INTERNATIONAL. Dufry CEO Julián Díaz has declared that the world’s number one travel retailer is aiming to become the first “global travel retail digital company” in an interview conducted at the Moodie Davitt Virtual Travel Retail Expo this morning.

He was speaking in the context of last week’s announcement that Alibaba Group has agreed to form a strategic joint venture with Dufry in China. At the same time, Alibaba declared its intention for an equity investment in Dufry to acquire 9.99% of the post-offering share capital.

Describing Alibaba as the “most prominent and important digital company worldwide”, Díaz said now the challenge is to “make it happen”.

Dufry Group CEO Julián Díaz in conversation with Martin Moodie at the Virtual Travel Retail Expo today

Díaz was asked by The Moodie Davitt Report Founder and Chairman Martin Moodie if the potential investment of Alibaba is to be capped at 9.99% or if they could even eventually reach a control position. He replied: “This is a question Alibaba has to answer. It’s for them to decide.”

Looking ahead to the strategy of the joint venture, Díaz said there are four aspects he wanted to develop to drive greater digitalisation. Firstly, engaging with customers at the “right time, at the right moment, even before they travel”; secondly to be relevant to customers who may have booked tickets a long time before they travel; thirdly “delivering the merchandise when it is needed and where it is expected by the customer”; and finally, the development of personalised digital offers.

Business has picked up gradually but remains vulnerable to the inconsistent approaches to travel taken by governments worldwide

Focusing on the situation of the core Dufry travel retail business, Díaz noted that there has been a gradual improvement from the 3% of 2019 sales achieved in April, at the start of the severe COVID-related travel restrictions, to 22% year-on-year in September.

He said he remains optimistic about recovery in the longer-term, but acknowledged this has been dented in recent months by the introduction of quarantine rules for various countries. As a result, he said the month-by-month numbers are not increasing as fast as he envisaged back in June and July.

However, Díaz, who stated “uncertainty is very high” chose not to criticise governments for these decisions, saying he preferred to concentrate on the business in front of him. He said: “I think we need to be sure that travellers are not confused about what’s going to happen in the destination… I think the sooner we can standardise the way of processing the passengers, the better it is going to be for everyone.”

He added: “We cannot obviously decide on quarantines. This is probably the most difficult thing today in different countries. Because this is a government decision and it is based on information that we don’t even understand because we don’t control it.

“But the reality is that we need to follow and support the government decisions in each of the countries. The situation and the evolution of the business will change dramatically when the quarantines are waived. I hope that this is going to happen soon.”

Asked about the current financial position of Dufry, Díaz said it had been difficult to “match the size of the company with the current reality of the business.”

He added: “When you have been a number one company [in travel retail] worldwide with all these conditions of investments, capex, personal expenses, operational expenses, and many other things… we don’t know how long recovery will take and you can’t be sure what you are doing is enough.”

That said, however, he insisted things are “under control” and that Dufry is “ready to stay here for a long, long time in any circumstances”.

Encouraging travellers back into the stores: Dufry at Heathrow T5

Having confirmed Dufry’s stable position, Díaz was asked if the company – given its strong record with mergers and acquisitions – was in a position to maybe capitalise on opportunities to buy other travel retail-related businesses who may be struggling to ride out the COVID-19 storm.

Answering, he said: “From Dufry’s perspective we are very prudent because obviously our priority number one today is to control the liquidity and to save the liquidity. But if there are opportunities to make acquisitions and increase value for our shareholders, we will try.”

He continued: “I wouldn’t say we are actively looking for opportunities because we are not… we are looking at the market with the characteristics of the uncertainty at this moment, but if there is a chance we will explore it for sure.”

Considering the current predicament faced by brand partners in travel retail, Díaz sympathised with their liquidity issues but he said by following four key pillars – namely specialisation, novelties, exclusive products and developing local products – relationships “will be fine” going forward and could become “even better than before”.

Ending the interview with a message to the world’s travel retail community, Díaz said: “I will try to improve the collaboration with suppliers and airport authorities for improving the travel retail business with the characteristics of each of these partners in the business. Together, we need to improve the collaboration for creating a sustainable [travel retail] business.”

He concluded: “We all need to adapt to the current reality. The situation is very complex with the size of the business depending obviously on the numbers of passengers and we are going to be impacted for a while. I hope that it will be a very short period of time, but we are required to adapt each of our businesses to the size of the market that we expect in the near future.”

Registered delegates to the Virtual Travel Retail Expo can watch the full Julián Díaz interview here through our on demand service.