GERMANY. Hamburg Airport and Gebr Heinemann have extended their successful travel retail partnership until 2027. Heinemann revealed the news today at its annual press conference in Hamburg, at which it also reported 2015 sales of €3.6 billion, some €2.8 billion from retail and €800 million from distribution. [More on the 2015 performance appears below.]
The Hamburg contract extension, struck early, builds on a strong relationship forged over more than 22 years between the airport operator and the German travel retailer, which operates the Heinemann Duty Free & Travel Value shops and three other concept shops.
Hamburg Airport CEO Michael Eggenschwiler, Hamburg Airport Head of Center Management Lutz Deubel and Gebr Heinemann Executive Director for Retail Raoul Spanger signed the contract extension.
Gebr Heinemann said that initial exploratory discussions began three years ago to examine an early extension of the contract. These took into consideration the increasing influence of online trade and long-term infrastructural developments at Hamburg Airport.
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Michael Eggenschwiler, CEO of Hamburg Airport (left), and Raoul Spanger, Executive Director for Retail at Gebr Heinemann, during the signing of the contract extension; Photo credit: Michael Penner |
“I am delighted about the extension of our contract with our longstanding partner, Gebr Heinemann, and the associated continuation of the successful duty free shops at Hamburg Airport,” said Eggenschwiler. “Gebr Heinemann has been at Hamburg Airport for over 22 years. The company makes travelling a true experience for our passengers, because for many people shopping in these attractive shops is a highlight when they take a flight.”
Deubel added: “Gebr Heinemann is an important business partner for the airport and strengthens our non-aviation business. We have been able to develop this business area into an important mainstay of our business in recent years. We are pleased to strengthen this successful partnership with today’s contract extension.”
Spanger said: “We have a very trusting, friendly relationship with Hamburg Airport, which is based on profound mutual respect. After introducing our retail brand Heinemann Duty Free in 2008, we have frequently established new services, such as home delivery. We are delighted that we have now been able to agree an early extension of the contract with our home airport, Hamburg Airport, of eleven years. I would like to thank all our staff for their excellent work.”
Family-owned Gebr Heinemann opened its first duty free store at Hamburg Airport on 1 November 1993, when Terminal 2 (T4 at the time) was put into operation. When the Airport Plaza opened in December 2008, the travel retailer quadrupled its sales area and opened a 1,400sq m shop directly behind the central security check area. The 20-year anniversary of the successful collaboration between Gebr Heinemann and Hamburg Airport was celebrated on 1 November 2013.
Gebr Heinemann now operates two Heinemann Duty Free shops and a Destination Hamburg shop with modern souvenirs relating to the Hanseatic city, as well as Hugo Boss and Montblanc boutiques and the crew shop.
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Gebr Heinemann Owners and Board of Directors 2016 at today’s press conference: (Left to right) Claus Heinemann, Owner; Kay Spanger, Executive Director Purchasing & Logistics; Peter Irion, Executive Director Distribution; Raoul Spanger, Executive Director Retail & HR; and Gunnar Heinemann, Owner; Photo Credit: Sandra Platzer |
Revealing its 2015 performance and a +13% climb in sales, Gebr Heinemann said it was aiming for a +10% increase in 2016 despite turbulence in some key markets.
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“We hope to grow sales by +10% in 2016.“ |
Claus Heinemann Co-Owner Gebr Heinemann |
Gebr Heinemann senior management revealed the figures, noting that the company retains a strong market leadership in the European region with around 30% of airport duty free sales. As of the end of 2015, the company managed around 115,000sq m of retail space worldwide.
Co-Owner Claus Heinemann said that 2015 had proved “an exciting year” due to the expansion of its business but also recognised the challenges posted by the “geopolitical situation” in a number of markets.
“Among the positives was our opening in Sydney, including at 7,000sq m our largest store, as well as our joint venture at Schiphol. There were negatives too: we were affected like never before by currency changes, which had an impact in Russia and on Russian customers, in Norway and in Turkey. Geopolitics played a part in North Africa and Russia, and it is playing a part in Istanbul now, where we are around -5% down in three first three months, but where we hope to match last year’s sales in 2016. We hope the impact of factors such as terrorism is not as strong in our markets in 2016 but it is unpredictable.”
Claus Heinemann also commented on recent developments, including the acquisition by Heinemann Asia Pacific of a minority stake in Duty Free International in Malaysia. “This is an important step,” he said. “The border business is important here and they have shops on the Thai and Singapore borders.
“This adds to our strong border portfolio, a channel in which we are number one in Europe. It’s a great task now for our Singapore office to improve logistics, supply and management to these stores, plus they have some important airport stores in Kuala Lumpur, where Heinemann too has business.”
On Amsterdam, Lounge 2 stores managed by Schiphol Airport Retail (in which Heinemann has a 60% stake) are being upgraded now, with completion due soon. The company said that year one sales hit €88 million, ahead of the targeted €85 million. Purchasing and delivery for this business is now consolidated through Heinemann.
In Istanbul, the retailer is beginning the process of sub-leasing spaces at New Istanbul Airport under its master contract airside. The airport is due to open (under the current schedule) in Spring 2018; Claus Heinemann described the work in Istanbul as “our biggest project yet”.
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“We are very much focused on organic growth.“ |
Gunnar Heinemann Co-owner Gebr Heinemann |
Executive Director Retail Raoul Spanger elaborated on some of the big projects, saying that the company planned to fully tenant its New Istanbul Airport spaces by year end. This will include speciality retail, news & books and other categories.
“Another big project comes in Oslo with a terminal extension,” added Spanger. “There we will open a 4,000sq m Arrivals shop, the biggest in the world. We will also have a 3,500sq m Departures store.”
Buoyed by continued passenger growth at Istanbul Atatürk, where Heinemann works with TAV Airports in the ATÜ Duty Free joint venture, Turkey overtook Norway as Heinemann’s largest national market by turnover in 2015. Turkey had €631 million in sales, from €560 million a year earlier; Norway had €441 million, a slight drop on 2014 (though up by +3% in Norwegian Krone terms) while Germany sales hit €407 million from €380 million in 2014.
External factors, as noted, had a big impact on certain parts of the business last year. Spanger noted: “North Africa is very tough. In Sharm-el-Sheikh there is virtually no business, and Tunisia is very difficult: the resorts business is -90% down though Tunis is around -50% as this retain solid levels of business traffic. We are still there and we believe in doing things for the long term but it is not easy.”
Russian impact
Russia/Ukraine remains difficult with double-digit sales declines last year in countries affected by the Rouble crisis.
Executive Director Distribution Peter Irion said: “The Rouble halved in value and the oil price falling sharply has also had an impact. A key impact in Russia was on regional airports, with airlines shifting traffic on international routes to Moscow and St. Petersburg. Moscow has seen good results, mainly at Sheremetyevo. Domodedovo was hit by the bankruptcy of Transaero and the decline in charters to Egypt and Turkey.
“But Sheremetyevo was positive as we had additional flights routed through there rather than regional airports. We took over shops in Terminal D from the former tenant, as well as adding Terminal E. We believe with new stores we can double the Moscow business.
“We know there is turbulence but we believe in this region. We will increase our market share there from 40% to 50%, plus we have a ten-year contract at the planned fourth Moscow airport.”
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“In Oslo we will open a 4,000sq m Arrivals shop, the biggest in the world. We will also have a 3,500sq m Departures store.“ |
Raoul Spanger Executive Director Retail & HR Gebr Heinemann |
Maritime, border and inflight moves
The cruise market is among the high potential growth channels, said the company, with sales growing by single digits last year (principally supply).
“We have expanded our distribution to MSC Cruises and to Harding Retail (owned by Flemingo) and to ten new cruise ships in the USA, for which they won contracts at the start of this year,” said Irion. “These contracts present big benefits as MSC and Harding operate as global accounts, not only in North America but in other regions too.”
On the retail side the company recently signed a deal to partner TUI Cruises for its onboard retail programme, covering four vessels at around 600sq m of space each.
“We have some retail business in the cruise channel, mainly serving German customers, but our focus worldwide in this channel is on distribution, not to become a specialist retailer,” added Irion.
The border business grew +15% last year, reported Heinemann, with expansion in Croatia, Macedonia and Andorra. It now has 64 stores in eight states under the Travel Free name.
The inflight business grew by double digits for the fourth year in a row with a +25% leap in 2015, said Irion. “This is not only about new customers but also improved service to carriers. For instance our in-house exhibition is very popular and growing, and we have a growing focus on in-house products and specials for inflight.”
In related news, Nadine Heubel, who headed the inflight division, is to become CEO Americas as the company aims to expand in this region. She is replaced from May by John Baumgartner, who is well known as the former business development chief at Inflight Service (recently acquired by gategroup).
Gebr Heinemann’s supply business in this and other channels also received a boost in 2015. “We added five new airports in Scandinavia and eight new locations through Baltona (owned by Flemingo) in Europe,” noted Irion.
Category expansion
Executive Director Purchasing & Logistics Kay Spanger said that the company continued to invest in developing newness with its brand partners, and reiterated his belief that emerging categories such as wines and fine food would play a much bigger role in the industry in the future.
“We are committed to growing the share of travel retail exclusives and for that we need the help of brands,” he said. “In a saturated market we need to be different. That means limited editions in wines like for example Schloss Vollrads 1211 Riesling or Chateau Haut-Bailly and the widening of class categories such as beauty.
“We need to continue to breathe life into the business. As retailers we need to play better on new categories, whether that is haircare or watches or wines. Fine food is 1.5% of sales, but it can be 10-12%, the same as confectionery is today. We also need to better integrate fashion & accessories and watches & jewellery. Look what we have achieved with sunglasses in the past four years: +20% growth a year.
“Amid all this, price will still be key. That does not mean low prices only, it means better price transparency. People will not stand for higher prices at the airport and they will know who offers the best prices. Suppliers need to understand this too and support us.”
People power, organic growth
Reflecting on the changing market worldwide, Co-Owner Gunnar Heinemann said: “Can a family business remain competitive and relevant? We believe so and it is a relief for us that we are not reporting to analysts every quarter.
“But we need more than ever to break new ground and to act in a partnership way, where we think and act for the longer term. That is a unique asset in how we do business, we believe.
“We also have retail creativity, while at the same time we are focusing more on our process management and cost structures, which have an impact on our profit opportunities.
“We benefit too from a pool of talented young people in our company. The awards we have received as an employer underline our commitment to our people.
“We are very much focused on organic growth: our Istanbul concession for the long term is the same as five large airport contracts elsewhere. We will also look at acquisitions where they make sense and accelerate our entry to new markets, such as our stake in Duty Free International or in Amsterdam.”
He concluded: “We will go forward led by our four core principles: one family; leadership through trust; perseverance and a focus on delighting our customers.”
*We’ll bring you more from the Heinemann press conference in this week’s edition of The Moodie e-Zine, and in our May Print Edition.
