Showing posts with label Moodie Report. Show all posts
Showing posts with label Moodie Report. Show all posts

12 January, 2012

100% FDI in Single Brand Retail. So?!?


The Government of India officially announced allowing 100% FDI in Single Brand Retail on 9 Jan 2012. “We have now allowed foreign investment up to 100 percent with the stipulation that in respect of proposals involving FDI beyond 51 percent, there will be mandatory sourcing of atleast 30 percent of the total value of the products sold…from Indian small industries/village and cottage industries and craftsmen,” Commerce and Industry minister of India, Mr. Anand Sharma said in a statement.

(Suggested Reading: FDI in Retail – the saga continues)

The Indian Industry seems to be equally upbeat;

In an interview to ET, Future Group's CEO Mr. Kishore Biyani said, "I believe both single and multi brand retail together can bring in an investment of $10 billion in the front-end alone. I think this is a significant investment in the next four to five years, and the journey has just begun." The announcement of single brand retail has come sooner than we had expected, though. It is a good move, and a precursor to the bigger one now - the multi-brand retail announcement, added Biyani.

“We hope the initiative is a precursor to further liberalisation in the sector in the days to come,” Rajan Bharti Mittal, managing director at Bharti Enterprises, Wal-Mart’s India partner for wholesale stores, told Bloomberg.

"The notification was expected because single-brand is less controversial, as the brand will not compete with a local retailer," said Bijou Kurien, who heads the lifestyle division of Reliance Retail, which runs department stores, hyper-markets and supermarkets.

“The opening of India’s single-brand retail sector sends a crystal clear signal that India is open for business at a time when economic opportunity is certainly welcome amidst global uncertainty,” said Ron Somers, president of US-India Business Council (USIBC).

We believe that further opening up of the single brand retail clearly shows the government`s positive intent towards bringing about reforms. We see this as an important step towards further reforms in the multi-brand sector as well said broking house ICICIDirect

“Globally, single-brand retail follows a business model of 100 percent ownership and global majors have been reluctant to establish their presence in a restrictive policy environment,” the department of industrial policy and promotion (DIPP), said in a statement.


(Suggested Reading: Luxury Retailing in India)

100 percent ownership would be permitted in single brand product retail trading under the government approval route, subject to the following conditions:

  • Products to be sold should be of a single brand only
  • Products should be sold under the same brand internationally (i.e. products should be sold under the same brand in one or more countries other than in India)
  • Single brand product-retail trading would cover only products which are branded during manufacturing
  • The foreign investor should be the owner of the brand
  • In respect of proposals involving FDI beyond 51 percent, mandatory sourcing of at least 30 percent of the value of products sold would have to be done from Indian “small industries/village and cottage industries, artisans and craftsmen”
  • Application should be submitted seeking permission from the Indian government for FDI in retail trade of single brand products to the Secretariat for Industrial Assistance in the Department of Industrial Policy and Promotion
  • The application will specifically indicate the product/product categories which are proposed to be sold under a single brand
  • Any addition to the product/product categories to be sold under single brand would require fresh approval from the government
  • Applications would be processed in the Department of Industrial Policy and Promotion to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for government approval

(Suggested Reading: “UnHate” by Benetton)

Mono Brands such as Tommy Hilfiger, Pepe, Mont Blanc, Rolex, Pizza Hut, Costa Coffee and many others through a JV with Indian partners have been operating in India over the past years. Some like Benetton and Nike have been operating on their own, using manufacturing/marketing as their modus operandi through a predominantly franchisee model. Over the past few years, we have seen even luxury brands like Louis Vuitton, Diesel, Tumi, Armani and Versace enter the Indian Retail market through respectable JVs with the likes of Reliance Retail, DLF Brands, etc. and all of them seem to be doing well in their own way. Indian business houses such as the Tatas, Jubilant Organosys and Dabur have been happy to partner with international brands such as Zara, Dominos and Subway (respectively) and operate large franchise operations. But the fuss over 100% FDI in single brand retail seems surprising, if not confusing. Louis Vuitton, for example expects a sale of over USD 100 million from a 550 sqm outle from its only airport store in the world at Incheon International Airport, Korea. It would take LV a few years to achieve a similar number in the Indian market. In such a scenario, I wonder why would international brands invest and fund their expansion and growth in India all by their own, while there are so many Indian business houses/partners who wish to do so.

Video Courtesy: The Moodie Report

Indian and International Retailers are eagerly looking forward to the approval of 100% FDI in Multi-Brand Retail, which is not expected until the elections are over in key states such as Uttar Pradesh. Major action is expected only when the big boys of multi-brand retailing are allowed to enter India and operate directly and service end-users/customers. And that doesn’t seem to happen soon, certainly not in 2012. Hopefully, the next year – if the world doesn’t end. That is.

(Suggested Reading: Borders – a book in itself)

14 October, 2011

Airports, A/c and Retail Opportunities


I came across an article recently on Times of India according to which Airports Authority of India (AAI) plans to turn-off air-conditioning in certain parts of the airports to reduce its expenses. “Our model for low-cost airports is based on a good low-cost carrier where people will get good, cost-efficient services. AC is the single biggest cost factor in airports. We are examining models to cut down the need for air-conditioning in the tier III airports that will come up,” said a senior official of AAI. Hubli in Karnataka will prove to be the first test case for this new phenomenon. The AAI is building an airport in Hubli for which the terminal cost has been pegged at Rs 60 crore (USD 13 Million). “We are going to further reduce this cost by shunning the fancy and shining tiles used for flooring and are looking at more areas for economy without compromising the efficiency and comfort level for flyers,” said sources. There is an increasing clamour among airlines, many of whom are struggling to survive and unable to pay hefty fees that the fancy new airports levy. Their logic: have economic airports with low charges so that flying remains affordable as high charges for ‘Taj Mahal’ kind of airports would have to be recovered in the form of higher fares from passengers.

(Suggested Reading: Airline guidelines – a boon to Retailers)

Another recent article in The Economic Times illustrates the financial performance of GMR Airports, the company that has built and manages two of the top 6 airports in India at Delhi and Hyderabad. Incidentally, Hyderabad Airport is the Number 1 among its peers according to the latest ACI Survey which grades airports across the world on passenger amenities and services. And yes, GMR neither switches off nor plans to switch of A/c. Their opportunity – non-Aeronautical Revenues which includes Retail and F&B options at the airport premises. World over, non-Aeronautical revenues account 30-50% of an airport’s revenues. Of this, Retail/F&B contributes significantly, over 70% in some cases closely followed by “Car Parking Revenues”.


In India, the focus on Non-Aero income has hardly been given importance by AAI, the erstwhile operator of the top airports in India (located at Mumbai, Delhi, Bangalore and Hyderabad which are now privatised). In the year 2006, Airport privatisation was formally passed on a Private-Public Partnership model (PPP) and Delhi, Mumbai airports were handed over by AAI to two private parties, viz., GMR and GVK to modernize the respective airports. While Mumbai is half-done (not sure which half), Delhi has a swanky new terminal, more popularly known as T3, built at a cost of over USD 2.5 billion. Over 100,000 sft of space is dedicated to Retail, F&B and other commercial areas and also boasts the largest car parking facility in town! (while compared to any other Mall or Shopping Centre). Hyderabad and Bangalore had their own greenfield (built from scratch) airports led by GMR and Zurich airports’ consortium in the year 2008.

(Also read: Privatisation of airports)

Instead of switching off A/c or using inferior quality of flooring and other amenities, AAI should rather focus more on the commercial opportunities. AAI follows the “Competitive Tender” model where the bidder with the highest bid amount qualifies to operate the said commercial locations. Needless to say, most of the branded players shun from such tenders due to inconsistency of participation. For example, a branded pizza chain cannot sell beyond their range, so does a branded formal wear Retailer! Most of the spaces that are tendered out are between 8-20 sqm (about 90 – 220 sft) for a snack bar or even a specialised category apparel / accessories store or a book store! It’s not only a business challenge to run a retail establishment within such a small area – but it doesn’t provide a good retail experience as well. This is a fundamental philosophy-flaw of AAI that needs to change. Change NOW.


If done properly, AAI can expect to garner reasonably good revenues from Non-Aero revenues. Chennai and Kolkata Airports which are being modernised by the AAI themselves will be a litmus test for Retailers. These airports are as large or larger than Bangalore & Hyderabad and the customer (Read: Passenger) is the same who is spending time and money at Delhi, Mumbai and other International airports. So, the intent to spend / opportunity to serve is already huge. With the burgeoning spends in Organized Retail even in tier II and tier III cities growing by over 35% year on year, it is no surprise that passengers in smaller airports / cities would spend on good quality products and services. HMSHost, a leading player in the F&B space at airports worldwide is now the largest player across Indian airports with significant presence at Bangalore, Hyderabad, Mumbai and more recently at AAI managed airports at Chandigarh and Lucknow. Cafe Coffee Day, India’s largest cafe chain operates over 25 locations across various airports in India.

(Also Read: A lot happened over coffee!)

So now, its up to AAI how they would want to capture the wallet-spends of its passengers! As a regular user of airports, I wouldn’t mind lesser space at the terminals (as a passenger, my dwell time is no more than 45 minutes and I am not going to play football anyway), rather prefer a comfortable environment – reasonably well maintained terminals and hygienic toilets included.

Hope – the most important word in our lives. I hope things will change. Even with AAI. Let’s see.

Ashta Mudras

13 September, 2011

Luxury Retailing in India


Last week was a fascinating one to the world of Travel Retail and Luxury Retail. One of the world’s most coveted luxury brands, Louis Vuitton from the house of Moet Hennessey Louis Vuitton (LVMH) finally debuted at Incheon Airport in Korea (which has also been ranked the number 1 airport in the world in passenger satisfaction by ACI International) amid much fanfare and excitement according to the first online update from The Moodie Report. Korea, which is famous for its “cheaper” alternatives in electronic products and automobiles (led by Hyundai) was the obvious choice for the cult brand since it is the most preferred transit destination between Mainland China, Japan and Korea and the rest of the world. Louis Vuitton was also ranked the number one luxury retail fashion brand (behind Hermes, Gucci, Chanel and Cartier) by the media house “My Retail Media” recently. LV, as it is popularly known, is most famous for its accessories & luggage (which ranges between USD 500 – 5,000) and is one of the last brands in the “Luxury” segment to enter the glamorous world of Travel Retail. Such is the potential of passengers travelling through airports!

(Suggested Reading: Travel Retail)

When LV entered the city of Bangalore in India (2008), it had installed a huge trunk outside the terminal building of Bangalore International Airport (BIAL), a first of its kind in the country but one which the brand does quite frequently across the world. Apart from this, LV operates at Delhi and Mumbai and is looking forward to expanding across other Indian cities in times to come. Hermes opened its first outlet in Pune this year, which was later followed by its flagship store at Mumbai. The beauty of this location is that it opened its store where the distance from / to Mumbai is ‘0’km (zero km)! Other luxury brands such as Gucci, Chanel, Cartier, Rolex, D&G, Armani, Hugo Boss, Omega, etc. have their standalone stores at Mumbai, Delhi and Bangalore. Although, the offtake is not as expected, according to market reports. There was even a recent article online in which the writer claims that the “Indian Luxury” market is a not as successful citing examples of how Nita Ambani (wife of Mukesh Ambani, one of the world’s top billionaires and the Chairman of Reliance Industries) shopped her porcelain from nearby Sri Lanka for their new billion dollar home! Indeed, Gucci, Prada and their ilk in Luxury Retail have not taken off the same way in India (estimated at less than USD 1 billion compared to that of USD 17 billion in China) but I wonder if that’s just the measure.

(Read: World’s cheapest car and its possible impact on Retailers)

The article also quotes the number of dollar millionaires – I guess, the methodology in itself is flawed. There is probably more “black money” in India than in white, hence it is not the best way to assess the wealth of native Indians. Mercedes Benz, the oldest German luxury automobile in India along with with its country counter parts Audi and BMW sold over 2,500 cars last year (at an average price of USD 100,000). Property Developers such as DLF, Prestige, Sobha and many more are developing high-end customised villas that range from INR 2 Crores to 5 Crores (USD 500,000 onwards). A typical Indian middle class family spends between USD 20,000 – 50,000 – something that’s unheard of in the Western world where Church weddings do not accommodate more than a 100 people while the big fat Indian weddings feed over a thousand people, twice a day, for 3-7 days! If western wear and accessories are any measure to say that Luxury Retail in India hasn’t take off, that’s right. But then, the Indian shopper doesn’t consider Western wear for day today use and hence their usability is restricted. The article claims that even an entry level secretary in Japan or China would sport a LV bag (it doesn’t mention if original) which is not the case in India. (But they do sport gold jewellery which is not considered…). High end electronic gadgets are favourites with the working middle class including the iPod, the iPhone the iPad and a wide range of mobile phones and related accessories.

I wonder why “Luxury Retail” in India is always connected with western apparel and accessories. Women do not sport western wear to work everyday! And the reason is simple – an average Indian (women) is more comfortable in her Indian clothing. The climatic condition is more conducive for comfortable dressing and hence their preference. Would this change in the next 20 years, yes. Would it match the world markets? No. I can assure that this market will never be the same in size as what it is in Japan or China, forget Europe or the US. Indian women and the society at large are indeed embracing western wear in a big way, especially for formal occasions at workplace. Even for holidays and other occasions. However, the appreciation for high-end Luxury remains lukewarm since the reasons to wear (other clothing) is far more. Cufflinks are famous all over the world to match blazers, jackets or suits. But a majority of people in the working class do not wear a full-sleeve shirt to work, forget other accessories! And the reason is that the Indian weather conditions do not permit wearing a heavy suit all day at work. Two thirds of the working class still commute in public transport (Metros / A/c buses) and two-wheelers and hence prefer an easy attire than the complicated ones. This is one reason why “wrinkle-free” shirts and trousers are a big draw in the country.

(Also Read: Luxury Retail at Airports)

But no one bothers to compare the gold consumption in India – the most coveted precious metal with the rest of the world. Some one from the Jewellery industry told me recently that if all the gold in Indian houses is collected and offered in the world market, the price of it would be cheaper than that of copper! Really. That’s the amount of gold that is collected and retained in India. For Indians, gold (Swarna, as in Goddess Lakshmi) is bought for various reasons – as traditional jewellery, as savings for future, as a means to display wealth and so on. A former minister from the state of Karnataka who was recently arrested and jailed apparently had a gold-plated chair and even cutlery / crockery for dining at his home according to press reports when the CBI raided his house!

I am sure that the Luxury Market as opined by experts will indeed grow - Coupled with better Retail Infrastructure and Government taxation norms. Soon, one can expect an LV at an Indian airport too. You never know. It’s just a matter of time.

29 July, 2011

Passenger dwell time is precious!

The lady at the check-in counter of Jet Airways, India’s premier airline told me that I just need to show the Boarding Card at the Lounge – they would scan and identify the passenger, rather than providing a Lounge Voucher separately. I was wondering if they were saving paper (Go Green, Save Environment, or one of those fundoo stuff). But actually, it was a smart way of using technology by using a scanner. QR Codes seem to be the rage all over and I now have mine for various purposes – try one of these below. Will write more about the utility of QR Codes to Retailers soon.

The Shriram on Twitter The Shriram on LinkedIn

As I was walking towards the Security Gates, I was remembering something that my friend Patrick Graf, Head of Retail Marketing & Services at Zurich Airport used to tell me often about one of the best practices followed at his airport – of how Shopping Vouchers were given to passengers at the time of Checking-In. It was indeed a smart way of engaging passengers and guiding them to the Retail / F&B areas rather than pushing them into those Lounges – if they have dwell time (in airport parlance, its the idle time, rather productive time available with passengers before boarding their plane), then we might as well use them at the numerous shops and restaurants. In fact, these are the guys who travel frequently collect air miles, are on the top levels of airline loyalty programs (such as a Platinum Member or Gold) and have very little time to shop for themselves or their loved ones.

I saw just that today at the Carnation Lounge in Mumbai Airport – a 200 sqm facility with over 100 covers and the place was full between 18.30 – 20.30 (I had reached the airport early for a meeting which was cancelled by the other party). Apart from my professional commitments, my favourite past time is to observe consumers (and potential ones too) and was just doing that. There were atleast 7 people that I spotted in the lounge who were fiddling with their iPads; almost everyone of them had a BlackBerry and a Laptop; over a third of them were in formal business suits; and there was a glass of beer or some other form of alcohol at over a fourth of all tables. And they were munching the complimentary buffet sponsored by the airline while continuing their work – most professional / official I would guess.

View of the Carnation Lounge – click on the photo to reach the author

Now, Retailers who have set-up shop (I am using this airport terminal just as an example) in the airside hope some of these influential passengers would pass by – not that those who don’t have Lounge vouchers are not influential – but these are probably a ready bait. With a little more working together between the Airport (Retail team), Airlines and Retailers, the dwell time could be utilised quite efficiently. Here are a few observations and ideas;

  • Collaborate - It might be worthwhile for the stakeholders to first agree to a plan; the Lounges do get crowded at times and its productivity is somewhat lost when some Pax do not move from their seats – by offering a special promotion exclusively to them, its not just an opportunity to entice them but also to free up space in the Lounges
  • Communicate – what’s seen is what is believed. If there is a partnership between airlines and retailers (at the airport), it should be mentioned loudly – probably at the entrance using a Standee or on the tables using Tent Cards and even on the PA system (though sparingly)
  • Co-Promote – I guess Retailers should promote the offers provided to a particular airlines (or a few of them if it is so) at their outlets – pax flying a certain airline may just walk-in to know more about the offer! And Airlines should promote the Retailers especially at the Check-In counters, not to mention on their websites, emailers, e-ticket borders and of course, behind the boarding cards

I have seen airports where the Lounges are located quite far-away and in spite of it, I have found myself waiting outside for a few of them inside to vacate so I can find a seat for myself. This is not particular to India, probably all across the world. There is a learning that we could take from some of the best practices followed at places like Zurich Airport and implement them in our own ways. After all, passengers’ Dwell time is too precious to be let off sipping a complimentary soup or reading the morning newspaper / evening tabloid at the Lounges – intelligence lies in enticing them to walk across the commercials areas – so they could also get a taste of Retail and F&B too. Now, I am gonna work on such a promotion starting shortly Watch out. 

24 July, 2011

Retail staffing has a long way to go!

photo courtesy

It was rather annoying that I didn’t get a refill lead for my Mont Blanc Pencil at the flagship store of the brand at the iconic UB City in Bangalore. The Sales staff, who was amicable and friendly ensured that the Mont Blanc service levels (as is globally) are maintained. What she didn’t do (and possibly, inadvertently) was accuracy of her technical skills. When I visited the store again the next day, another staff who was equally amicable and friendly explained that there were already spare leads within the writing instrument and that there was a mechanical issue due to which it wasn’t working properly. After a few permutation and combinations, he somehow managed to make it work! Well, I was impressed that my pencil was working normally but certainly not about the service levels at a store of one of the most respected brands in the world. In both the cases, there were no efforts made by the staff to show something new within the store – the interactions revolved around just fixing the problem rather being engaging or exhaustive. 

A few days ago, we went for dinner in a large group to a reputed restaurant in town, named Aangan. I believe they have a few branches across the city and was proven to be a good place all along. even as we were walking towards the store, what I saw from outside made me a bit confused – such a respected restaurant was running fans instead of air-conditioning! Yes, I agree the weather outside is rather pleasant but the overall ambience inside wasn’t so, with all the odour of food. We placed the order and were sipping our soup and the staff was already there with the main course – rotis, dal, etc. When I questioned what was the hurry, the staff replied (but politely), that “the food was already prepared”. Then a senior guy came across and took the food back (though not to the kitchen but to another table!).

AppleJump1 photo courtesy

Now let me compare these with an example of extraordinary product / service orientation by Retail Sales staff. recently carried an interesting article on how Apple has ensured highest levels of customer service at its flagship stores. More people now visit Apple's 326 stores in a single quarter than the 60 million who visited Walt Disney Co.'s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple's annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That's far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates. According to several employees and training manuals, sales associates are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems.

Retail staffing is one of the most complex challenges that Indian Retailers have been facing over the years. My first employer, RPG Retail had set-up RIRM – RPG Institute of Retail Management, an inhouse training & development agency in which I was a Certified Trainer. The HR Team would scout for talent from government schools and recruit them as trainees – they would be provided class room training initially and later, on-the-job training at one of its Foodworld, Musicworld and Health & Glow stores. In addition to this, they would be given a Certificate after a 6 month period of experience and a job offer to join as a full time employee. The success rate used to be over 80%, thanks to the reasonably lucrative and respectful employment that the trainees used to get. Over a period of time, they were “ready to poach” variety for newer Retailers who entered the market. Most Retailers in India today have a Training & Development Department but it’s quite a challenge to retain front-end employees especially, thanks to the lure for a small hike in salary! Most of them do not have long-term goals and hence keep jumping jobs, partially for the sake of salary and partially for other conveniences – such as proximity to their residence, designation, and not to mention shorter working hours or lower work-load.

Thankfully, Indian customers at the moment are not as demanding as their western counterparts, but it is just a matter of time that they too shall be demanding superior product knowledge and high levels of customer service – from boutique stores to hypermarkets. Needless to say, retail employees would also understand this themselves, with personal experiences. More than the employers’ interest, I foresee employees (in the front-end) taking a lot more interest in training themselves – for their own long-term success and existence!

26 April, 2010

Duty Free in India – a fiasco or a success story in the making?

“Nuance Group (India) to exit Hyderabad Airport Travel Retail as new Tender looms” read the headline on The Moodie Report – the most respected and authentic Travel Retail news site that never sleeps. Even though the Publisher Martin Moodie, Deputy Editor Dermott David and many other senior people were stranded over the past 10 days due the flight disruptions caused by E15 (that’s the short code for the Icelandic Volcano), the news website kept going. Such is the commitment of the people behind. Back to the headline, which also appeared in a leading Indian newspaper a few days ago, it was indeed a surprise for many of us in the Industry. Or should we say was it a surprise that the news came so late! Well. 

The Nuance Group that operates over 400 shops across 60 airports and 20 countries worldwide and which is among the largest Duty Free operators in the world entered India in the year 2006, with a JV with Shoppers Stop, India’s leading retailer. The JV was specifically formed for the Duty Free tenders that were coming up then, at Bangalore and Hyderabad for the two new Greenfield airports. It was quite a surprise to see this JV and so were many other partnerships – The Oberoi Group with Heinemann, for example. It was the first time that international players were setting their eyes in India. It was initially India Tourism Development Corporation (ITDC), a Govt. Of India undertaking which was the monopoly operator across Indian airports over the past 3-4 decades. And then came in the private monopoly of Flemingo since the turn of the 21st century. This was challenged by the International players in 2006 when the top five Duty Free operators of the world including Nuance, DFS, Dufry, Heinemann and Alpha participated in the tender process of BIAL. The line-up and interest in the Indian Duty Free was so impressive that many in the industry were hoping for better days ahead, guessing that the international players with their global exposure and best practices would mark a change in the country. Wish dreams were horses!

The first International player to win a tender in India was the Nuance-Shoppers Stop JV at Bangalore International Airport. This was followed by a similar success at Hyderabad International Airport. Other players such as Dufry and Heinemann made a quiet exit from India heading back to their strong bases. Alpha, which had been operating in Kochi and Colombo for over 10 years went back to focus on its territories.

A lot was anticipated by the Industry from the Nuance-Shoppers JV since its victory from the tenders at Bangalore and Hyderabad. With their impeccable track record in India, Shoppers Stop was expected to put things into perspective and bring some method to madness in this crazy business. After all, travel retail was, and is still a very nascent industry in India and who would believe me as an Airport Retail Manager a few years ago when I would say passengers would buy not just books and magazines, but also diamonds, watches, t-shirts and perfumes, even in the domestic departures of the airports! Shoppers Stop is doing an excellent job and one can see this at the Bangalore and Hyderabad Airports. And Nuance, with their global experience and success was expected to negotiate the best rates from its suppliers and pass on the discounts to its customers at the International Departures and Arrivals. Needless to say, this is a true story today and the duty free stores in Bangalore and Hyderabad have been the favourite for most International passengers in recent times, surpassing erstwhile favorites such as Dubai, Singapore and Bangkok Duty Free.

So, what really went wrong at Hyderabad? Honestly, I wouldn’t like to speculate. But there are certain points that were evident with their business model, some of which are discussed here. Sure, these are observations of yours truly and a few people around while personal thoughts of some of the readers may differ. To begin with, the size of the market was over-estimated. Going by previous experiences, the incumbent Flemingo who was operating at the erstwhile Begumpet Airport at Hyderabad did not have such a large duty free area. This, in my opinion should have been the first learning. A large airport doesn’t necessarily mean a large Duty Free Store, many of you would agree. Next, the range included high-end premium products including Scotch and Cigars, which was probably not required. The reason for this being over 60% of international passengers are either proceeding towards or returning from the Middle East and are blue-collared workers, whose primary requirements include some inexpensive chocolates to distribute among friends and family, low-cost tobacco products, whisky and rum. And most importantly, over half of all passengers belong to the Muslim community who do not consume any form of alcohol. This, according to many in the industry was the most important point that should have been kept in mind. Indeed, for the reasons mentioned above, it was widely expected that Alpha Duty Free, now a part of the Autogrill Group, which has been operating in Cochin (with similar consumer profiles) could have been a better bet for this airport.

Most recently, middle of 2009, there was an unsavoury incident at Hyderabad Airport where some of the staff of the duty free were allegedly involved in a racket that included illegal smuggling of customs bonded goods. While the words may sound alarming or confusing, what was happening actually was that the staff were taking goods out of the store that were not purchased by passengers, but by illegally using their personal details. This, according to some in the close vicinity of the Operator as well as the Airport Management was the last nail on the coffin. Afterall, the GMR Group which operates and manages the airports in Delhi and Hyderabad was in no mood to continue a situation that would give it disrepute in any form. The new Terminal 3 at New Delhi is nearing completion and once finished would possibly be the best terminal in India and among the best in the world. So, the latest news is that a new tender is being called for and the new operator “may” have a Joint Venture with the GMR Group directly, just like how Aer Rianta has entered in Delhi.

Having said all of that, Nuance has done a commendable job in Bangalore over the last two years and this is also a reflection of their best practices being continued – they are also doing great in Zurich Airport, which happens to be one of the main shareholders in Bangalore Airport. Their achievements in Bangalore include bringing for the first time in India a Formula One Racing Car to many other exciting promotions that have never been tried in the country. While there is wide speculation that they would wind up their India operations  (naturally by the Indian Media coz they love doing it), many in the know are unwilling to believe so. Bangalore Duty Free, if done well in the years to come would be not just among the most profitable to the operator, but has the possibility to be one of the best in the world. Nuance has proven time and again that it is THE BEST Operator at Singapore and Hong Kong and understands the pulse of this market quite much. I am sure the business will flourish well in capable hands and continued mentoring and look forward to its wining accolades in times to come. So, where is the Indian Duty Free heading towards? Just wait until T3 opens - and the new integrated Terminal at Mumbai International Airport. Just a matter of time, when Indian operators will show the world how this business is run best. Cheers. 

Thank you, HR

It was a surprise to see Zoho Corp, take up front pages of leading newspapers today (20 May) to celebrate International HR Day. Seemingly, t...