THE REAL DEAL

A host of new contracts and record sales figures for 2014 make these exciting times for travel retail and duty free operators, writes Joe Bates.

Duo to transform Auckland duty free offering

Auckland Airport has announced that its duty free offering will be provided by LS travel retail Pacific and Aer Rianta International from July, 2015.

The airport’s general manager, retail and commercial, Richard Barker, believes that having “two of the world’s most innovative duty free operators” onboard for at least the next seven years will help transform Auckland’s duty offering.

He says: “Both operators have proven themselves to be driven and innovative in achieving strong, customer-focused, growth in airport duty free retail.

“They will provide our passengers with shopping experiences unrivalled anywhere else in the country. There will be many new duty free brands and retail concepts, including a number of world firsts.”

Barker says that travellers will start to see the positive impact of the two new operators from July this year, although admits that the biggest changes will come when the airport opens its new international departure area.

The new concessionaires are also expected to act as a catalyst for a significant expansion of Auckland Airport’s online retail channel, including ‘click and collect’ which provides passengers with the option of buying online and collecting their tax-free and duty free purchases when next travelling internationally.

“Auckland Airport is focused on strategically growing its duty free and retail business and providing travellers with a great shopping and travelling experience,” admits Barker.

“As a result of the duty free tender, and other changes in specialty stores, we expect our earnings before interest, tax and depreciation in the 2016 financial year to increase by an additional NZ$5 million.”

Matthieu Mercier, LS travel retail Pacific’s chief executive officer, says: “We will boost the airport’s duty free offer with innovative ideas, and we will leverage our extensive vendor relationships and global experience by offering a wide range of big name brands in Perfume & Cosmetics, local wine and liquor to name a few.

“Our goal now is to make it happen and to create a fantastic duty free experience that exceed passenger expectations, and I
believe that our vision for Auckland Airport will achieve this and more.”

Jack MacGowan, Air Rianta International’s chief executive, notes: “This is a wonderful opportunity for Air Rianta to enter a new partnership with an ambitious, forward-looking airport that is seeking to collaborate with a global duty free operator to enhance the retail experience of international passengers at Auckland Airport. 

“From the moment we held our initial conversations with the team at Auckland, we recognised a shared vision about placing the passenger at the heart of the airport retail experience and about enhancing that experience with an exciting retail offer. We will bring to Auckland our global experience of successful airport retail operations and airport partnerships.”

Heinemann to spearhead Sydney duty free revamp

Across the Tasman Sea in Australia, Sydney Airport claims that its international passengers will start enjoying a new duty free retail experience following the appointment of new concessionaire, Heinemann Duty Free.

According to the airport, Heinemann is set to the reinvigorate the duty free experience over the next 12 months by creating a new, unique shopping experience with an extensive selection of brands at attractive prices and two dining concepts, headed by celebrity chef, Luke Mangan.

“Heinemann is the world’s third largest travel retailer and we selected them for the exclusive brands and value they will provide to more than 13 million passengers who travel internationally from Sydney Airport each year,” enthuses Sydney Airport’s managing director and chief executive
officer, Kerrie Mather.

“We are looking forward to working with Heinemann over the next year to transform the airport’s duty free offering and create a retail experience that’s uniquely Sydney.”

Heinemann Asia-Pacific chief executive officer, Max Heinemann, claims that travellers at Sydney Airport would make significant savings on duty free items.

“We’re going to give passengers a fantastic retail experience with outstanding service and exclusive international brands at attractive prices,” he pledges.

Heinemann’s Sydney operations will employ a workforce of over 550 staff, with the company set to invest more than A$60 million (€40 million) in its new location.

It promises to offer travellers an extensive selection of perfumes and cosmetics, wines and spirits, confectionery, tobacco products and accessories across six shops at Sydney Airport’s T1 terminal.

Work will commence immediately on a refit of the duty free stores, with work to be staged over the next 11 months to minimise disruption to travellers. Three stores in departures and two stores in arrivals will be completed in January 2016, with a final arrivals store to be open by mid-2016.

The new stores are being designed by Gebr Heinemann’s in-house design team in collaboration with the renowned Australian architectural firms Geyer and Lava. As with all Heinemann duty free shops, the design will incorporate a sense of place and in this instance, will be inspired Sydney’s beautiful harbour, beaches and laid-back sophistication.

Milestone year for Abu Dhabi Duty Free

Abu Dhabi Duty Free (ADDF) exceeded sales of $272 million for the first time in 2014, a rise of 10.5% on the previous year.

A number of new retail stores opened in 2014, including two new multi-category outlets, a new 253sqm Fragrance Boutique in Terminal 3, a handful of refurbished core duty free stores on the Terminal 1 Upper Level, and several initiatives including a new Wellness Spa and Minimart outlet.

Beauty & Fragrance emerged as the biggest selling category in 2014 with a 31% share of ADDF’s turnover.  

Indian, Chinese and Emirati passengers continued to account for the highest share of sales at the airport (36%). 

Abu Dhabi Airport Company’s chairman, His Excellency, Ali Majed Al Mansoori says: “This significant milestone confirms that we are providing passengers with the diverse services and offerings they expect at a major international airport and reflects the incredible growth in passengers which is largely driven by the success of the national airline, Etihad Airways”.

The growth was across all categories with Perfume and Cosmetics (+9.7%), Rolex (+36.6%), Watches (+15.5%), Cigars (+13.2%) and Food and Confectionery (+8.4%) among the best performers.

Other facts and figures for 2014 include the fact that ADDF sold over 40,000 litres of fragrance, 200 tonnes of powdered milk and 188 tonnes of chocolate – including 25 million single M&M candy sweets.

And things will get even better for ADDF when the airport’s new Midfield Terminal Building, which will have a capacity of 30mppa, opens for business in 2017.

The self-proclaimed goal of Abu Dhabi Duty Free is to “create the world’s best commercial offer at an airport” at the Midfield Terminal and “provide customers with a sensational experience and exclusive innovative offers, supported by high levels of service and traditional Emirati hospitality”.

Dubai Duty Free sales soar to new heights

Dubai Duty Free (DDF) ushered in the New Year by announcing record-breaking sales of $1.917 billion for 2014, representing a 7.36% increase over the previous year. 

The sign that a remarkable year was coming to an end was evident in December 2014 when it set a new monthly sales
record of $205 million – an incredible $192 million (+7%) more than in the same month in 2013.

The December high was fuelled by DDF’s 31st anniversary celebrations when it offered a 25% discount across a wide range of merchandise from the 18th-20th December, which resulted in a shopping spree by passengers of $51.74 million
during the 72-hour period. 

Over the anniversary weekend, the cash registers recorded a total of 405,407 sales transactions with 205,485 of them alone on the anniversary day itself, 20th December.

Reflecting on another memorable year at DDF, Colm McLoughlin, executive vice chairman said: “We are thrilled to announce such a positive year during which the operation went from strength to strength.”

The operation recorded a staggering 26.9 million sales transactions in 2014, which is an average of 73,960 sales transactions per day across both Dubai International and at Al Maktoum International, Dubai World Central. 

With sales of $314 million, Perfume – which now contributes 17% of Dubai Duty Free’s total sales – retained its position as the best-selling category. Liquor and Gold followed, with sales of $286 million and $163.6 million respectively. 

Cigarettes and Tobacco came in fourth place with sales amounting to $160 million followed by Confectionery with $147.7 million.

Other major increases were seen in Cosmetics, which rose by 19% to $146.5 million and accounting for almost 8% of annual sales. Watches rose by 9% to $137 million.

Looking ahead, Dubai Duty Free will continue to enhance its retail operation with the ongoing refurbishment of Concourse C and the opening of a 7,000sqm retail space in Concourse D while maintaining a busy events and promotional calendar. 

Good times for Bahrain Duty Free

Bahrain Duty Free recorded the highest profits in the company’s history in 2014 when it posted a net profit of $22.7 million for 2014 – 32.7% up on the previous year’s earnings of $17.1 million. 

Chairman of the board, Farouk Almoayyed, believes that the variety and quality of goods on offer and a renewed focus on marketing campaigns and customer service had a hugely positive impact on sales, which increased by 7.8% to $74.5 million in 2014. 

A 10.4% increase in passenger traffic at Bahrain International Airport and a number of shop refurbishments, which included the Arrivals shop in addition to the opening a new fashion shop, also contributed toward the record sales figures.