SRI LANKA. Flemingo Duty Free has got off to a strong start at Colombo Bandaranaike International Airport since the November 2011 opening, according to CEO PK Thimmayya.

As first revealed by The Moodie Report, Flemingo shared the spoils in a duty free tender with the long-time (and previously solitary) incumbent, Autogrill Lanka (formerly Orient Lanka).

Speaking to The Moodie Report at the airport yesterday, Thimmayya said the retailer hopes to record first full-year sales of around US$30 million. Around 40% of revenue is being generated from the 2,600sq ft Arrivals shop with the bigger (3,000sq ft) Departures store accounting for about 60%.
“Sri Lanka is growing as a tourist destination,” he said. “The traffic has been growing almost +40% year-over-year. The spend per passenger has been changing as the quality of the traffic is improving.

Martin Moodie (middle) on location with members of the Flemingo Duty Free management team at Bandaranaike International Airport. From left: Mayura Ranawaka, Assistant Marketing Manager; PK Thimmayya, CEO; Alec Denby, Retail Business Manager; Mathan Rajendran, Deputy General Manager – Operations

The vibrant frontage to the Departures store is underpinned by promotional activity (currently for Johnnie Walker). Such an approach is critical to driving footfall into the Flemingo store, which competes directly with Autogrill Lanka’s outlet.

Head-to-head: Flemingo’s Arrivals store (left) is immediately adjacent to Autogrill Lanka’s shop (right)

The long, narrow Arrivals store offers a mix dominated by spirits, wine and confectionery

The Moodie BlogA questionable question of authenticity
Autogrill Lanka is also giving out pamphlets headlined ‘Are you buying a genuine product? – Yes, that’s our guarantee’.
More on The Moodie Blog

“We’ve been pleasantly surprised. Most of our expectations and ambitions have been more or less realised in just a short time. We’re extremely enthused about this opportunity.”

Thimmayya said that the growth in Chinese traffic, allied to a strong Korean and Japanese tourism base, is helping to drive high-end liquor sales. On Tuesday night, for example, the retailer sold 10 bottles of ultra-premium Hennessy Paradis Cognac to passengers on a Hong Kong-bound flight.

“It’s quite amazing,” he said. “We were very pleasantly surprised. The first day we set up the store we sold a bottle of 25yo Chivas Regal, which was very encouraging. We then started getting in most of the high-end merchandise”¦ we have not been disappointed as we been selling [plenty of] Hennessy Richard and Louis XIII, for example. There have been days when we’ve sold 20 bottles of XO on a flight.”

Flemingo CEO PK Thimmayya is delighted with the retailer’s progress since its November start-up

High-end Cognac does well both in Arrivals (pictured) and Departures duty free

The Flemingo store in Arrivals has a disadvantageous position compared to the neighbouring Autogrill Lanka store which is adjacent to the main passenger flow. That factor has held back sales, Thimmayya said, though the retailer has worked hard via strong branding and promotional activity at the front of the store to attract footfall.

In Departures, the rivals’ sites are more equally balanced. Autogrill Lanka’s shop benefits from being placed just beyond the top of the escalator and is the first store passengers find. However, Flemingo’s outlet is visible as passengers come through security one level below and enjoys a strong position as they make their way towards the gates.

NOTE: We’ll bring you video footage of the new Flemingo Departures store on The Moodie View next week as part of an extended follow-up report. Flemingo Duty Free’s Colombo operation will also be profiled in a forthcoming issue of The Moodie Report Print Edition

Confectionery is a huge money-spinner in Arrivals, sometimes accounting for at least 35% of daily sales

Flemingo encourages passengers to maximise their generous wines and liquor allowance

Confectionery is also a major category in Departures duty free

Fragrances (above and below) represent around 14% of the mix in the Departures duty free store

High-end Cognac (above) and whisky (below) have been surprise hits at the Flemingo operation

Single malt whisky sales are booming in Sri Lanka and Flemingo’s range reflects that surging popularity

Johnnie Walker is hot property here and its promotional presence is both constant and innovative

Scotch whisky, from entry point brands to ultra-premium blends, is the dominant category

White spirits duty free sales are led by vodka with a strong presence from flavoured lines

Tobacco (sold only in Departures) generates just under 15% of duty free sales