Duty Free Retailing in India

The world of duty free retailing in India is virgin territory. The physical quality of the outlets, the service quality as well as the category mix, needs substantial improvement. While new pirate airport operators in India, attracting professional retailers, in the years to come, the retail offer at Indian airports is liked to drastically improve.

Home grown retail heavyweights like Shoppers’ Stop and Pantaloon Retail are pushing ahead via partnership with international specialists like the Swiss operator Nuance Group and UK based Alpha airports Group respectively to vie for operating stores in India’s newly privatized airports at New Delhi, Mumbai and Bangalore.

Of the three, Delhi and Mumbai account or almost 65 per cent of India’s annual international traffic of 19 million passengers. However, both airports may need $3.5 billion of investment in the next 10 years as passenger traffic rises by an annual 25 per cent until 2010 in the nation of 1.1 billion people. In early 2007, Nuance Group teamed up with Shopper’s Stop Ltd in a joint venture designed to enter the Indian airport retail market. The JV Company is equally owned by both partners and plans to offer a comprehensive range of services from operating master concessions to distributions for international brands.

The objective of the joint venture is to offer a wide range of services for Indian airport retail, both on the duty free side and on the domestic side, as per applicable regulations from the operation of master concessions duty free food & beverage concessions to the franchise of concepts developed by Nuance or third parties a well as distribution of internationals brands of wine and liquor to hotels and other wholesalers as may be permitted by the Foreign Direct Investment Regulations.

The Shoppers’ stop Nuance consortium has in fact, been selected to operate the Retail & Duty Free packages in the International Departure at the upcoming Bangalore International airport. BIAL has also selected shopper’s stop Ltd for the retail package in the Domestic Departure.

For Airport Retail India to take off, a structured Duty Free regulation as in most other countries would be needed.

Services Retail:

Put simply, services retail would involve the retail of various services to the end consumer. For the purpose of this, key services have been identified as:

1) Retail banking
2) Car Rentals
3) Providers of various services like electricity, gas etc
4) Service contracts which may be entered into for servicing of consumer durables like maintenance of water filters computer systems etc.

A key area within services retail is retail banking. Retail banking refers to the dealing of commercial banks with individual customers. The retail baking products would include fixed, current savings accounts on the liabilities side; and mortgages and loans (e.g. personal housing auto and educational) on the assets side. Related ancillary services include credit cards or depository services.

Retail banking in India is not a new phenomenon. The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. While new generation private sector banks have been able to create a niche in this area of loans and financing, the public sector banks have not lagged behind Leveraging their vast branch network and outreach public sector banks have aggressively forayed to garner a larger slice of the retail pie.

While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. There is a need of constant innovation in retail banking. In bracing for tomorrow a paradigm in bank financing through innovative products and mechanism involving constant up-gradation and revalidation of the banks’ internal systems and processes is called for. Banks now need to use retail as a growth trigger. This requires product development and differentiation, innovation and business process reengineering, micro-planning, marketing, prudent pricing, customization technological upgradation, home / electronic / mobile banking, cost reduction and cross selling.