Airport Authorities & Landlords
Leveraging Profitable Retail Concepts for Value Creation
Dufry strives to create value for landlords through our ability to deliver best-in-class retail concepts, alongside our deep understanding of customers including their expectations and shopping behaviors. The trust our landlords have placed in Dufry has allowed our company to become the market leader in travel retail, currently operating over 2,300 shops in 64 countries located in airports, seaports, railway stations, downtown areas, border crossings, cruise liners & ferries, hotels and other locations with captive audiences.
Benefitting from the widest industry experience
Maximizing returns on the available retail space, by creating highly innovative and attractive shopping experiences for customers is a common goal that Dufry shares with its landlords. Combining extensive expertise in all technical and regulatory aspects in the markets in which we operate, along with a comprehensive portfolio of attractive retail concepts tailored to the individual needs of both duty-free and duty-paid environments are our key competencies. Moreover, first hand customer insights, collected through detailed regular research in our key locations and online engagement, allow us to develop successful marketing initiatives tailored to meet the requirements of every single airport or any other shop environment. Our worldwide presence and the extensive intelligence by traveler profile are core competitive advantages and key drivers to increase sales and profitability, combined with our ongoing evolution of shop design and customer services.
Real Partnership is key for value creation
The 2020 business year and the highly challenging environment created by the global spread of the COVID-19 pandemic has significantly highlighted the importance of real partnerships to drive success. Finding highly flexible solutions and short-term alternatives for cooperation could only be achieved through a high level of trust and shared objectives, which have been key characteristics of travel retail in the past, but have become essential in 2020. Our many years of experience in the business show that the closer both parties work together and align their common goals, the greater the opportunity to generate value – and this will be true even more going forward. By joining forces, we can create inviting and attractive commercial spaces that maximize spend from the passengers’ arrival at the airport until their boarding – and if legislation allows for arrival duty-free – after landing.
Strong partnerships drive success and profitability.
Recent examples of refurbishments and expansions of our shops confirm the value of coordinated and targeted strategies. Projects developed in 2020 at the airports of Odessa (UKR) and Singapore as well as in Salt Lake City and Boston (US), and the refurbishments completed at the operations in Corfu, Mykonos and Thessaloniki (GR), Antalya (TUR), Belgrade (SRB) or Nashville (US) are a few examples of how Dufry and landlords can work together to optimally structure passenger flows, improve the appearance of commercial spaces and expand retail offerings to considerably increase sales.
Dufry’s New Generation Store – tailored customer communication
With four New Generation stores opened in 2019 in Buenos Aires (ARG), Amman (JOR), Malaga and Alicante (ESP), we complemented the nine earlier ones in Madrid (ESP), Cancun T3 and T4 (MEX), Melbourne (AUS) and Zurich (CH), as well as at London Heathrow T3 (UK). In 2020, Dufry continued to expand its digital technology by implementing digital elements as part of the refurbishments done throughout the year in over 50 shops.
Dufry’s New Generation Store concept makes extensive use of digital technology to increase communication with passengers at the airport. The digital route allows Dufry to approach potential customers in an even more personalized way than ever before and to flexibly adapt in-store communication during the day to the changing nationalities and customer profiles, thus significantly enhancing the communication’s impact. The sense of place of our shop designs, an important aspect for landlords, is also secured in the new concept, as the format provides for a high degree of customization. Dufry knows how to perfectly match these requirements with efficient retail concepts, to best serve travelers’ needs and to generate value for landlords and Dufry alike.
Long-term concession portfolio.
In 2020, Dufry further accelerated the deployment of its digital strategy elements. Besides the New Generation Stores, services such as Reserve & Collect and above all the loyalty program Red By Dufry have a global span and are therefore able to promote our operations online and reach travelers across the world. This gives airports and their retail offer additional visibility and exposure, thus promoting them as attractive shopping locations. For a more detailed description of our digital strategy, please refer to Our Strategy.
Successful contract extensions secure future business
In travel retail, concession contracts are a key business driver for retail operators, as they provide the right to sell their products at a given operation. In 2020, Dufry continued to win new contracts and to renew existing concession contracts, thus successfully strengthening the remaining average lifetime of its portfolio, which is currently 6 years. Within our concession portfolio, 27% of our contracts have a remaining life-time of one to two years; 29% of three to five years; another 29% of between six and nine years, and the final 15% have a remaining duration of ten years or more. In average, Dufry renews existing contracts that generate between 10% and 15% of our sales every year, while at the same time adding new contracts.
39 new shops added to our first-class concession portfolio
In 2020, Dufry opened and expanded 39 new shops adding over 9,600m² of retail space across all divisions. At December 31, 2020, the entire concession portfolio of the group included retail space of close to 470,000m² thus strengthening our portfolio, despite some crisis-related closures we had to perform.
Dufry’s concession portfolio is highly diversified and well balanced across emerging and mature markets on all six continents. This considerably reduces risks of being exposed to single markets and operations; the largest concession only accounts for approximately 6% of turnover; while the 10 biggest concessions represent less than 25%.
Focusing on investment returns
In 2020, our organization has followed its approach of financial discipline even more closely when evaluating new projects and opportunities – a methodology successfully developed in the past, which has proven its value during the present challenging environment. Projects are analyzed individually on a commercial and financial basis. The many aspects of a project being put together include development potential and analyzing initial investment requirements, as well as the expected development of passenger numbers and profile perspectives. Through a strict evaluation of these criteria and our disciplined approach to returns, we ensure that our concession portfolio remains of the highest quality and that each concession offers attractive returns for the Group. This methodology is applied for all project types, irrespective of whether we participate in a tender process, engage in direct negotiations with landlords or perform acquisitions.
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