Delhi Duty Free pins hopes on cosmetics for profit

Written by Debabrata Das | New Delhi | Updated: Mar 31 2013, 06:18am hrs
With the aim of growing its revenues at 25-30% year-on-year, Delhi Duty Free will focus on increasing sales from the perfumes and cosmetics segments and also open a dedicated electronics store.

The largest duty free retail operator in India has also started a customer loyalty programme as it aims to breach the $100 million revenue mark soon.

Amongst the plans this year, we are very bullish about the perfumes and cosmetics segment, said Arun Barathi, chief commercial officer, Delhi Duty Free Services. We will be bringing in some new brands in that segment, brands which are amongst the top five in the world. June 2013 onwards we will have a good electronics store in the duty free so will fill that gap as well, Barathi added.

Currently, liquor contributes to the lions share of the sales at the duty free with 60%, while perfumes and cosmetics come in at a distant second with 25% of the overall sales. The rest is from confectioneries and tobacco.

According to aviation consultancy firm Centre for Asia Pacific Aviation (CAPA), Delhi Duty Free is the largest duty free retailer in India with sales of $72 million in 2011. Delhi Duty Free is expected to complete 2012-13 with $90-94 million in sales turnover and expects to cross the $100 million mark in the 2013-14 fiscal.

To keep up the growth momentum, Delhi Duty Free has also launched a card-less customer loyalty programme. At the moment 10% of our transactions come from loyal customers and we expect this will go up to 20% with the launch of our loyalty programme, said Barathi. We are very conscious that to compete with Singapore, Dubai and Bangkok, we need to develop a strong brand. Nearly 80% of our first time buyers shop with us again so the challenge really is to bring in that first time buyer.

With 40,000 square feet of retail space spread across the arrivals and departure area, Delhi Duty Free has one of the largest shopfloor area in Indian airports. But in terms of revenues, Delhi Duty Free falls way behind global leaders Dubai Duty Free who had revenues of $1.46 billion in 2011.

Indias airport retail story has, however, unfolded only in the last five years. International standard retail formats were entirely absent from Indian airports, even the metro gateways, until recently, said CAPA in a recent report on Indian aviation retail business. In the case of the largest airport, Delhi, duty free spend has increased 400% over the five years to FY11.