Our leading position is the result of a remarkably rapid expansion. In the last ten years turnover grew on average by 19% in constant currencies. Our strategy is founded in our goal to best serve our clients. By developing and improving our services at shop level and throughout the value chain, we aim to continuously improve their shopping experience. One topic, on which we are currently working particularly hard, is the digitalization of our shops, which aims to make shopping at our stores an experience to be remembered.

Focus on customer experience and retail excellence generates value for all stakeholders

Dufry, and travel retail in general, are at the center of three very important and distinct industries: retail, airport and consumer goods industries. Addressing the different requirements from this position is critical to generate value for all our stakeholders. Nevertheless, our approach is simple: we focus on best servicing our customers.

This clear focus ultimately creates a winning formula for all stakeholders: by providing customers with an unrivalled shopping experience; by opening the doors for suppliers to a fast growing group of affluent customers; by fully exploring the commercial potential for landlords; and ultimately by creating value for Dufry shareholders.

For our customers we aim to create a memorable shopping experience by constantly improving our shops and developing our best-in-class retail formats, and by creating innovative promotions and marketing initiatives. Our team of sales representatives will receive travelers with a big smile introducing them to the world of travel retail, while providing them with detailed product information – increasingly supported by the latest digital technology.

Equally important for Dufry is to provide travelers with a singular sense of place. Our shops will combine the well-known assortment of global brands and products with a special local touch which differentiate our shops worldwide, wherever they may be – at airports, seaports, railway stations or borders – and irrespective of whether they are duty-free or duty-paid. A selection of our main retail concepts can be found here.

We offer a memorable shopping experience

Demographics play a big role in our business and changes in customer profiles and preferences can occur rapidly. For this reason Dufry sets high priority on consumer intelligence, both from internal operational information and through external research. We constantly track customer behavior at our shops and use our market insights to continuously fine-tune our offering and not only match but exceed the expectations of our clients.

To suppliers we offer the biggest access to the ever more attractive travel retail, through our more than 2,200 shops in over 390 locations in 64 countries. In addition to the business that we can generate with the suppliers, our shops offer them an unrivalled worldwide window display to promote their brands and products to an afuent consumer segment.

Dufry works closely with brands to offer customers the right products at the best price, giving special attention to promotional campaigns and marketing initiatives at our shops.

Landlords get the highest productivity of their retail areas, maximizing their revenues when working with Dufry. We offer the full range of retail concepts which are adapted and customized to the specifc location. Moreover, Dufry provides access to the most comprehensive portfolio of global and local brands. In a nutshell, landlords benefit by optimizing their overall business and by offering attractive commercial spaces to their passengers.

Geographic diversification to maximize opportunities and mitigate risks

Dufry is today not only the market leader in travel retail, but by far also the most diversified industry player, with operations in 64 countries, on all five continents.

Geographic diversification is of key importance to our strategy for a number of reasons: first, it is the best way to benefit from the ever growing number of travelers worldwide; second, as a global organization, we can efficiently develop new business opportunities; third, major global brands can offer their products via a truly global travel retailer and fourth, it is a very effective approach to mitigate risks.

Diversification is a key aspect of our strategy

Our global presence allows us to quickly and better evaluate new projects nearly everywhere, capitalizing on the expertise of our local teams. This local perspective helps to accurately evaluate opportunities, gives us a clear understanding of the local market characteristics and allows to closely collaborate with landlords and other local business partners to effectively develop new businesses.

Moreover, being geographically diversified considerably mitigates risks generated by external impacts in single markets or regions. This diversification is best illustrated by the share any individual concession has in the total Group. With the largest concession accounting for about 7% of our business, and with the ten biggest ones representing less than 35% of 2017 sales, Dufry has no significant exposure to single contracts.

Profitable growth and focus on returns

At Dufry, we have a disciplined financial approach in all our new projects, be it organic or acquisitions. We carefully analyze every project or significant investment with detailed projections and with a view on minimum return requirements. This implies a careful assessment of the original investment needed to build and set up the store as well as the cost structure and profitability of the business once it is operational. This culture of focusing on returns and cost control has allowed us to grow our business profitably and to capture opportunities in many different markets.

Further to the steady increase in passenger numbers over time and our financial discipline, we minimize business risks by implementing a highly variable cost structure. These defensive characteristics help to protect the business in case of downturns, which usually are local, thus providing a solid and resilient profile.

High free cash flow generation

The combination of Dufry’s solid profitability and the low capital intensity results in high levels of cash generation, particularly for a retailer. With the current size of the Group and the full implementation of our new business operating model, we expect to further improve our cash flow generation capability. Going forward we will use the cash generated to return it to shareholders as well as to do small or mid-sized acquisitions.

Dufry’s growth path going forward

Dufry has achieved an impressive 19% CAGR turnover growth in the past ten years (on constant exchange rates), to which organic growth contributed 4% and acquisitions 15%.

While acquisitions added most to our growth in the past, we expect organic growth to play a more important role going forward. Supported by the growth of passenger numbers – the most important driver of our business – we will focus on driving sales through the implementation of best-in-class shop concepts and new digital technologies which will be complemented with the proven marketing and promotion activities that we have used and fine-tuned over the years. Furthermore, we expect to grow through additional retail space, be it through expanding in existing locations or by winning new concessions in further airports or new businesses.

Despite the consolidation seen in travel retail over the last years, the industry remains relatively fragmented, with the top 10 players controlling just over half of the market and the remaining market being covered by small and medium sized operators. We expect to be able to capitalize through M&A on such small and mid-sized opportunities that may arise in the future, with a focus on Asia and the Middle East or bolt-on acquisitions that complement our presence in existing markets.

Offering the best retail experience for international and domestic travelers in multiple channels

Dufry currently generates about 62% of its revenues in duty-free and 38% in duty-paid operations with both sectors continuing to offer substantial growth opportunities. At Dufry, we traditionally have had a strong project pipeline, which has allowed us to grow our retail space in different channels of both sectors. On the duty-free side, the airport channel is expected to continue to be the largest and fastest growing part of our business. In addition, we do see additional potential by further developing the cruise ship business, duty-free border shops and downtown duty-free in selected markets.

Passenger growth is a key driver in travel retail

The duty-paid sector has a considerable development potential in airports as well, since the expected growth of domestic passengers is similar to the one for international travelers. Furthermore, this sector is even more fragmented than duty-free, thus offering attractive new expansion opportunities.

One of our main initiatives is the international roll-out of our successful duty-paid retail concepts, Hudson and Dufry Shopping, which have been implemented in selected markets and which have the potential to be deployed further. Hudson is a well-established convenience store concept that has been very successful in North America in the past 30 years and which we have deployed in 15 countries so far since 2009. Dufry Shopping is a duty-paid concept that offers a high quality assortment of international brands in an exclusive setting, similar to a duty-free travel retail store, but targeted to domestic passengers. In 2014 we ran a pilot of Dufry Shopping in Brazil where we achieved strong first results and was quickly expanded to other 7 locations in the country. The newest and first Dufry Shopping store outside Brazil was opened in 2017 at Las Vegas McCarran International Airport. Based on the positive results achieved so far, we are convinced that this concept can also be successful in other markets globally.

Our strategy is supported by strong and resilient industry fundamentals

Travel retail is a fast growing industry driven by ongoing growth in number of passengers.

Global passenger numbers are currently expected to grow by at least 6%, per annum, which translates into a potential of over 500 million new customers for the industry. This intrinsic growth perspective is a unique advantage of travel retail compared to any other location-based retail channel. Industry specialists expect this trend to continue, thus providing a resilient driver for travel retail going forward. The growth potential is further increased by the development of innovative commercial concepts with landlords and brands alike. Dufry’s ambition is to deliver excellence in execution while driving change in the way the travel retail industry operates. We believe that being market leader also means to be at the forefront of this development.

Seizing the opportunities of digitalization

As in many other industries, digitalization will change the way business is done in travel retail. At Dufry, we are excited about the new possibilities and opportunities that new technologies offer. Therefore digitalization is and will be a key element in our strategy going forward.

For Dufry, digital technology represents a tool to support and evolve a strong business model to the next level to continuously improve our offer to the captive audience we have in travel retail. As customers come to our stores, while they are waiting to board the plane, train, ship or are enjoying their stay in a casino or hotel environment, they also enjoy strolling through the shops. Therefore sales are generated by impulse decisions and immediate needs, which to a very high extent protect travel retail from direct competition by online platforms.

To maximize the attraction to enter our stores we want to create additional value by providing a superior customer experience and a more efficient business. Thus the use of digital and online technology will change our business in three major areas: how we communicate with our customers, how we sell products and how we organize our processes and the value chain.

Digitalization offers us new possibilities and opportunities

In detail this means that we will firstly be increasing personalized communication with customers at home, during their whole journey, and in particular when they are in the proximity of our shops. Secondly, we will digitalize the shops to increase the conversion rate and to simplify in-store processes, such as product consulting, payments, individual promotions etc. Thirdly, we will further improve customer services and individualize product offers for specific customer profiles. See also the Focus Story on our digital strategy.

Related Information

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Swiss heritage and travel retail

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Remuneration Report

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