel & Transportation, Mphasis Headquartered in Bangalore, Mphasis is an IT services company offering Cloud, Congnitive, Digital, Governance, Risk & Compliance, Infrastructure, DevOps Automation and many other services.

Travel by air is becoming smart and easy – every passing day. Airline industry attracts passenger with best price, deals and value addition. Equally, partner of the trade, airports, also started playing major role, while attracting customer to their hubs. The airline passengers utilizing the airports for their essential travel needs and started expecting more engaging facilities are extended to them.

Retail, though, in the beginning got introduced in a small scale in most of the airports to satisfy the travel needs, like food, travel accessories, essential clothing and gift items. But today, if you observe, close to 40-50 percent of the space in airports are filled with retail outlets due to the demand created by the passengers. Passengers now started adding ‘shopping on the way’ as one of the action item during travel. Early arrivals, connecting hubs like Dubai, Frankfurt, Hong Kong and other cities are providing great shopping experience for the travelers. However, airports need to consider introducing more options. Currently, the larger retail outlets are selling food, alcohol, fashion accessories, confectionary, perfumes, travel amenities, books and periodicals. Retail collection may be included with country-specific retail products. City essentials may be promoted depending on the session instead of expecting the passenger to on-look at general market place.

Typically, we see more at the air side retail outlets. Airports should be converted with more retail options at the city side as well. It enables the day passengers, transit passengers to have whole new experience instead of offering ‘conventional time-killers’ to the passengers. Flexible check-in, bag drops may be positioned, as they walk-in to the airport. It requires – clear and easy – accessible or clutter-free design patterns for the passengers to gain confidence and shop at will. It boosts the revenue in abundance.

Airports should also upgrade their websites so that passengers can pre-order the items.
Passengers can collect – either on departure, on-arrival (after security points) or during transit. (e.g., Dubai Airport). Airports must increase the digital foothold. So that, up-selling and cross-selling at airport can increase the revenues in multifold for the airports. Airlines also need to introduce the airports which provide tremendous retail experience, so that it will be mutually beneficial for the airport and the airlines.

"Converting an airport as a strategic retail experience centers makes the airports to get more revenue from other sources"

Airports while upgrading need to consider the options to be more attractive to the passengers. During redesign phase – the airport authorities need to have complete clarity on – what kind of retail mix will be offered for the passengers, level of introduction – phase wise, positioning the retail shops in strategic locations within airports are very import. While introducing more outlets at the city side, we need to consider its impact which includes the security aspects.

Strategically, airports may consider signing MoU with larger retail operators so that the best experience provided to the customer. Providing larger malls within airport territory brings whole new experience. The prices of selling products, items and services may be kept highly competitive instead of charging premium. But it is also essential for the retail operators to understand the nuances of travelers shopping ‘inside’ the airport and knowing what to offer ‘outside’ the airport premises. The differences will make those airports as a retail hub conversion successful otherwise it may not yield right experience for the travelers or the users of such facilities. Airport safety administration may need to revisit some of the new challenges emerging due to the retail advancement within the airport premises. They may need to create logistics routes, separate gateways for the retailers to bring-in/out the materials will become more sensitive and we may need to look at it – very deeply before venturing with such advancement. Security and Safety will have to have different policies and procedures established to handle any eventualities. Boarding passes – considered extensively – for the especially duty-free items and large airside purchases. We may or may not consider the city side purchases because boarding-pass may not be available for those passengers not yet checked-in. Airports need to decide the document preferences, while the city side procurement happens. The airport authorities need to consider the permissible items and its relevant policies.

Converting an airport as a strategic retail experience centers makes the airports to get more revenue from other sources. Now they are largely depended on airlines or associated fees. According to European Travel Retail Confederation, in Europe the duty-free and travel retail industry generated revenue in a year - Euro 15.4 billion, of which Euro 10 billion was generated at airports. It means, the airports amounted to 67 percent of total duty-free and travel retail sales for Europe in a year. It is showing upward trend, obviously, on year on year basis.

Real-estate and infrastructures are well-utilized by this way and considerable income from retail channel can help airports to self-sustain. Globalization enabled most of the airports to get unbundled from the clutches of government regulations. More private participation is being encouraged. But such relationship can sustain provided if innovative models are introduced into airports. Otherwise converting airports as a profit centers will be a challenge. Some airports are earning big revenues using parking. But the kind of satisfaction the retail experience offers at airport will be immense and the travel becomes more fun for the passengers.