Airport retail continues to grow phenomenally, aided by increasing air traffic and growing wait times at airports. The outlook on airport retail remains bullish, however, challenges prevail – political instability and online retail onslaught can take away some of the sheen from this fledgling landscape, according to a new study on airport retailing by research firm Fact.MR.
The gains in the airport retail are primarily driven by ‘duty-free’ motivations, however, the competitive pricing offered by online retailers has meant taken away that lucrativeness. Luxury retailers at airports may not be as susceptible to the online juggernaut as mid-price player, but the threat is growing by the day. Airport retailers are now focusing on incorporating a multi-channel approach that captivates the attention of a captive audience.
Airport retailers have shied away from disruptive innovation, as they have been guaranteed of a specific footfall every day, unlike high street retailers who have to wait for weekends to see higher footfall. The laxity in terms of innovation has also been influenced by higher sales densities; however, increasing competition, especially from online stores, is driving the adoption of technology.
Airport retail sales have remained limited to small-ticket purchases, including perfumes, books, and apparels; however, consumer electronics products have witnessed a surge of late. According to Fact.MR, revenues from consumer electronics sales at airports totaled US$ 1,700 million in 2017.
The lucrativeness of consumer electronics shopping at airports in southeast Asian countries is creating opportunities for airport retailers. The factors for this spectacular rise are multi-pronged – emergence of a middle-class with disposable incomes, and investments in airport expansion have fuelled growth. Spectacular growth has been witnessed in India, where air traffic has doubled to 117 million in the last 6 years. The Fact.MR report pegs Indian airport retail to witness steady growth in the short- and long-run.
The popularity of consumer electronics at airports in Southeast Asia mimics the broader buying trends in the region. Consumers in Southeast Asia are showing an insatiable appetite for smartphones, mobile accessories, and other mid-priced products. Sensing the opportunities, airport authorities and retailers are focusing on this consumer durable segment, and it is likely that airports will have higher visibility of these stores.
The limitations on permissible luggage have meant that consumer electronics retailers are focusing on hyper-personalization. Incorporation of technology to access consumer details to deliver the products at the desired destination has opened up new avenues. The trend of hyper-personalization is likely to gain ground in the airport retail sector in the future.
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