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Airport Retail

Airport Retail

What is Airport Retailing?

Airport retailing simply refers to the retail sale of goods and services at airport premises. The known and unknown branded retail stores in airports are all in the business of what is called airport retailing. The word ‘airport’ is prefixed because of the location where this business takes place.

Types of retail stores and services commonly found at airports:

  • Books, magazines and stationery stores
  • Tea and coffee kiosks
  • Food outlets
  • Refreshment & Beverage stores (including liquor and tobacco)
  • Perfume, jewellery, and luxury stores
  • Stores dealing in eyewear, clothing and accessories
  • Travel accessory stores
  • Car rental outlets
  • Booking counters of hotels
  • Certified foreign exchange services
  • Pharmacies
  • Appointment counters of hospitals

Airport Retail as an industry

The airport retail industry is a part of what is called the travel retail industry which is valued at about USD 60 billion (2023) and projected to cross USD 170 billion by 2030. As per rough estimates from multiple perspectives, the share of the airport retail sector is estimated to be almost half of the total value of the travel retail industry.

Some of the driving forces behind the surge of airport retailing are:

  • An increasing number of commercial passenger airports
  • An increasing number of passengers travelling by air
  • Growing appetite for travel and tourism among common people
  • Improving airport infrastructure
  • Growing behavioural acceptance towards retail shopping at airports
  • Reinforcing effect

Airport Retailing as a Business Opportunity

When airport retailing is to be assessed as a business opportunity, case-by-case assessment becomes necessary. A big retail giant can think of a wider business model with a presence in multiple airports within a country or across the world. A smaller enterprise will have to think differently. The size and scale of the airport in question and the air traffic involved are also determining factors in developing a business model and business plan. Some of the important considerations to be taken into account to assess the prospect of starting an airport retail business are highlighted below.

Presence of Competitors

The presence of direct competitors is a strong positive sign of the presence of business potential in a given airport. The presence of multiple competitors indicates that they must have done their market research before establishing a business in that airport. It also shows the presence of a regulatory framework to apply for and start a specific business in that airport. Likewise, their presence sheds a green light on many important factors. However, the presence of competitors must not be construed as avoidance of market research and other essential assessments and projections for business.

Volume of Air Traffic

Just like it is unlikely to be commercially feasible to start a big business in a very small market, it is also the same with starting an airport retail business. The number of flights that an airport handles speaks about the number of prospective customers available for targeting. That is why airport retailing is a rare phenomenon in small airports. An entrepreneur thinking of starting an airport retail business must consider this as a primary factor. They need to see if the airport they are considering can justify the required business volume. As an alternative strategy, they may have to scale down their offerings provided the rentals and other costs support the business commercials.

Average Number of Passengers per Day

Even if an airport is named an international airport or is an important connecting point, the number of passengers may not be sufficient enough to pull off business commercials. An important statistic to look at is the average number of passengers an airport handles per day. Still, this number only shows the total number of prospects available for targeting. Now, what numbers are suitable or the degree of confidence in attracting customers and creating conversions shall vary from business to business. This data point is also relevant for existing businesses in making inventory-related decisions.

Airport Maintenance, Infrastructure and Ambience

Retail brands also have certain predefined standards to maintain. The physical elements of their stores reflect their brand identity and voice. Take cleanliness for example. A branded coffee shop would not open a branch in a locality where cleanliness and hygiene are not properly maintained by authorities. The same applies to airports. If the shop is clean inside but the other interior areas of an airport are not well-maintained by housekeeping, it will affect the brand experience of the customers. The same goes for the infrastructure and ambience in airports.

Routine Average Waiting Time

The time available with passengers is another vital consideration for airport retailers. In busy airports, under ideal circumstances, passengers do not have much time on their hands for leisurely or exploratory shopping. If they need anything they will get to the nearest store and buy it. Or if they notice a store and they get reminded of something, they will go and buy it from there. So, retail brands that are dealing with products that need deep thinking and consideration before buying should reconsider their airport retailing ideas. Airport retailing is for quick and easy purchases or consumption.

Presence of the Target Segment or the Need

A pertinent question that all businesses ask in general should also be asked in airport retailing – is the target segment available? The target segment comprises prospective customers who may buy the product offerings. If the target segment is not available, who will be offered and who will buy? And the reverse is not just true but would also perform well. Take the example of a store selling memory cards used in cameras and phones in airports in and around tourist destinations.

Premium Price

One side of airport retailing is about premium brands, premium and rare products, premium quality and premium pricing. It does not matter whether a store is selling chewing gum or imported wine. But sometimes even routine products are sold at exorbitant rates in the airports because of additional charges and high rentals. This makes airport retailing a tricky area of business for routine merchandise.

Rentals

Most of the airports in the world today are managed by private companies under the aegis of respective authority bodies. These companies make heavy investments and have to incur high operating costs to maintain the airports. They are bound by contracts for their deliverables. Because of all these factors, there is no scope for leniency in the quality of services or maintenance of assets and infrastructure. This burden passes on retailers and one s

Rules & Regulations

Airports are sensitive places governed by strict regulations. So, retailers must exercise high levels of caution and care in ensuring that they strictly abide by the established rules and regulations encompassing all business activities and operations.

Challenges in Airport Retailing

Making accurate demand forecasts

Airport retail stores encounter many challenges in achieving accuracy in demand forecasting. The foremost one is the transient and dynamic nature of demand in airport shopping. There is hardly anything consistent about it and is constantly changing. The fluctuations and unpredictability in demand make it challenging to generate a baseline projection. The buyer’s behaviour is also influenced by the purpose of travel, time of the year, airfares, frequency of travel, etc. For example, if the airfares are already high, passengers are extra cautious about spending on anything that could be avoided.

Limited customer base & drawing customers

The number of passengers travelling via an airport remains confined for long periods. This means retailers have a limited customer base. All the passengers may not be even the same as the target segment. Thus, it makes airport retailing a limited affair. Secondly, attracting customers is difficult in small and medium-sized airports. Customers are aware that goods are available at expensive rates in airports and prudence says it is better to avoid making planned purchases there.

Increasing rentals which are already high

Like the rentals for any property, the rentals for space in airports are also subject to annual or periodical hikes. There is little scope for businesses to expand within the hired space. This only increases their commercial burden with every passing year. And if the same does not get compensated with an increase in revenue, it begins to show up negatively on their financial statements. The same consideration applies to other operating costs as well.

Longer replenishment time

The inventory sold in the retail stores of airports have to go through stringent security checks and screens. This makes stock replenishment a time-consuming operation. Also, purchases have to be initiated much earlier to ensure that goods could be on the shelves on time. This also makes changes in merchandising or product offering a detailed planning process.

Remain open for longer hours

Because airports work 24×7, most of the retail stores in the airports remain open all the time. Some stores may close during the night but in busy airports, the majority of stores remain open for the full stretch. This means shift working is involved and it is stressful and exhausting for both small teams and business owners.

Longer onboarding of employees

Working inside an airport is again subject to stringent norms. Employers, apart from their own checks and measures, also have to adhere to the norms laid down by concerned airport authorities and other regulatory bodies governing hiring. So, recruiting and onboarding take longer for employees intended for posting in airport-based enterprises.

Limited room for stocking

With limited storage space, retailers have little room to flex their merchandising skills. To add to the woes, some stores do not even have additional room for storage like stock rooms. This makes things much more challenging for small retailers. And limited stocking abilities of a retail store affect the choices it can offer to its customers.

Difficult in returns and refunds

After passengers leave an airport, the process of return and refund becomes a daunting task for retailers. That is why most retailers display the sign – no return, no refund. But that is convenient only till a direct competitor does not display such a board. Again, different airports may have different rules and regulations governing product returns.

Why YRC

Started in 2012, YRC is a boutique retail and eCommerce consultancy brand specialising in business management, growth, and expansion. YRC’s growing global footprint is preceded by its experience of having worked with 500+ clients in more than 25 verticals. The services and solutions are designed and delivered by a team of expert retail consultants with rich and relevant professional exposure guided by planned and proven principles and processes.

In airport retailing, businesses of all sizes can benefit from YRC’s extensive array of services as per relevance and unique business requirements.

In business model development, YRC helps its clients identify and develop strong value propositions. The entire value chain is mapped encompassing the best way to create and make the identified value available to the target segment.

In financial and commercial planning, YRC prepares the detailed numbers and statistics required to convincingly pull off the business idea. The various assessments prepared include demand forecasts, projected sales and revenue, CAPEX and OPEX, estimated profit and loss statements, ROI and break-even analysis, and inventory and purchase planning.

One of the major concerns for airport retailers is making the best use of the available space while still achieving the goals of visual appeal and elevating the customer shopping experience. YRC’s expertise in layout planning is put to use here to help its clients quickly get a list of implementable options for the layout of their stores.

The benefits of SOP-based operations planning are many. But a strong reason to develop and use SOPs by retail stores located in airports is to ensure that the applicable rules and regulations established by airport authorities and other regulatory bodies are duly followed. SOP development & implementation assistance is one of our flagship competencies.

To know more about YRC’s retail consulting services or if you want any business-related query on airport retailing addressed by one of our expert retail consultants, drop us a message and we will reach out to you.

Let’s Talk!

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    We work only for Visionaries.

    CONTACT

    PROCESS AUTOMATION

    The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

    In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

    Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

    Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

    YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

    VIDEOGRAPHY & PHOTOGRAPHY

    No matter how good your product is, the customer would know only if it looks good.

    Photography includes the following steps:

    • Cataloguing your products
    • Cataloguing your images
    • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
    • Choose the right camera & lens (You may also outsource the photography to a third party agency)

    DIGITAL MARKETING

    Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

    Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

    These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

    Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

    This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

    IT INTEGRATION

    Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

    YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

    IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

    This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

    Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

    WAREHOUSE & LOGISTICS PLANNING

    • How many cities or countries you wish to sell in?
    • Where should your Warehouse be located?
    • Should you have one warehouse in each country or city?
    • Should you be having your own delivery team in your base city?
    • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
    • How should I manage the logistics if my goods are coming from different countries?
    • How should the goods be stored and barcoded?
    • How much space do I require for warehouse?
    • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

     

    At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

    We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

    Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

    UI & UX DESIGNING

    This Step involves 03 distinct parts:

    Part 1: Choosing the right Platform:

    From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

    Part 2: UX Designing:

    “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

    UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

    “As per statistics, 68% of the customers abandon the carts before payment”

    An interesting UX ensures the customer sticks on to the website for a longer time.

    Part 3: UI Designing:

    UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

    A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

    The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

    If User experience is the bare bone, user interface wraps it up with an attractive cape.

    At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

    SAMPLING & PRODUCTION

    This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

    In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

    Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

    Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

    Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

    Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

    Production Sample is made before the production which is the replica of what is going to be finally produced.

    Once you are through with all this, you are good to go ahead & get your goods manufactured.

    PRODUCT DESIGNING / SOURCING

    Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

    Product Designing / Sourcing can be done in several ways, as follows:

    • In-house Design Team
    • Freelance Designers
    • Outsourced Design Team
    • Ready Product Sourcing (From Manufacturer or Wholesaler)

    At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

    These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

    If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

    Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

    BRANDING

    Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

    Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

    It is an integral part to attract the target audience.

    ORGANOGRAMS & SOP’s

    Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

    SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

    At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

    CRITICAL PATHWAY

    Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

    CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

    CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

    At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

    BUSINESS STRATEGY & BUSINESS PLAN

    Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

    Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

    Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

    YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

    MARKET RESEARCH

    Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.