MALAYSIA. Malaysia Airports-owned Eraman aims to grow top-line sales by +10% in 2018, amid a rebranding drive to come and plans to overhaul the commercial business at Kuala Lumpur International Airport. General Manager Zulhikam Ahmad stated the ambition to The Moodie Davitt Report at TFWA Asia Pacific on Tuesday, the same day as Malaysia Airports held its Annual General Meeting and outlined its goals for the year ahead.
As reported previously, Malaysia Airports Holdings reported a +15.4% year-on-year surge in retail revenue to RM853.7 million (US$218 million) for 2017. Retail and food & beverage sales per passenger increased +11.5%.
At its AGM the group revealed plans for a “commercial re-set” at Kuala Lumpur International Airport (KLIA), as one of its big priorities to grow non-aeronautical revenues in 2018.
This will involve heavy investment in upgrading space and will represent the first big renovation at the airport in around ten years. It will feature an improved environment for retail, with better flow and new technology to encourage passenger awareness of the offer.
There will be commercial tenders too, scheduled for later this year. Many retail contracts at KLIA were due to expire in June but most have been extended by at least six months and others for longer, depending on the scope of renovation work ahead.
Ahmad outlined plans for the Eraman business in 2018. “We will place more focus on P&C across our airports. That is one of the growth drivers among the categories today.”
As noted in our May Interactive Edition, beauty is Eraman’s fastest-growing category, driven by the increase in passenger traffic and especially an uptick in Chinese travellers.
In October 2017, Eraman worked with Dior to introduce a boutique at the KLIA Contact Pier. The company is also working with renowned brand principals to drive closer collaboration, Zulhikam said.
Eraman will add more big names to its portfolio this year, he says. These will include MAC Cosmetics, Gucci and Jo Malone. “We will add more brands later this year to cater to the fast-growing numbers of tourists from China, Japan and Korea that help to buoy sales growth.”
He added: “At the KLIA Contact Pier we have focused on fragrance – we will open up the offer to include skincare in that zone. We also recently opened four new P&C kiosks at Kota Kinabalu Airport, a location that is showing growth of almost double the rate of KLIA – driven by Chinese spend.”
He also cited the recent strength of liquor sales – aided by strong partnerships with brand principals – and of confectionery. “Confectionery has shown strong single-digit growth at KLIA lately, with Indian traffic a big contributor.”
Healthy Chinese inbound tourism to Malaysia is also having an impact on the business. “KLIA spend per passenger year to date among Chinese is +50% higher than any other nationality; at klia2 it is almost double.”
On other priorities, Ahmad noted: “As a company we also plan to focus more on F&B, something we do already. We will grow the category with our parent Malaysia Airports.”
As reported, Eraman is planning a major rebranding. This will seek to position the company for a new era, according to Ahmad, and strengthen the brand within both local and international markets.
“It will be rolled out in a co-ordinated approach, covering the website, uniforms and all the way to the stores in the third quarter of this year,” he said.
The rebranding exercise aims to strengthen Eraman’s brand presence across all the airport terminals it operates in by introducing a distinctive corporate identity. He added that this would also strongly reflect its Malaysia identity.
The retailer’s year-long Eraman Shopping Extravaganza Buy & Win campaign is also a major contributor to the bottom line. The second cycle of the current contest, which took place in November and December, attracted more than 170,000 entries with participants from Malaysia, China, India and others.
“This campaign has successfully helped push Eraman’s revenue to a whopping double-digit growth in December 2017 compared to 2016,” Zulhikam reported. The third cycle of the contest is taking place now (April and May 2018).
For this campaign, Eraman is giving away prizes worth over RM1,000,000 (US$256,070) in total, including fuel vouchers, a holiday packages in ASEAN (Association of Southeast Asian Nations), shopping vouchers, and designer bags. The grand prize is a BMW 318i for each cycle.
*Below, we present highlights of Malaysia Airports’ traffic and commercial performance, as revealed at Tuesday’s AGM, and plans for 2018.
