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“We are excited by the winning operators’ innovative concepts, through which CAG can realise our vision to rethink the airport shopping experience, enhancing Changi Airport’s reputation as a world-class airport“ |
Lee Seow Hiang Chief Executive Officer Changi Airport Group |
SINGAPORE. In major breaking news, DFS Venture Singapore has retained the liquor & tobacco concession at Singapore Changi Airport, while, in a dramatic turn of events, powerful Korean travel retailer Shilla Travel Retail (The Shilla Duty Free) has wrested the perfumes & cosmetics contract from long-time incumbent Nuance-Watson (Singapore).
Changi Airport Group (CAG) announced the news today at 18.30 Singapore time, noting that the tenders represented its “most significant leasing exercise in more than six years, with the successful proposals setting the stage for a dramatic transformation of Changi Airport’s retail landscape and elevating the airport shopping experience to a new level”.
It continued: “The awards of the new concessions conclude an intense evaluation process for the hotly contested tenders, which closed in June 2013.
“The closely-followed contests attracted strong interest from major global and regional travel retailers, with six and seven bids respectively in the liquor and beauty tenders.”
[As previously revealed by The Moodie Report, those initial bidders were: a) for liquor & tobacco – DFS Venture Singapore; Nuance-Watson (Singapore); Lotte Duty Free; King Power Group Hong Kong; World Duty Free Group; and Sky Connection; and b) for beauty – Nuance-Watson (Singapore), DFS Venture Singapore; Shilla Travel Retail; Lotte Duty Free; LS travel retail; King Power Group Hong Kong and World Duty Free Group. The Moodie Report understands that the final short-list came down to DFS, Nuance-Watson (Singapore) and Lotte Duty Free for liquor & tobacco and Nuance-Watson (Singapore), World Duty Free Group, Lotte Duty Free and Shilla for perfumes & cosmetics.]
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A day of triumph and loss, delight and despair at Changi |
| While Champagne corks are popping in one company, elsewhere tears are shed and futures pondered. Don’t believe it was any different today. |
CAG continued: “The tender awards mark the start of an exciting new journey for Changi Airport, which will see its major concessions – key anchors of the airport’s retail offerings – undergo spectacular transformation over the coming months.
“For both concessions, passengers can look forward to impressive new store designs, including revolutionary duplex stores, exciting new brands and extensive product ranges, as well as unique experiential concepts in-store.”
CAG Chief Executive Officer Lee Seow Hiang said: “The liquor and beauty concession tenders are immensely important to us. As the concessions represent our key retail touch-points with passengers, they play a pivotal role in shaping the overall retail experience at Changi Airport.
“We are excited by the winning operators’ innovative concepts, through which CAG can realise our vision to rethink the airport shopping experience, enhancing Changi Airport’s reputation as a world-class airport.”
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The shape of things to come: Shilla Travel Retail will introduce more than 70 new brands to the beauty category at Singapore Changi Airport (artist’s impressions courtesy of Changi Airport Group) |
CAG said: “Both winning operators stood out with their highly innovative retail concepts and strong business plan, supported by competitive financial offers and solid fundamentals.”
The result is a particular triumph for the Korean retailer, which has made no secret of its ambitions to become a global player. The Shilla Duty Free sales surged by +26.5% in 2012, reaching KRW1,899 billion (US$1.7 billion). The Changi concession represents a monumental breakthrough in both status and revenue terms.
Equally, one must feel for Nuance-Watson (Singapore), which has done an outstanding job at Changi for many years under Ken Tse’s tremendous local leadership. Following on from the loss of its two Hong Kong International Airport core category contracts last year, the news will be a particularly bitter pill for the company to swallow.
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A key highlight of the forthcoming retail transformation at Changi Airport is the world’s first airport duplex stores for the liquor and beauty categories |
DFS Group’s Changi liquor & tobacco operation, meanwhile, is consistently rated as one of the world’s best, based on a combination of factors including a rare ability to attract travel retail or airport exclusives (always important to Changi Airport Group and its ‘Changi First’ programme), high-quality merchandising and top-quality service.
WORLD’S FIRST AIRPORT DUPLEX STORES FOR LIQUOR AND BEAUTY
A key highlight of the forthcoming retail transformation will see Changi Airport welcoming the world’s first airport duplex stores for the liquor and beauty categories.
Three such stores – two for liquor and one for beauty – will be centrally located at Terminals 2 and 3’s Departure Transit Malls. CAG said: “With spectacular store facades and double-volume grandeur, the duplex outlets will be stunning architectural showpieces on their own, making them not just exciting shopping venues, but must-see attractions within Changi’s Departure Transit Malls. The spacious interiors will feature panoramic product displays and special areas for customer engagement and experiential activities.”
RAFFLES HOTEL COMES TO CHANGI
In its central store at Terminal 3, DFS will partner Singapore’s world renowned Raffles Hotel to deliver “an experience like none other”, CAG pledged. “It will recreate in-store, the colonial-style hotel’s legendary Long Bar – where the famous “˜Singapore Sling’ cocktail was invented in the 1900s – offering Changi’s international passengers a distinct Sense of Place and a taste of Singapore.
“Within the stores, there will also be dedicated boutiques offering different brand experiences, wine libraries, innovative multi-media promotional areas, as well as interactive activities to promote category appreciation and connoisseurship, such as tasting opportunities and educational sharing sessions.”
POWERFUL BEAUTY LINE-UP, PLUS FIRST STAND-ALONE SAMSUNG RETAIL BOUTIQUE
In the beauty category, CAG said that passengers can look forward to a “strong and diverse” product line-up.
Shilla Travel Retail will introduce more than 70 new brands at Changi Airport, including Jo Malone, Nars, Giorgio Armani Cosmetics, Clé de Peau, Darphin, Repetto and Karl Lagerfeld plus Korean names such as Missha, Etude House and The Face Shop.
CAG said: “There will also be innovative experiential offerings in-store, including beauty cafes, where passengers can enjoy a cup of tea while choosing the perfect shade of make-up, spa concepts providing beauty consultation and services, as well as a retail theatre for special promotions and product launches.
“These offer passengers an engaging retail experience that is at the same time, personalised and exclusive.”
In addition to its beauty concession, Shilla Travel Retail’s affiliate, Samsung Group, will introduce the world’s first standalone Samsung retail boutique in an airport, at T3. CAG noted: “A leading global brand for mobile lifestyle electronics that is highly sought-after by consumers, the Samsung boutique will be an exciting addition to the range of lifestyle electronics brands offered at Changi Airport.”
FINANCIAL AND QUALITATIVE OFFERS BOTH OF CRITICAL IMPORTANCE
CAG said that the proposals were evaluated based on a “holistic set of criteria”, covering both qualitative and quantitative factors. It commented: “While the financials of the proposals were important considerations, strong emphasis was also placed on qualitative criteria such as the strength and innovation of retail concept, product range and brands representation, track record, pricing policies and customer service strategies.”
LONGER-TERM CONTRACTS
In a break with previous tradition, CAG is offering six-year contracts in each case. Previously its core category concessions carried tenures of three years with two-year extension options.
The liquor & tobacco contract runs from 9 April 2014 to 8 April 2020, while the perfumes & cosmetics contract runs from 1 October 2014 to 30 September 2020. DFS and Nuance-Watson (Singapore) had each extended their contracts to meet the beginning of the new concessions.
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DFS Group’s liquor & tobacco operation at Changi, which generated sales of around S$420 million (US$330 million) in 2012, is constantly acclaimed as one of the best in the travel retail world |
In 2012 the liquor & tobacco concession generated sales of around S$420 million (US$330 million) while perfume & cosmetics revenues were about S$395 million (US$310 million). Those figures are set to rise sharply on the back of anticipated traffic growth and the opening of the new T4 in 2017, well within the new six-year contract term.
The tenancy for the liquor concession will begin on 9 April 2014, covering 15 stores spanning over 6,000sq m across Terminals 1 to 3, as well as about 1,800sq m of retail space in Terminal 4 when it opens.
For the beauty concession, the tenancy will commence on 1 October 2014. This includes 19 outlets covering about 5,500sq m from Terminals 1 to 3, and about 1,800sq m of space in the future Terminal 4.
CAG said that the transition for the commencement of the new concessions will be planned carefully, and renovation works on the new outlets will be conducted in phases to ensure that, at all times, passengers’ shopping needs at each terminal are met. The key components of the overall retail transformation, in particular the first two duplexes in Terminal 3, will be completed by early 2015.
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Today’s result is a towering achievement for The Shilla Duty Free, which runs the hugely successful perfumes & cosmetics operation at Incheon International Airport, including the busiest travel retail door in the world (above), as well as a high quality operation in downtown Seoul (below) |
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The two concessions are the retail anchors of Changi Airport’s transit malls and represent CAG’s top two product categories in terms of sales. In its tenders, CAG demanded that retailers embody the hallmark of the ‘Changi Experience’ and deliver a superior shopping experience to passengers. It is clear that both DFS and Shilla truly rose to that challenge.
FOOTNOTE: Today’s news will be the subject of a special edition of The Moodie Report e-Zine later this week, examining the repercussions of the results for both winners and losers.
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