SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES (SIMS) (CONSTITUENT OF SYMBIOSIS INTERNATIONAL UNIVERSITY) DISSERTATION Growth of Airport Retail Sector in India A PROJECT REPORT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Under the Guidance of Professor, Dr. Komal Chopra SUBMITTED BY Gaurav Biblani (A 12) PRN 15020441095 Nirpender Kumar Singh ( A 24) PRN 15020441159 Batch 2015-17 (MARKETING) 1
DECLARATION BY STUDENTS We hereby declare that the project titled Growth of airport retail sector in India is our primary and original work. The report is being prepared on the basis of primary research. 2
DECLARATION BY FACULTY GUIDE It s hereby declared that Gaurav Biblani, PRN 15020441095, Roll no- A-12 and Nirpender Kumar Singh, PRN 15020441159, Roll no A-24 has completed their Dissertation Project on the topic Growth of airport retail sector in India. Signature of the Faculty Name of the Faculty : Professor, Dr. Komal Chopra 3
ACKNOWLEDGEMENT I would like to convey my deep gratitude to SIMS and Professor, Dr. Komal Chopra, respected faculty guide for guiding me throughout the project. He has always been there for providing an unbiased critical overview of the project at each stage. To the rest of the Symbiosis fraternity we extend our deepest gratitude. Regards Gaurav Biblani, Nirpender Singh Batch 2015-17 Marketing 4
TABLE OF CONTENTS SR. NO CONTENT PAGE NO. 1 Chapter 1 Introduction 6 2 Chapter 2 Research Methodology 7 3 Chapter 3 Analysis and References : Retailer 8 4 Chapter 3 Analysis and References : Customer 16 5 Chapter 4 Data Analysis 22 6 Chapter 5 Finding and Conclusion 23 7 Chapter 6 - Recommendations 24 8 Chapter 7 - Appendix 25 9 Turnitin Report 31 5
Chapter-1 INTRODUCTION The global airport retail market is set to expand by leaps and bounds, led by robust growth in Asia Pacific and the Middle East and Africa. In 2015 the global airport retail market has reached to $ 44.1 billion. Which is expected to rise to $ 59.2 billion by 2019. This will be driven by stronger passenger growth as well as growing affluence in emerging markets which will increase the spending power. Airport retailing in India has crossed its initial stage. It has started adding significant nonaeronautical revenues for various airports in India. For instance Delhi s Indira Gandhi International Airport (Combining T1 and T3) has close to 500 brands spread over 323,000sq ft. Most of the brands planning to expand in future. In recent years many low cost airlines have emerged up (Indigo and Spice Jet) and due to early check-in times, passengers spent in a lot of time on airports. Thereby exploring the retail stores. The idea is to understand the growth of Airport Retail Sector in India. Understanding the purchase behavior of the customer and inside motive of the retailer/brand. It s being seen that there are various brands that have stores only at airports. The main motive is to increase the brand awareness. Other aim of this project is to study the major categories of products being purchased by customers while travelling by air. Taking on the perspectives of the retailers as both initial and maintenance cost is high. Finding out performance (revenue /profit) for stores. 6
Chapter-2 RESEARCH METHODOLOGY 2.1 TOPIC SELECTION The topic selected was to determine the growth of airport retail sector in India. This topic was selected to understand the growth this industry is showing and to see the future potential of this sector. We have taken the retailer s and customer s perspective through our survey. Survey was conducted using a questionnaire that was filled by retailers and customers at various airports. 2.2 SAMPLING TECHNIQUE AND SIZE The sampling technique used was simple random sampling. The purpose of the sampling was to determine To find the growth potential of airport retail sector. To understand the buying behavior of customers from airport retail stores. To understand the various product categories put up by the retailers at airports. To find out the major purposes (Marketing, Branding, Trial etc.) of the retail outlet owners. 2.3 COLLECTION OF DATA Primary data: All data has been collected in the form of primary data. The respondents were interviewed face to face, telephonically or through emails. The respondents were asked to fill a questionnaire designed to understand their preferences and pattern while buying from retail stores at airport and similarly from the owner and managers of retail stores. The research and primary data was based out of the three major airports i.e. Mumbai, Pune and IGI Delhi airports. The questionnaire was different for retailers and customers. 2.4 ANALYSIS OF DATA All the data analyzed was represented in the form of Graphs/ charts and tables with the help of excel. 7
Chapter-3 ANALYSIS AND INFERENCES Retail Store Analysis 1. Different types of stores surveyed Analysis: Type of Store: Retail Store Food and Beverages Duty Free Store 0 5 10 15 20 Fig 1: Different types of stores surveyed In our survey of retailers we have got response from 19 retail store, 7 foods and beverages store and 4 duty free stores. These were the three major categories in which we can classify the stores present at airports. 2. Ownership of the store Analysis: 8
Surveyed person is the proprietor or the store company owned 30 25 20 15 10 5 0 Company Owned Self-Owned Fig 2: Ownership of the store It was found that 25 stores surveyed was company owned and only 5 stores was self-owned which implies that companies are aggressively interested in opening stores at airport. It was also found that mostly the self-owned stores were in food and beverages segment. 3. Total Store Area Space Analysis: Total Store Area (Figures in Sq Ft) 20 18 16 14 12 10 8 6 4 2 0 500-800 800-1500 Above 1500 Fig 3: Store Area It was found that average store area lies in between 800-1500 sq. ft. And big stores like croma and shoppers stop are taking area above 1500 sq. ft. which shows that there is a demand for huge area space on for airport retail. 9
4. Footfall at the airport retail stores Analysis: 16 14 12 10 8 6 4 2 Approximate footfall in the store per day 0 100-500 500-1000 Above 1000 Less than 100 Fig 4: Footfall at the airport retail stores It was found that footfall at airport retail store was high and most of the stores had good footfall and relatively more than as compared to outside stores. We found that 14 stores had footfall between 100-500 and 13 stores had footfall between 500-1000 which is a descent number for retailers. 5. Purpose behind store at airport Analysis: Purpose of opening store at airport Sales and Profitability Marketing and Advertisement Experimental 0 5 10 15 20 25 30 Fig 5: Purpose behind store at airport 10
We tried to find out the reason behind brands opening their stores at airport and we found that sales and profitability was the major reason for opening a store at airport followed by marketing and advertisement. 6. Performance of store Analysis: 16 14 12 10 8 6 4 2 Performance of airport retail Store as compared to other stores 0 Equivalent High Low Fig 6: Performance of Store It was found that when compared to the outside airport retail stores 15 stores were equivalent in performance in terms of revenue and to our surprise we found that 12 stores were high performing stores for the companies. 7. Type of product in terms of price Analysis: Type of product that sells more at airport retail store 18 16 14 12 10 8 6 4 2 0 Average Priced High Priced Fig 7: Type of product in terms of price 11
It was found that 17 stores said that they sell more high priced products at the airport retail store as compared to outside store and 13 stores said that they sell mostly the average priced products. But none out of surveyed stores said that the low priced product was in demand at airport retail stores. 8. Airport Retail Store is a Profit making store or not Analysis: 25 Airport store a profit making store 20 15 10 5 0 No Yes Fig 8: Airport Retail Store is a Profit making store It was found that around 67% of retail stores surveyed was making profit and there airport retail store was a profit making stores. This analysis shows that majority of stores are profit making and some are showing growth potential which acts as a boost for this sector. 9. Government Regulations promote airport retail Analysis: 12
Government rules and regulations promote airport retail 25 20 15 10 5 0 No Yes Fig 9: Government Regulations promote airport retail We found that around 70% of surveyed stores said that government is supportive and rules and regulations are promoting airport retail in India. Government is promoting airport retail and taking new initiatives in this direction. 10. Future Growth Potential for airport retail Analysis: Growth potential of airport retail in India 20 18 16 14 12 10 8 6 4 2 0 Average High Very High Fig 10: Future Growth Potential for airport retail We found that most of the retailer is upbeat about growth of airport retail in India and with new government initiatives this sector is going to get a boost. 13
11. Future plan of opening a new store Analysis: 30 Plan to open new stores at airport 25 20 15 10 5 0 No Yes Fig 11: Future plan of opening new store We found that around 85% of retailers are willing to open new stores at airports as we have seen that most of the stores are profit making stores so they are planning to expand. 12. Airports where retailers would like to open new store Analysis: If yes, then at airport where retailers would like to open store International Domestic All of the above 0 5 10 15 20 25 Fig 12: Airports where retailers would like to open new store 14
We found that most of the retailers want to open new stores at international airports because the footfall is quiet high at these airports and the revenue is high. We found that big brand are willing to open retail stores at major airports but there are also good number of retailers who are willing to expand across all type of airports. 13. Biggest challenge faced by airport retail Analysis: The biggest challenge faced by airport retailers Fuel Prices Hike FDI Economic Meltdown 0 2 4 6 8 10 12 14 16 Fig 13: Biggest challenge faced by airport retail It was found that FDI and economic meltdown are the two major challenges faced by the airport retailers. Economic meltdown directly impacts the airport retail industry in terms of revenue and FDI is a challenge as it hampers the new growth opportunities. 15
CUSTOMER ANALYSIS 1. Age profile of the respondents Fig 14: Age profile of the respondents As per the data maximum number of respondents are in the age group of 31-40. 2. Gender profile of the respondents Fig 15: Gender profile of the respondents 16
3. Income Analysis of the respondents Fig 16: Income profile of the respondents Majority of the respondents fall in the income group of up to 10 lacs, followed by the range 11-15 lacs per annum. The idea was to cover the working class samples in majority, those who are financial independent. 4. Analysis of purpose behind travel Personal Non-Leisure Purposes 5 Personal Leisure purposes 46 Business Purposes 49 0 10 20 30 40 50 60 Business Purposes Personal Leisure purposes Personal Non-Leisure Purposes Total 49 46 5 Fig 17: Purpose of travel: of the respondents 17
As per the graph above it is clearly seen that majority of travelers are in lieu of business, followed by Personal Leisure purposes. Also we have a very negligible percentage of travelers that do not come under business or leisure purposes. 5. Average Travel Frequency on yearly Basis Fig 18: Yearly frequency of travel of respondents As per the analysis it is being observed that majority of travelers have frequency more than 10. 18
6. Average Time spent on various retail store on Airports: More than 60 Mins 4 Less than 10 mins 9 30-60 mins 37 10-30 mins 50 0 10 20 30 40 50 60 10-30 mins 30-60 mins Less than 10 mins More than 60 Mins Total 50 37 9 4 Fig 19: Time Spending pattern of the respondents Its clearly being seen and experienced that travelers spend on an approximate 10-30 mins on stores while on airports. In some cases its being observed that people also spent more than an hour, that percentage is less than 5%. 7. Attraction factors for consumers on Airport Retail Stores Visually Attractive 15 Type of Product 51 High end appeal 34 0 10 20 30 40 50 60 High end appeal Type of Product Visually Attractive Total 34 51 15 19
Fig 20: Attraction factors for stores : of the respondents As per the data collected its being observed that the Type of Product (Interest in the category of the consumer) is the most deciding factor in visiting of a store. 8. Frequency Shopping on Yearly Basis 7 48 45 1-5 6-10 Above 10 Fig 21: Shopping Frequency of the respondents 48 % of consumers accepted that on average they shop around 6-10 times in a year. The other majority of them i.e 45% shop 1-5 times. 20
9. Category of Products most purchased by travelers on airport. Food and Beverages 15 Book Stores 17 Apparel Store 39 Alcohol 29 0 5 10 15 20 25 30 35 40 45 Alcohol Apparel Store Book Stores Food and Beverages Total 29 39 17 15 Fig 22: Categories of products being purchased by respondents From the analysis, Apparel and Alcohol are the second most purchased categories of products at airports. As seen there are certain brand showroom available only at airports. Also alcohol is available duty free at various duty free shops. 10. Views of respondents on the Expansion of Airport Retail Industry. Strongly Agree 37 Neither Agree nor Disagree 11 Agree 52 0 10 20 30 40 50 60 Agree Neither Agree nor Disagree Strongly Agree Total 52 11 37 Fig 23: Expansion view As per the research majority of the respondents strongly believe that Airport retail industry to be expanded as the traveler base is increasing day by day. Neither of the respondents disagrees in this regard. 21
CHAPTER-4 DATA ANALYSIS 1. In the survey of retailers we have got response from 19 retail store, 7 foods and beverages store and 4 duty free stores. These were the three major categories in which we can classify the stores present at airports and we found that all seven food and beverages store was a profitable store. Majority of retail store and duty free stores are also profit making stores. 2. It was found that 25 stores surveyed was company owned and only 5 stores was selfowned which implies that companies are aggressively interested in opening stores at airport. It was also found that mostly the self-owned stores were in food and beverages segment. 83% of stores are company owned which means this sector is very highly organized and well managed. 3. After apparels, alcohol is the most purchased category on airports. 22
Chapter-5 FINDINGS AND CONCLUSION The purpose of this research is to understand the growth potential of airport retail from the customers and retailers perspective. This research explores Indian customers perception towards buying products from airport stores and also to find the retailer s perspective to see if they are willing to invest and find airport retail stores profitable. The perception of Indian customers towards the airport retail shopping was found through various questions to understand how they look at this sector. Key Findings: 1. 63% of stores are retail stores out of the surveyed stores which means the retail stores are leading followed by food and beverages. 2. 83% of surveyed stores are company owned. 3. 60% of stores surveyed had area between 800-1500 sq. ft. 4. 90 % of stores opened at airport are for sales and profitability which means company are mostly sales focused and not marketing and branding. 5. 86% of surveyed stores is either equal or better in terms of performance as compared to same company s outside stores. 6. 66 % of the airport retail stores are profit making which is a clear positive sign for new players to come in and existing once to expand. Profitability is gradually becoming a routine for airport retail stores. 7. 70 % of retailers believe that government rules and regulations are positive and promoting airport retail and maximum people feel that this sector 8. 93% of existing retailers are willing to open new stores at airport which is a promising sign for this sector. 9. 51% of customers things that the products are major reason of attraction at airport retail. 10. From the analysis, Apparel and Alcohol are the 2 most purchased categories of products at airports. As seen there are certain brand showroom available only at airports 23
Chapter 6 Recommendations Airport retail has a very high growth potential in India. Air terminal retailing is a well-known idea all-inclusive however is still in its early stages in India. The non-aeronautical income (to a great extent from retail) is more than twofold the aeronautical income at most air terminals abroad, however in India it is the inverse. Be that as it may, air terminal retailing seems balanced for a great take off in India. The remodel of most real airplane terminals is in progress with expansive devoted territories for retail locations. The as of late opened T2 terminal at Mumbai's Chhatrapati Shivaji International Airport for example, has around 700,000 sq ft zone - the span of more than 10 soccer fields - devoted to retail, nourishment and drink, parlor and travel administrations. Also, the retail space in Delhi's T3 terminal is spread more than 290,000 sq ft. As of late, not just has traveler movement run up essentially with all the more ease aircrafts on the scene, additionally the time spent by travelers at airplane terminals has expanded because of early registration times set via carriers taking after security and operational concerns. Retailers say it bodes well to be available at airplane terminals. "Airplane terminals are a decent place to get clients. All the more along these lines, since there has dependably been deficiency of value retail space in India. Retailers, be that as it may, need to pay much higher lease per square foot for the space they possess at air terminals contrasted and different areas in urban areas. "There is a guaranteed client base and you can straightforwardly focus on your center clients, that excessively seven days a week, so it bodes well for organizations to be there, on the off chance that they're prepared to pay the higher lease. 24
Chapter-7 APPENDIX Questionnaire to elicit information on Growth in Airport Retail Sector in India Dear Respondent, We, the students of Master of Business Administration in Symbiosis International University, Pune are conducting a research on Growth in Airport Retail Sector in India. We seek your co-operation in answering the questions listed below. We assure that information provided by you will be kept strictly confidential and used for academic purposes only. Instructions: Please put a mark against appropriate answers. GENERAL INFORMATION 1. Name : 2. Age (in years): 3. Gender: 4. Type of Store: 21-30 years 31-40 years 41-50 years Above 50 years Male Female Duty Free store Retail Store Food and beverages 25
5. Are you the proprietor or is the store company owned? Self-Owned Company Owned 6. What is your store Area? (Figures in SqFt) 100-500 500-800 800-1500 Above 1500 7. What is the approximate footfall in your store per day? Less than 100 100-500 500-1000 Above 1000 8. What is the purpose of opening store at airport? Marketing and Advertisement Sales and Profitability Experimental 9. Performance of your airport retail Store as compared to your other stores? Low Equivalent High 10. What type of product sells more at your airport retail store? High Priced Average Priced Low Priced 11. Is your airport store a profit making store? Yes No 26
12. Who is your major target customer? Foreigners Indian nationals 13. Do government rules and regulations promote airport retail? Yes No 14. What is the growth potential of airport retail in India? Very High High Average Low Very low 15. Would you like to open new stores at airport? Yes No 16. If yes, then at which of the following type of airports would you like to open store? Domestic International Proposed and upcoming All of the above 17. What is the biggest challenge faced by airport retailers? FDI Economic Meltdown Fuel Prices Hike Terrorism Others 27
Questionnaire to elicit information on Growth in Airport Retail Sector in India Dear Respondent, We, the students of Master of Business Administration in Symbiosis International University, Pune are conducting a research on Growth in Airport Retail Sector in India. We seek your co-operation in answering the questions listed below. We assure that information provided by you will be kept strictly confidential and used for academic purposes only. Instructions: Please put a mark against appropriate answers. GENERAL INFORMATION 14. Name : 15. Age (in years): 16. Gender: 17. Income (per annum) 21-30 years 31-40 years 41-50 years Above 50 years Male Female INR 2 Lacs - INR 5 Lacs INR 5 Lacs - INR 10 Lacs INR 10 Lacs - INR 15 Lacs Above 15 Lacs 18. What is the purpose behind travel? 28
Business Purposes Personal Leisure purposes Personal Non-Leisure Purposes 19. What is your average Travel Frequency per year? 1-10 11-20 21-30 Above 30 20. What is the average time you spent at Airport Retail Stores? Less than 10 mins 10-30 mins 30-60 mins More than 60 Mins 21. Which of the following factors of retail store at airport attracts you? Visually Attractive High end appeal Type of Product Others 22. What is your average Shopping frequency at Airport per year? Never 1-5 6-10 Above 10 23. Which of the following outlets you prefer visiting? Duty Free Store Duty Paid Store 24. Which of the following category of store you buy the most from at airport? Book Stores Apparel Store Food and Beverages Alcohol Other 25. Which of the following airports do you prefer the most for shopping? 26. Delhi Chennai Bangalore Mumbai Other 29
Strongly Disagree Disagree Neither Agree nor Disagree Agree Strongly Agree 30
TURNITIN REPORT 31