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RETAIL/F&B Last modified on January 15, 2017

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Dufry CEO, Julián Díaz, provides his thoughts on airport duty free concessions and some of the opportunities and challenges facing the travel retail market.

How healthy is the airport duty free market?

The airport duty-free market is very resilient and all indicators point to yearly growth in industry sales of around 5% to 7% over the next three years, and with passenger traffic expected to double to over 14 billion by 2029, there is plenty of scope for future growth.

What are the main challenges/threats to the future success of the industry?

Short-term challenges for individual airports can, of course, be created through external factors like economic crises, natural catastrophes or diseases; but these factors will never impact all locations at the same time. Passengers may change destinations as a result, but are unlikely to stop travelling.

How do you build loyalty and is there any evidence to suggest that passengers look for outlets operated by specific duty operators?

We already have a customer loyalty programme called ‘Dufry RED’, which is currently being deployed in several countries and which allows customers to benefit from promotions and special services only for members. Indications show that customers appreciate our offers and services, since spending of RED members is above average. And digital technology will further support CRM [customer relationship management] activities with new features.

How big a role do you believe an airport’s retail/F&B offering plays in its overall customer satisfaction levels? 

Although travellers go to the airport to fly and not to shop, the concessions offering is often a key part of the ‘airport experience’ and therefore can become a crucial factor in overall passenger satisfaction levels. An airport that offers its customers an enjoyable atmosphere and a positive retail/F&B experience can only benefit from it.

It should also be noted that many airports have recognised the value of non-aeronautical revenues, and continue to invest, while others are still behind the curve and have huge potential to improve their attractiveness. 

In some cases non-aeronautical revenues already make up for close to 50% of the airport’s turnover and travel retail is often the most important contributor. 

We strongly believe that common efforts and partnerships between airport operators and travel retailers can considerably improve revenues for both partners if the collaboration starts when defining passenger flows, the allocation of retail space, shop design and communication rather than just discussing remuneration schemes.

Why isn’t Dufry that big in Africa and is this something you are looking to change?

This is a continent with only two airports in the top 100 worldwide for international passengers. Having said that, it is a continent set to grow and Dufry is there. We are basically looking at opportunities and recently signed a new contract in Cairo and opened new shops in Kenya. Our approach to new business is the same the world over. We evaluate each opportunity on its merits, independent of the country or continent, and have clear return expectations on new projects. So, for us, it depends only on the availability of interesting projects with profitable business cases. 

How successful are Arrivals duty free shops?

They are very successful although, with the exception of Brazil, they rarely match the sales levels of Departure shops. Ideally they complement the ‘normal’ duty free offerings service. To have both Arrival and Departure shops in the same airport allows a
travel retailer to offer additional services to customers, such as buy now and pick-up upon arrival, which are highly appreciated. Unfortunately, Arrivals shops are not yet allowed in all countries, but as the recent attempts undertaken in Russia, Kazakhstan, Armenia, Belarus and Kyrgystan show, more and more countries recognise their importance.

What is the most expensive item anyone has ever bought at one of your airport shops?

Recently, in one of our shops in Switzerland, an Indian customer bought several watches for a total of CHF121,300 [$120,000]. It is difficult to say if this is our biggest ever sale, but for sure it is an exceptional one.

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