An International city sans Cafes

Trichy is among the fastest growing Tier 2 towns in Tamil Nadu. A lot of investment is being planned by the State Government, by setting up SIDCO centres in and around the town. During the 1980s, the former Chief Minister of Tamil Nadu, Late MG Ramachandran wanted the city to be the second capital for the state. What a clairvoyance he must have had.

After all, Trichy Airport has among the second highest foreign passengers landing and departing the city, mostly from Southeast Asian countries and the Middle East.

In March 2024, Prime Minister Modi inaugurated the newly constructed integrated airport terminals, much to the excitement and comfort of departing passengers.

I remember coming to the airport in 2010 to bid for a café space during my stint at Café Coffee Day. We didn’t win the tender though, as the winning bidder had quoted way higher than us.

And back then, Airports Authority of India (AAI) had the rule of H1 bidder winning the tender, i.e., the one who bids the highest takes away the tender opportunity. This and many other such rudimentary conditions have changed over the years in the AAI Tenders, which is following the rule book of the private airport operators.

The fledgling city is famous various centres of worship, such as the Rockfort Temple – the hill is said to be as old as the Himalayas; the Srirangam Temple and a dozen Divya Desam Temples, Our Layd of Lourdes Church, the rock stone dam “Kallanai” built by the Chola Kings and several monuments.

Yet, every time I come here, I find that the city has not graduated to host coffee shops or cafes. This is due to two main reasons – international and domestic brands in F&B are not smelling the coffee here yet; on the other hand, the city lacks quality retail space to offer such businesses.

For a city that is said to have a population of over 12 lakh people, there is just one outlet each for Pizza Hut, Burger Kind, Baskin Robbins and Dominos (perhaps two).

I have personally instigated several people in the town with deep pockets to develop the city’s first shopping mall but of no avail. The Femina Mall that’s in the city centre is a large hypermarket at best and houses a few local eateries and outlets.

A city of international stature such as Tiruchirapalli requires a handful of international and desi cafés which sell high quality coffee, tea and other beverages.

Many high-fliers in the city or those who travel host their one-on one meetings at popular star hotels such as at the Marriott, Ramyas, and a few others. Yet, the charm of a coffee shop for casual conversation, a third and alternative space to sit and work, read, write or just enjoy the cuppa is missing.

There are no more than a dozen good vegetarian restaurants whereas the city is dotted with several small and mid-sized F&B outlets that offer various veg- and non-veg cuisines. The night life is not there at all – forget top end pubs or restobars, the city has just. Graduated from neighbourhood TASMAC attached bars to private permit rooms in a few hotels.

Especially after the Covid-19 led lockdowns, several individuals have settled in their hometowns, especially tier 2 towns, so they can WFH as well as enjoy their lifestyle in Tier 2 towns. Trichy continues to be one of the most promising cities that I have travelled to in India in the last 2.5 decades of my professional career.

Similar towns such as Jaipur in Rajasthan, Surat in Gujarat, Ludhiana in Punjab, Siliguri in West Bengal, Bhopal in MP, Calicut in Kerala, Hubli in Karnataka are great examples where the retail wave is riding high. I am yet to understand what ails this city to grow beyond its seams.

As MK Gandhi said, become the change that you want to see, I am trying my best to bring in as many brands as possible to the city, from apparel to luggage, F&B to QSR and what not.

If your brand wishes to explore opportunities here, then please do reach out to me. I am an email away – shri611work@gmail.com

The hype around Air India’s big buy

Much is being spoken, written and debated about the recent purchase of 470 aircrafts by Air India from Airbus and Boeing. So much so, that the US President made an official statement that this could create a million jobs for his countrymen. Many politicians thanked the Indian Prime Minister while so many questioned his role in this private affair between a buyer and a seller – why and how would the Governments on both sides have any role. Leaving all the controversies (if one exists!) aside, let us see the opportunity that we are sitting on. 

In the past 8 years or so, the present Government has reactivated over 70 airports. These are not new ones really, for they already existed. Barely. These were airstrips with an ATC Tower at best built before WW 2 by the British. The Union Government through its ambitious project to make the common man fly – Ude Desh ka Aam Nagarik (UDAN) was activated and many unused airports were operationalised. It is another thing altogether that our railway networks are choked and a small section of travellers do not mind paying a premium for air travel.

A view of the Udaipur Airport developed under UDAN

Altogether, the number of air passengers have grown from 37 mn pa in 2010 to 167 mn in 2019 (sans 4 days of the first lockdown!). The number halved for FY 2021, grew to 123 mn in 2022 and would be around 130 mn in the current FY. By 2027, we expect over 200 mn passengers to hit the sky in a year. To give it a perspective, over 2.2 mn (2 Crores) people took train journeys daily in 2019 of which an estimated 8% of them travel in airconditioned classes.

What excites me, as a (Travel) Retail Professional are the possibilities for retail at airports. To accommodate these new 470 aircrafts plus another equal number from all other incumbent airlines at the moment in India, we are expecting a blast in the skies. Don’t worry, it wouldn’t be so choked like our railway networks where one express train has to stop at times to let the other one travel. But the congestion at airports (runways) would be inevitable. 

IGI Airport, New Delhi

The new Terminal 3 built at New Delhi Airport a decade back is already choking during peak hours. Mumbai is building another new airport and the same is the case at Noida. Bangalore has commenced a new parallel runway last year and a brand new terminal T2 which will be fully activated by Q3 FY 2024. Goa has a brand new airport in the north while there is no confirmation of shutting down the existing one in the south of Panjim. 

Keeping aside the top 20 airports – 2 super metros, 4 metros and the top 16 cities in India – there would be 175+ operational Airports across the country by 2025. The bare minimum would be a daily passenger count of 1,000 pax/day while the maximum would be 30,000. The top 6 airports, by then would be handline 30,000 – 60,000 passengers per day! 

At the moment, the spend per passenger in Indian airports is abysmally low. Singapore’s Changi Airport recently announced their CY 2022 revenues from Travel Retail – USD 870 mn. That would be 38% of 2019 revenues, which means in 2019, it would have been USD 2.2 Bn pa. Dubai’s retail and F&B revenues pre-pandemic were a little over USD 2 Bn pa; Hong Kong, Paris CDG, Frankfurt and Zurich Airport, each had Travel Retail Revenues between USD 600 mn to USD 1 Bn pa. All this crashed due to Covid-19 but is slowly bouncing back.

New Integrated Terminal Building coming up at Chennai Airport

In India, Travel Retail has been a non-starter except at the top airports, especially those which were privatised. AAI continues to operate quite differently, in a manner that is neither exciting nor enticing for retailers to embrace the opportunity. However, change is inevitable and we see a huge improvement coming our way. By 2025, over 5 lakh people would be travelling through our Airports every day. Imagine the  potential retail opportunity that we are eyeing. And these are reasonably affluent passengers with disposable incomes. From a humble cup of tea or coffee to a beer / gourmet meal, F&B seems to be a larger pie than product retail at airports. I had written the reason for this in my previous post. 

Nevertheless, Air India’s purchase of 470 aircrafts is a boon for Indian Travel Retail. Happy to be back here in my new avatar in Travel Retail supporting the Trinity - Airports, Retail / F&B companies and the Consumers.

20 years in Retailing

We were 42 of us who arrived at Spencers Plaza at Chennai, one of the only few malls in India in 2001. Most of them had come outside of Chennai. We all had one common reason to come together, through all the diverse backgrounds that we had. We were the Retail Management Trainees to join RPG Group for a 3-week induction at the HQ located on the fourth floor of the same building. Imagine a career, where you have to work amongst shops selling grocery, beauty products, food and beverage and all within a full air-conditioned environment. Only that this luxury would be short lived until we moved back to our “regions” – our destinations to write our own destinies, all by ourselves. The day was 4^th June 2001. One of the most memorable days in my professional career. 

I had unofficially joined the retail industry way back in 1997 when I would scoop ice-cream part time at a Baskin Robbins parlour, the first one in Chennai and second in India. Though I was pursuing software languages in the morning at NIIT and a graduation in Commerce in the evening at Ramkrishna Mission’s Vivekananda College in Chennai, retail and consumer business became my first love, instant love, right from the first scoop I sold. For an eternal introvert until then, I never knew I could sell something to someone for a consideration, an expensive one at that, let alone the ability to speak with my chin up. 

To my utter shock, I was posted to Musicworld Kolkata for my 1^st year assignment. For the record, I hadn’t ever crossed Chennai city limits in my entire life, save for an annual vacation once in 3-4 years to Mumbai where my maternal grandparents lived or to my father’s hometown at Kumbakonam, where the entire extended family would congregate once in a while for a religious festival or a wedding. I dreaded travelling 1.5 days by train from Chennai to Calcutta. That it was 2^nd class A/c was a silver lining. After all, I was going to be travelling in a/c for the first time, that far. The only other time was one of the first rides from Delhi to Lucknow when Rajdhani was launched in the late 80s. I wondered what would I do alone, in the train, all day. And then, all alone in an unknown city, unknown people, unknown language and an unknown destiny. I am glad I took that train, much to my own chagrin, lest I won’t be writing this Anniversary article today with a sense of fulfilment and happiness. 

The memories I have etched of the city of joy, is perhaps one of the greenest that I would carry to my ashes. I made some amazing friends in Calcutta, spoke Bengali in a few months, and most importantly learnt the fundamentals of retailing at Park Street. Mr. Sanjiv Goenka was based in town, so we were always alert for he may turn up anytime. Seeing consumers spend hours together to pick up a cassette worth Rs. 27 was truly amazing. With 80% of volume business coming from cassettes, 15% from CDs and 5% from VCDs and Games, the 8,000 sft store would do a monthly turnover of Rs. 65 lakhs. Yes. In 2001. And the business grew 30% more during Pujo period and during Christmas! Amazing days. 

After a year, I moved back to Chennai on “job rotation” model of RPG Group’s HR Policy to join Foodworld, where I was in charge of the first store of the group. It was here, between 2002-04 that I decided that I wish to spend the rest of my life in Retailing, selling something or the other to end users. Extended Family members around me laughed, wondering why would someone study MBA to work in a grocery shop after all. Neighbourhood was worried if I was qualified enough for an arranged marriage. 14 years later, I received my first professional award – “Top 50 Retail Professionals in India” decorated by Asia Retail Congress. And then, three more awards in Retail and F&B in the past 6 years. In between, speaking at 100s of forums on Consumer Business & Retail in India, Singapore, Malaysia and China!

Before and after my first “public recognition”, my work in retail spoke more than what I could imagine to write. Designing and establishing India’s first ever Travel Retail environment across any private airport in India in 2006 at Bangalore; setting up 140 cafes across India for Café Coffee Day; driving and doubling the dealer network of Royal Enfield from 140 to 300 in just 2 years; and growing the topline of Levista Instant Coffee by 79% during the pandemic year 2020-21; I still try my best to stay grounded and humble without taking up any of the honours on my head. 

Every time I begin my lecture at a B-School as Visiting Faculty teaching Retail Elective to 2nd year students spanning 20-30 hours for the last 16 years, I still feel it is my very first day in Retailing, my tone and throat trembling for the first few minutes in to the class. Completing 20 years in a single Industry feels like an achievement. 

But for me, as I always say – I have just begun and I have Miles to Go before I sleep. Miles2Go. And needless to say, I am a self-proclaimed “Retailer by Profession and Choice. Since 1997”. For a reason!

Rail Retail – The next big thing?

Among the few exciting assignments that I have worked all my life, one of the most interesting ones was setting up commercial opportunities at the first greenfield private airport in India at Bangalore in 2006. I was among the first few to join BIAL, the company which was helmed by Zurich Airport along with L&T and Siemens as Private Partners and the Union Government of India & Government of Karnataka providing the necessary statutory support. I was solely responsible for conceptualising, designing, leasing and later managing the Retail areas at the Airport which included Duty Free Retailing in the International Departures & Arrivals, Domestic Retail in all other areas, F&B outlets including Cafes, Restaurants, Pubs and ForEx outlets keeping in mind the convenience of passengers as well as increasing the non-Aero revenues for the airport company. What was then (in 2006) – Travel Retail, a national industry of Rs. 300 Crores pa is now over Rs. 3,000 Crores, thanks to upgraded Airport Terminals at Delhi, Mumbai, Chennai, Bangalore, Kolkata, Hyderabad and Kochi over the past decade. 

I have been an avid traveller all my life and after flying two times a week, forty times a year for a decade in work, I took to rail travel over the past half-decade ever since I turned an Entrepreneur due my business interests largely being achievable by train and more so saving travel time (during night) as well lower cost of travel and transportation, save the cost of F&B at Airports. I just got in to yet another Shatabdi trip and I ain’t surprised I know by platform number already and a clear plan of what to munch when I arrive at Bangalore as well, at the Adigas outlet where the train would drop me. Similarly, the F&B outlets at various stations are familiar to regular passengers like me and those who plan their travel around food & snacks (your’s truly included) know how early to reach the station for the last grub or drink before boarding. 

Shatabdi has been a revolutionary product (sounds like a software product from Infosys or ICICI, hic!) from Indian Railways and with faster drive time as well as complimentary meal on board. What used to be an exciting array of food items before is now a simple breakfast and a simpler meal with a beverage or two in between. The not so great thing is that there is no possibility for passengers to purchase food items even if they wish to do so. Sounds familiar to the scenario a decade and half back when low cost carriers like Air Deccan started off leaving passengers stranded ob=n board with no possibility of even buying water or snacks. Last week, I was traveling in the much touted and recently inaugurated Tejas Express from Chennai to Madurai which was inaugurated by none other than the man of the moment, the Hon’ble Prime Minister of India, Shri Narendra Modi.The train covers a distance of over 450 kms in 6.5 hours compared to other trains which take 90 mins more than this. With traffic on rails (yeah, more trains you see) having grown manifold over the years, it’s an awesome feat by Indian Railways that they have managed to cover this distance in the said duration. While the train has several exciting features such as an access controlled door, CCTv cameras and personalised entertainment, the F&B scenario is the same as a Shatabdi. 

The Railways could help themselves by offering “Travel Retail” on board akin to the Airlines which not only opens up an array of incremental income to the agency but also provide passengers a break from monotony in travelling seated all day (or evening). Way back in 2010 when I was responsible for setting up new cafes for Café Coffee Day, India’s largest coffee chain with over 1,600 outlets today, I charted a plan to set-up a mini-café on board Rajdhani and Shatabdi Trains. The proposal was to have a portion of the pantry car culled in to a café – a café on the move with outstanding visuals even as the train cruises at 90-110 kms between cities. The proposal was rejected by the then Head of IRCTC, the agency which was and is responsible for the commercialisation of the Railway network for reasons best known to him. Even as I was walking up to my train this morning, I saw this tuck shop selling Railway merchandise and once again I am intrigued by the immense possibilities and opportunities that beckon in Travel Retail at Railways. With the elections ahead, I don’t see any new initiatives until June 2019 but am hoping the new Ministry would take this up more seriously. For the love of travelling. 

Notes of a Frequent flyer

The biggest technology revolution Indian’s have encountered in the past 5 decades is the advent of the internet for daily use. From ordering Vegetables & Grocery, booking Travel tickets for Air, Train, Bus and Taxi rides on Ola & Uber and not to mention the flirtatious relationship we enjoy with Amazon, Flipkart, Snapdeal and others – India is the only country in the world which has the highest percentage of “Cash on Delivery” model – a method we have invented where the delivery boy collects cash after delivering the parcel from an E-Commerce company… be it mobile phones or an acrylic accessory which hides the back (and sometimes even the front of the Rs. 50,000 (about $700) worthy iPhone XR) or a simple Pizza that is delivered from the neighbourhood Pizza Hut. 

And this is where the first nightmare begins for the frequent Indian Traveler like me. Even as a harried (and hurried) passenger books his/her cab through a cab-hailing App such as the Wall St. funded Uber or the Indian discovery (and Japanese funded) Ola say around 4 am, the traveler realises she is low on Digital Money for paying the cabbie. So, she adds up a sizeable amount in to their wallet from a bank account or credit card and the transactions fails at the first instance. Why did it fail? While we have the highest number of mobile connections in the World, the number of towers is quite disproportionate to the usage. Isn’t there something called Broadband? Oh yes, we do, in fact India’s broadband rates are among the lowest in the world. Recently, our Honourable Prime Minister quipped at a Conference in Japan that India’s internet rates are lower than a cup of Coffee. Well, if he says so. But the internet is patchy most of the times and the promise of 100mbps speed by the Operator is applicable only when a single device is used – but a typical Indian household would have two mobile connections for the gent and the lady each, one each for their parents & kids, a couple of other devices such as iPads, Alexa and a Smart Tv and last but not the least, the live-in maid and the household’s car driver also are allowed to use the home Wifi because of the unlimited usage options offered by the Telecom providers.

And finally, the traveler completes her wallet transaction only to find that the cab prices have surged meanwhile due to peak demand - well, the Top 7 Airports in India including at Delhi, Mumbai, Chennai, Bangalore, Kolkata, Hyderabad and Kochi (in that order) which contribute to over 70% of India’s total air traffic have their peak capacity between 5am – 8am. So, finally she accepts a surged fare and curses how the Cab Companies funded by the Japanese, Chinese and American Investors have spoiled the market with freebies during off-peak hours and apply surge pricing which take away the incentives of using the App. The Cabbies in India, especially those who have joined the likes of Ola and Uber (and also food-hailing Apps such as Zomato, Swiggy & Uber Eats) have a new-found love for GPS – especially when it comes to delivering food or showing up a Taxi at the client’s place. India’s GPS is, well not so great obviously because 8 out of 10 times, these App users end up at the nearby street and call the user and sometimes even insist that the Customers come over there – either to board the cab or to collect their beloved Rotis and Pizzas. 

While the call happens between the Traveler and the Cabbie, one must be very cautious about the mood of the driver – so depending on their convenience, the user must agree to pay by wallet or cash. So, typically from around the 20^th of the month, the cabbies reject trips which have a wallet payment since they need working capital and the Cab companies (despite funded in Billions of dollars) do not settle their payments on time. So, when a traveler says she is going to pay by Wallet, there is a high chance that the trip gets cancelled only to get allotted to another driver. By a stroke of luck, one could get the next cab arriving in 3 mins or 10 mins. Again, the cabbie who’s nearby would most probably prefer a cash payment and if the traveler refuses, the process repeats. This is a pattern, in fact. With most flights not allowing Free Cancellation or postponement, the traveler usually prefers not to cancel the next cab, because time is more precious than money. So, she finally settles for a cab with the payment option preferred by the Cabbie and heads to one of the Architectural wonders and marvels of the country – the multi-billion dollar funded “City Airport”.

It has always kept me wondering but hell yeah, why do almost all Airports in India except at Bangalore have only 3-4 entry gates when the influx of passengers during the morning and evening peaks are an estimated 20,000 – 30,000 spread over 3-4 hours? CISF – the National Agency entrusted with the protection of Airports among other prestigious Infrastructure projects are always in a situation where the supply is lower than demand. So, the waiting queue to simply enter the Airport Terminal could take between 5-12 mins on an average, depending on how quick the CISF guard is willing to skim through the paper (or digital ticket) and match it with the 5 acceptable identity Proof documents. Now, most of these identity docs for us in the late 30s, 40s and 50s who form the frequent traveler base, were perhaps made about a decade or two earlier, so the hardcopy doesn’t match the image with the  real one, despite the L’oreals and Gillette grooming accessories which Indians are embracing like no other. So, there is a 50% chance that the CISF guard takes a third look and compares the two images giving competition to the advanced AI techniques being practiced in many other developed countries. He gives a stern and final nod and allows the passenger to get inside the terminal. Oh, btw visitors are not allowed inside Terminal buildings in India. What started as a threat perception after 9/11 and 2008 London attacks has become a convenience excuse, thanks to the crumbling infrastructure in the public areas of the Terminal. So works well for the Airport Operator and the CISF indeed. 

All the four Private Airports have an excellent check-in process with kiosks that help travellers to skip the queue. However, most Frequent Traveler check-in before arriving to the Airport, which means the baggage Drop Queues are more crowded than those which have pax who haven’t checked-in. What an irony this is! Another 15 minutes later, the pax heads to the Infamous Indian Security Check. A decade back less than 8% of all air pax were women, but not the case today. The split is at least 80:20 today especially with more women travelling on work and leisure. Although the Frisking Queue for women is just one, perhaps two. Men have to wait endlessly and finally get their “trays” where they unload their offering from their laptop bags, backpacks and other fancy bags. It’s interesting to note what all a man carries - from multiple chargers to power banks, iPad, laptops (some carry coveted MacBooks as well), two mobile phones on an average and some even carry reams of papers (somewhat work related, although I wonder who keeps paper records anymore). The best part is how Men stand at the Security Frisking area - with hands raised and legs spread. It could be gory to hilarious to a security threat to the guards themselves with some pax standing as though they would pounce on the guards! Meanwhile, there is another senior guard who’s carefully skimming the Tv screens of the X-ray machines. 4 out of 10 bags (random average, but yeah) are identified for a total display of all the internal compartments of the bags even as the pax who is already late is sulking to get to the gate. 

Once at the Gate, a few pax try to board a flight which is for a different destination and realise it only when the staff at the Boarding Gate send them back saying they are still boarding pax for the previous flight. Many Indian Airports still have bus gates, mostly more of them than aerobridges, purely due to infrastructure costs as well as availability of remote parking bays. So, the pax now gets to a level below and waits to board the bus and finally reaches the aircraft. Once inside the craft, there is a wrestle for multiple rights; first comes the right to stowage - who gets to keep more and how close to where they are seated. Then comes the eternal right for arm space. Seasoned travelers like me always, almost always prefer an aisle row and seat number “C” so I get one arm space for granted and also I get to do some elbow space, such as writing articles like these. Last comes the right to alight - who gets out of the craft faster as though this will ensure who will get out of the airport itself. Because the bus ride to the terminal building is a sort of sight-seeing to showcase the marvellous infrastructure that the Government or the Private Operators have invested. While waiting for the baggage, one would wonder what was the topic the unloading guys must be discussing today - from Trump’s intentions on curbing sanctions to the latest celebrity gossip and more which eventually decides how soon (or late) your bag would arrive. After spending over 200-300 mins or more at two Airports, the passenger finally leaves the Terminal Building back to civilisation which looks very different altogether. 

On the way back to a catch a flight home, the frequent flyer heads to the Lounge and flashers his Mastercard or a Privilege Pass to get seated in a cushioned leather sofa and catch up on the latest cricket score. Some of them order a drink only to be forewarned by the waiter that they need to pay for this while the food is complimentary. After gulping one or two depending on how soon or later their flight would depart, the passenger continues to enjoy the hospitality while somewhere thanking the guy who took his application form for a Credit Card many moons back, so he gets this privilege. Those who aren’t blessed with such an offering loiter along the endless pathways which have numerous shopping and dining opportunities. From the latest Hidesign leather bags to Designer Neck Ties, from local delicacies like Sambar Vada to customised Pastas and Sushis, one could get almost everything inside an Airport that a typical restaurant serves in the top cities of India. It’s so heartening to see Travel Retail has come of age so much at Indian Airports over the years that many passengers prefer to shop here than in the city stores, thanks to deals on books and electronics as well as the personal space and staff attention they receive.

Having said that, most Airport Retail Stores, in my humble opinion aren’t investing even 25% interest or effort to cash in on the impending opportunities. Talk about CRM or customisation, Data Science or Business Intelligence, there is so much more to do. The staff are busy fiddling their mobile phones most of the times and even when the Customers (pax, in this case) show interest on products, they react very minimally. Of course there are a few exclusions and some of the staff do get interested in a dialogue with customers but frankly thats mutual. I have personally shopped quite a lot at the Airport stores. To show them that by building meaningful conversations with customers, one can actually “encourage customers to buy” than merely trying to “sell” a product or force them to “buy”. At Restaurants, food courts and Kiosks, the staff are more functional than vending machines with eye contacts hardly present or pitching to up-sell a thing or two. 

Even as the Frequent Flyer is on her / his way back home, the same process as in the morning repeats until finally one has taken the taxi back home. TSome of us start catching up sleep in the taxi and when we hit the sack, it’s close to midnight - most of us have been taught in our early days of professional employments to travel “first flight out, last flight in” and thus utilise the working day the most. Habits stay on.

UDAN - a A Flight for Retailers

If the Modi Government has its way, it will make the real common man to fly. No kidding. With it's ambitious UDAN - Ude Desh ka Aam Nagrik (Let the common man fly) which is a rehash of the regional air connectivity proposed by the UPA Governments but with a lot more incentives to Airlines and of course flyers. The fare for a one hour flight is capped at Rs. 2,500 adjusted to inflation. Whether the one hour is block time or flying time is yet to be clarified. And many other things too. If technical details about UDAN interest you, read this column written by The Flying Engineer here.

India has over 450 airstrips/airports that were developed and built during the WW 1 & WW 2 by the British for strategic purposes. How many of you may know, unless you are from surrounding areas that we have airports in most obscure locations that one would have never thought of, such as Vellore and Salem (Tamil Nadu), Kadappa (Andhra), Gubarga (Karnataka), Raxaul & Muzaffarpur (Bihar) and so on. Most of these lay defunct with AAI not having funds to develop them or Airlines ready to ply there for various reasons. Such airports also include the ones at Pondicherry and Mysore, just to name two of them, which are very interesting tourist places but are not really well served. When local politicians announce their charter for upcoming elections, there is a mention of developing a local airport but the idea dies down after the man (or woman) occupies the high seat. Due to this, many thousands of people are forced to undertake alternate routes for travel by road and rail which are cumbersome and times taking as well. 

The Federation of Indian Airlines (FIA), which represents IndiGo, Jet Airways, SpiceJet and GoAir, has written to the Union Civil Aviation Ministry terming the proposed regional connectivity levy as “illegal” and “in contravention to the Constitution of India.” It said the government is not empowered to levy a tax on airlines to fund the regional connectivity scheme under the Aircraft Act of 1934, quotes The Hindu. And their grouse is understandable. The Civil Aviation Ministry's guidelines already includes flying to certain far-off destinations across the country including the North East which doesn't attract flight loads and hence dampens the revenue prospects for the airlines. 

Given the scenario, as a former Airport Official and a Retailer, here is my recipe for a resounding success to this ambitious plan. Commercial Revenues can significantly reduce the burden on the Ministry as well as the Airlines, if they were allowed to be rightfully exploited. Worldwide, even the top airports such as Singapore, Hong Kong, Dubai and Frankfurt boast more than a fourth of their revenues coming from non-aero revenues. This has been, mostly a well-planned strategy executed over the past 4 decades by these airports, given the opportunity to derive non-aero incomes, especially from the millions of passengers who fly everyday across the world.

It is common knowledge that the Terminal Building in a small airport such as Salem which would have probably two flights a day will mostly remain unused all day (and night) whilst occupying thousands of acres of land. One of the best ways to put to use the idle areas is by constructing relevant retail areas in these locations. Sounds weird? Let me explain.

Continuing the example of Salem, it is a prosperous city with the Salem Steel Plant employing thousands and also being a business hub due to its native industries in apparel manufacturing and of course agriculture. People here have the money and aspirations to fly, travel the country and the world. But in most cases, they have to visit Chennai to take a flight forward. While Coimbatore is closer, it doesn't operate flights to all parts of the world or even connect important hubs within India. It is also important to note that cities like Salem do not have a so called popular Mall with domestic and international Retailers, although there is quite a bit of shopping and dining that happens all over the city. Therefore, by commercialising the landslide (the city side) areas of this airport and allowing private partners to Build-Operate-Transfer the assets to the Government, it would probably be a double whammy. The biggest issue with airports today worldwide is the safety and security factors. But this would be well taken care because the commercial areas would be located in the landside and visitors (to the Mall) will have no access to the terminal building and beyond. Only passengers with valid boarding documents would be allowed inside the Terminal Building. 

At the same time, the Restaurants at the roof top of these buildings will provide a massive view of the runway and the city as well as the parked aircraft which is always a delight to watch. A part of the vacant land may also be used to build budget hotels, thus ensuring a 365 day use of the asset. 

While the idea sounds cool, the biggest issue here is execution. AAI runs most of the airports in India including Chennai and Kolkata and currently only four airports at Bangalore, Hyderabad, Mumbai and Delhi have been privatised. It is to be noted that these four airports contribute over 75% of the air-traffic in India and also act as hubs for international travel. Much has been written, discussed and debated about the perils of privatisation of Airports over the past decade. And the Government may take the best of what has been done in since 2006 regarding airport privatisation and perhaps move on. Alternately, the airport may continue to build and maintain the Terminal building, the Runway, the ATC Tower and other technical facilities while the other areas are handed over to private operators.

Overall, Retailers have a great opportunity to grab this opportunity. India's largest cafe chain Cafe Coffee Day put up its first cafe at HAL Airport at Bangalore in the late 90's and continues its focus in the airports and has a major presence all over the country. Many other retailers can take a cue out of this and explore other retail opportunities. Chennai Airport is out with its upcoming Retail Tender, details of which can be accessed here.

I hope to see Retailers take advantage of this sky-high (pun intended) opportunity and also be a part of this upcoming growth opportunity. 

Food Retail is tuff…

Restaurant business is damn exciting. While people don’t shop for clothes and mobiles every weekend, most people drop over for a good meal frequently and a great meal, once in a while. Great Meal, I mean is a bit indulgent. It could be a Michelin rated restaurant. It could be one among the top 10 restaurants in the country. It could be a celebrity chef’s eating place. Ofcourse, the Five-Stars. The list is long. However, the food business is also one of the tuffest to be in. In fact, it is also one of the retail formats where the churn is very high. For every 6 successful restaurants, three of them fail. And the reasons for failure are aplenty, Customer Service (or the lack of it) being one of the main reasons why restaurants cannot keep up in the short to medium term. Also, investors are not too keen to fund ventures that do not show the ability to scale. 2-3 outlets is not scaling up. It should be in double digits. Most of the restaurant owners are entrepreneurs, many having chosen the route to entrepreneurship after stints in corporate life. They invest their life time savings to open a restaurant (also includes Pubs / Nighclubs / Others) and usually find the going tuff within 18-24 months of opening. That’s when the business matures and needs further investment in marketing and PR – the machinery that keeps restaurants going. I was at a restaurant called “Tangerine” in the upmarket Alwarpet locality in Chennai. The last I had been there was about a decade back. The food was excellent, just how I remember it had tasted during my last visit. However, the place was a bit worn down. The kitchen, which has limited space and equipment cannot cook more than two dishes at a time, which increases the waiting time for guests. The staff fare not all that excited, since they don’t get regular footfalls all over the week.

The business is all the more difficult if they operate in niche categories. In a city like Chennai, there is a strong thrust on Veg-only restaurants. Yes, you heard that right. In fact, India is the only country in the world which has so many veg-only restaurants and that too, all across the country. I visited one last month. It is called La Shakahari. La, being a french word and Shakahari being vegetarian in Hindi language. The restaurant is located inside a residential area and I was almost being challenged by the Google Map in my phone to find the place despite its best efforts. But once we entered, we realized what a great place it was. They had a set-menu as well as A la Carte. The set-menu offerred more items for what we would have paid otherwise while ordering them individually.

One of the biggest challenges that Restaurateurs face is the inability to scale-up. Most times, it’s the lack of capital. At times, it’s the lack of intent and interest to grow. A potential investor would indeed be able to show inclination to projects which are tried and tested. However, many entrepreneurs just don’t expand. Another option to scale up is the Franchising route. However, the risk is you would lose consistency in the long term and many of them would probably serve food that tastes different.  For fear of not diluting their exclusive menu and taste that it offers, these restaurants remain standalone ventures and thus allow others to crop up in other parts of the city.

Of all retail formats, the F&B format is one of the toughest to operate. Many of them shut shop within 24 months of opening. If they withstand any further, then they strive to stay for a long time in their lifecycle. It also depends on the choice of real estate – Rent is almost 20% of Sales in Malls and about 12-15% at High Street locations. And that’s why you don’t find many of them in Malls not doing well or being priced exorbitantly. At the end of the day, the success of a restaurant is actually many factors playing in.

Smartphones & Dumbphones

In the early 2000s, there was only one mobile phone brand that was popular in India. It was none other than Nokia. It was considered the “Maruti” of mobile phones, with one model priced at a gap of a Thousand odd Rupees. Customers could choose from an array of models starting from a few thousands to a lot of thousands! Mid-2005, came the BlackBerry. A BB was the ultimate corporate tool that every executive carried; or rather wished he could carry. Over time, the company reduced the entry level prices and it was accessible to small time traders, entrepreneurs, businessmen and their ilk. The Late Steve Jobs, former CEO of Apple Inc. unveiled the iPhone to the public on January 9, 2007, at the Macworld 2007 convention at the Moscone Center in San Francisco. The two initial models, a 4 GB model priced at US$ 499 and an 8 GB model at US$ 599, went on sale in the United States on June 29, 2007, at 6:00 pm local time, while hundreds of customers lined up outside the stores nationwide. The passionate reaction to the launch of the iPhone resulted in sections of the media dubbing it the 'Jesus phone'.The fit and finish and the premium pricing meant that it excluded the masses. It was seen as a toy for the rich and famous. Soon, Apple realized that they had to be a useful product for millions of people worldwide and hence subsequent models such as the 3G, 3GS, 4, 4S, 5 & 5S were released. The latest in the line is of course the hugely popular iPhone 5S which was launched on 20 Sep. 2013. It is also the most sold model for the company.

Between the rise and fall of Nokia, Blackberry and Apple, several other brands have come (and a few have gone) with their range of smartphones. The commonality of the former three is that they used their own hardware and software whereas all other devices manufactured by brands run on the Android software which is developed and owned by Google. One of the reasons why Blackberry and Apple were appreciated by their customers was that their products were unique. While the most complained thing about the Android devices is no matter how the phone looks (or feels like), the interface is just the same of the Android. The world has most number of Android phones, but that’s probably due to cheaper price points of these phones as well.

Apple has been playing hide and seek in India for the past couple of years. While the market seems promising, its China that’s a bigger opportunity currently for the company. Despite so many efforts by its Senior Management to focus on India, the California HQ team has been reluctant to do so, for reasons best known to them. This has been clearly visible in the Sales and Marketing Strategy, Distribution network and Pricing. Clearly, India doesn’t seem to be among the favourites yet. However, last week, Apple announced that it would commence manufacturing of the now discontinued iPhone4 model to play catch up with the Android device manufactures such as Samsung, LG, Sony, Micromax and others to compete aggressively in the Indian Market.

I was astonished to see a huge advertisement for this now obsolete model at Delhi Airport’s Terminal 1D recently. Why would a user want to buy an expensive smartphone, which is now obsolete in the developed markets, at a price point where there are several other options! As many say, Steve would have never allowed it to happen. If you have read his Auto-Bio like me, you would know what I am saying. The business team is trying to play catch up in a market which is flooded with cheaper, imported as well as locally manufactured phones.The iPhone4 which I owned two years back was an excellent phone, but was only relevant then. Some of the new features that the competing Android devices currently provide are no match for the older Operating system of apple that this model runs on. Will this bring pot loads of money to the company? Probably no. Will this bring a distribution strength to Apple in India? Yes. Retailers like Croma, EZone, Reliance, Univercell, etc. would be happy to stock these phones and offer them at prices sub-20,000 with buy-back schemes and EMIs on Credit Cards. This is a wait and watch game. Apple has to do a lot more to upgrade users from dumbphones to its range of smartphones. It would not happen any soon. It would not happen with any one model. The entire infrastructure has to be focused on the supply chain-pricing-marketing model. While most Apple users do not downgrade (their models) at any cost, its mostly the users of other platforms who move to Apple. Price alone would not be enough to convert them to buyers and loyalists. Apple needs to do a lot more.