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“With these new projects, we have created a sizeable platform to further strengthen our position [in Asia]“ |
Julián Díaz CEO, Dufry |
INTERNATIONAL. Dufry has made a critical breakthrough into the Mainland Chinese duty free market as well as boosting its duty paid operations there.
On 10 October Dufry and Beijing Capital Airport Commercial and Trading Company (ACT) signed an agreement to operate duty paid shops at Beijing Capital International Airport (BCIA) for up to five years.
Located in the new terminal 3D, the operations will comprise nine shops, covering nearly 1,000sq m of retail space. These are expected to open progressively over the next nine months.
Dufry will unveil a series of fashion & accessories and luggage stores, including brands such as Tommy Hilfiger, Armani Jeans and Furla. It will also open a number of perfumes & cosmetics shops, with brands including Kiehl’s, Shiseido and Clarins.
This new project comes as part of ACT’s plans to redevelop the commercial offer at BCIA. The airport is the busiest in China and among the top five airports in Asia, handling 82 million passengers in 2012.
Of these 32 million were domestic passengers, equally distributed between terminals 3 and 2, with a smaller number in Terminal 1. To cater to the increasing number of passengers, Terminal 3D was opened earlier this year.
SHENZHEN BREAKTHROUGH
Dufry is also to enter the Mainland Chinese duty free market for the first time after striking a partnership with Shenzhen State Owned Duty Free Commodity (Group) Company (Shenzhen Duty Free) for the provision of supply and management consultancy services at Shenzhen Bao An International Airport’s new international airport.
Under the deal, struck on 10 October, the two partners will develop the retail concepts and supply core categories such as perfumes & cosmetics, food & confectionary as well as fashion, accessories, watches & jewellery. The operations at the new terminal are scheduled to open progressively from next month.
Shenzhen Duty Free is the sole duty free operator at Shenzhen Airport, as well as a major operator of border shops between Shenzhen and Hong Kong. Shenzhen Airport handled nearly 30 million passengers in 2012.
Dufry Chief Executive Officer Julián Díaz said: “The signing of the two new agreements in Beijing and Shenzhen are a continuation of our strategy in China. By partnering with ACT we are set to bring the highest standards of travel retailing to Beijing Capital International Airport. Equally important, our cooperation with Shenzhen Duty Free will be our second duty free operation in Greater China, and will mark Dufry’s entry into the duty free market in mainland China.
BUSAN CONTRACT OFFERS ENTRY “INTO THE BIGGEST DUTY FREE MARKET IN THE WORLD”
In related news, Dufry confirmed this morning The Moodie Report’s big breaking story earlier this week that it had signed a partnership agreement to operate a duty free shop at Busan Gimhae International Airport for five years.
Dufry Thomas Julie Korea Co Ltd (DTJ) is an alliance between Dufry and the South Korean firm Thomas Julie & Co. DTJ will be the duty free retailer at Busan Airport in most core categories, including wines & spirits, confectionery, fashion & accessories, watches & jewellery, tobacco, electronics and souvenirs.
Special attention will be placed on the introduction of an attractive mix of Korean products, showcasing the best of Korea’s heritage and culture. The shop is expected to start operations in the first quarter of 2014 with 434sq m of retail space. It will be expanded in 2015 as part of an airport-wide upgrading programme. Thomas Julie & Co specialises in the supply of Korean products to the duty free channel.
Busan Airport handled 4 million international passengers in 2012, up +20% over 2011, driven largely by booming traffic from China. Key destinations from the airport are Japan and China, as well as the Philippines, Thailand, Hong Kong and Vietnam. Busan is the second largest city in South Korea after Seoul.
Díaz said: “The new contract… represents a major step for Dufry to enter the single largest duty free market in the world. The partnership with Thomas Julie & Co will bring a strong Korean partner for the Busan Airport operation, with an attractive representation of Korean products as part of the retail mix.
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“The recent bidding processes in Asia are a milestone in the execution of Dufry´s strategy, which is based on emerging markets and touristic destinations“ |
Julián Díaz CEO, Dufry |
“As the largest foreign travel retailer in China, Dufry is well placed to work with DTJ to cater for the fast-growing number of Chinese passengers going through the airport. Together with Thomas Julie, we look forward to deepening our relationship with Korea Airports Corporation, creating an exciting retail offer in Busan Airport, and taking Korean-made products to our global network of shops.
“With the new projects in South Korea and China, we have now a solid and diversified footprint in some key markets of the region and this will allow us to explore further opportunities. From a group perspective, all the new projects are yet another step in the diversification of our business and our strategic positioning in attractive markets.”
EURASIA AND ASIA KEY AREAS OF FOCUS
Dufry said it considers Eurasia and Asia among its key strategic priorities, based on the company’s strategy of growth in emerging markets and tourist destinations. With its existing business in the region/s plus several contracts won since the beginning of this year, Dufry said it has created a sizeable business “which may give rise to economies of scale for further projects”.
Díaz commented: “We are very pleased with the results achieved in the recent bidding processes in Asia. They are a milestone in the execution of Dufry´s strategy, which is based on emerging markets and touristic destinations.
“With these new projects, we have created a sizeable platform to further strengthen our position in that region. Dufry will [now] operate in 14 locations, 140 shops, in the Far East, Middle East and Central Asia, bringing the total number of countries in our global portfolio to 49. Altogether, Dufry will add around 14,000sq m of new space and expects to have a contribution of around CHF250 million per year to our revenues once all the projects are fully operational.
“With these new projects, we have created a sizeable platform to further strengthen our position in that region.”
