Creating stakeholder value through customer experience and retail excellence

Dufry, and travel retail in general, is at the center of three very important and distinct industries: retail, travel locations and consumer goods. Addressing the different requirements of our stakeholders and aligning their respective interests is critical in order to generate value for all. Our approach can be summarized in a simple way: we focus on offering the best services to our customers.

Our clear travel retail focus, where we mostly concentrate on locations with captive audiences, creates a winning formula for all stakeholders: for customers, by providing an unrivalled shopping experience; for suppliers, by showcasing their brands to a fast-growing group of affluent customers; for landlords, by fully exploring the commercial potential of a travel location and for shareholders, by creating value through generating cash and profits. For an overview of our stakeholder community please refer also to the Dufry stakeholder ecosystem.

For our customers, we create memorable shopping experiences by constantly improving our shops and developing best-in-class retail formats, as well as by implementing innovative cross-channel marketing initiatives. Our sales representatives will always receive travelers with their biggest smile, introducing them to the world of travel retail and providing them with detailed product information – increasingly supported by digital technology.

An unparalleled sense of place is for Dufry a key element of an attractive customer shopping experience. This includes local product offerings, as customers increasingly want to complete their travel experience by bringing home memories, as well as internationally recognized brands that are well known and much liked. Our shops combine the famous assortments of global brands and high-quality products with a special local touch, which differentiates our shops worldwide and wherever they may be – at airports, seaports, ships, 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.

Unparalleled customer experiences.

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, extrapolated 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.

For suppliers we offer access to the largest footprint in the ever more attractive travel retail channel, through our more than 2,400 shops in over 420 locations in 65 countries. Our shops offer suppliers an unrivalled worldwide window display to promote their brands and products to an affluent consumer segment.

In recent years, we have seen an increasing importance of novelties, exclusive products and limited editions to attract customers to our shops. Dufry works closely with brands to offer customers a unique product selection and to offer dedicated brand experiences, which make the channel even more attractive.

Increasing importance of novelties and exclusive products.

Landlords get the highest productivity from their retail areas, maximizing their revenues when working with Dufry. We offer a full range of retail concepts adapted and customized to any specific 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.

For shareholders, Dufry is the world’s leading travel retailer, offering them an attractive investment opportunity to participate in a growing industry and a company that focuses on profitable growth and cash generation. 

Diversification strategy maximizes opportunities and mitigates risks
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 anywhere; third, major global brands can offer their products via a truly global travel retailer and fourth, it is a very effective approach to mitigating risks. Dufry is today not only the market leader in travel retail, but also by far the most diversified player in the industry with operations in 65 countries on all six continents.

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

Furthermore, being geographically diversified considerably mitigates risks generated by external impacts in single markets or regions. This diversification is best illustrated by the share of individual concessions in the Group. With the largest concession accounting for around 7 % of our business, and with the ten biggest representing less than 35 % of 2019 sales, Dufry has limited exposure to single contracts. Ultimately, geographic diversification is key to offering our brand partners a fine-meshed network of locations and shops, which allows them direct engagement with a growing number of customers through a window display in any given mature or emerging market.

Diversification by geography and by channel.

For Dufry, diversification also means accessing different channels, thus further widening the scope of the company. In this context, the cruise and ferry businesses, train stations and downtown locations such as hotels, casinos and leisure resorts have gained in importance. Cruise lines in particular offer an attractive channel to engage with customers during a longer period of time and represent a resilient growth opportunity as cruise vacations continue to be “en vogue” and shipyards for the construction of new vessels are fully booked for the next decade.

Resilient cash flow generation.

Financial discipline focusing on returns
At Dufry, we have a disciplined financial approach to all our projects, be they organic or acquisitions. We carefully analyze every project or significant investment with detailed projections and with a focus on minimum return requirements. This includes a careful assessment of the initial investment needed to build and set up the stores as well as the cost structure, profitability and cash flow generation of the business once it is operational. This culture of giving importance to returns and cost control has allowed us to grow our business profitably and capture opportunities in many different markets.

As part of our financial risk management, we minimize business risks by implementing a highly variable cost structure. These defensive characteristics help to protect the business in case of downturns, which are usually local and temporary, thus providing a solid and resilient profile.

The combination of Dufry’s solid profitability and low capital intensity results in a strong cash generation. With the current size of the Group we expect to further improve our cash generation capacity in line with top-line growth.

Organic growth complemented by small and mid-sized acquisitions
Dufry’s overall growth strategy continues to be characterized by a combination of organic growth as well as small and mid-sized acquisitions.

With respect to organic growth, the travel retail industry has the unique advantage of benefitting from a secular increase of travelers around the world and offering the great opportunity to directly engage with them. This characteristic clearly differentiates travel retail from any other retail channel. Consequently, organic growth will also continue to be an important driver of Dufry’s development going forward. We will focus on driving sales through implementing best-inclass shop concepts, by further deploying our digital strategy, and by complementing the proven marketing and promotional activities we have used and finetuned over the years. Besides benefitting from additional passengers, we expect to further increase our retail space, be it through expansion in existing locations or by winning new contracts in airports where we don’t currently operate, or in other channels. At Dufry, we traditionally have a sizeable project pipeline, allowing us to grow our retail space in different channels, regions and sectors.

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 consisting of small and medium-sized operators. We expect to be able to capitalize on M&A when small and mid-sized opportunities arise, with a focus on Asia and the Middle East, or with bolt-on acquisitions that complement our presence in other existing markets. The majority participation acquired in the RegStaer Vnukovo operation in Russia, as well as the 34 shops acquired from Brookstone in the U.S. are good examples of this type of transaction.

Offering the best retail experience for international and domestic travelers in multiple channels, Dufry currently generates about 61 % of its revenues in duty-free and 39 % in duty-paid operations, with both sectors continuing to offer further, substantial growth opportunities.

On the duty-free side, the airport channel is expected to continue to be the largest and fastest growing part of our business. We continue to see additional potential in further developing the cruise ship business, duty-free border shops and downtown duty-free shopping in selected markets.

Passenger growth is a key driver in travel retail.

The duty-paid sector also has considerable development potential in airports, since the expected growth of domestic passengers is similar to that for international travelers. Furthermore, this sector is even more fragmented than duty-free, thus offering attractive new expansion opportunities, as we have successfully demonstrated in 2019 with the two acquisitions done through our subsidiary in the United States.

We continue to actively foster the expansion of our successful duty-paid retail concepts, Hudson and Dufry Shopping, which have already been implemented in several markets and have the potential to be deployed further. Hudson is a well-established convenience store concept that has been very successful in North America over the past 30 years and that we have deployed in 17 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 it targets domestic passengers.

We originally piloted Dufry Shopping in Brazil in 2014, expanding to 7 locations across the country and the immediate success has led us to a strategic decision to roll out this concept into other countries. The first Dufry Shopping store outside Brazil was opened in 2017 at Las Vegas McCarran International Airport and followed by the Malta Dufry Shopping in 2018 and by the contract signed in 2019 with Newark Liberty International Airport for a new Dufry Shopping to be opened in 2020. Based on the positive results with 9 Dufry Shopping locations in 3 countries so far, we are convinced that this concept can be successfully rolled out to other markets globally.

With the acquisitions of 34 Brookstone stores across several U.S. airport locations done through our Hudson subsidiary, we now also have an additional duty-paid format, which we can further expand across North American airports.

Ever since the Hudson IPO, Dufry has clearly outlined its intent to further expand into the airport food & beverage market in the U.S. With the acquisition of OHM Concession Group LLC through Hudson, the Group made an important step forward, added new food & beverage concession capabilities and expanded its North American footprint. Airport food & beverage will currently be a focus only in North America. Please find out more on the North American Division here.

Our strategy is supported by strong and resilient industry fundamentals
Travel retail is a fast-growing industry driven by ongoing growth in traveler numbers. The increased demand from passengers to travel is the reason why this attractive retail channel keeps growing and displays different dynamics to high street retail.

Global passenger numbers are currently expected to grow by around 4 % per annum, which translates to a potential of over 300 million new customers for the industry every year. 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. Dufry’s ambition is to deliver excellence in execution while driving change in the way travel retail operates. We believe that being the market leader also means being at the forefront of this development.

Seizing the opportunities digitalization brings
Digitalization is changing the way business is done in travel retail. At Dufry, we are excited about the possibilities and opportunities these new technologies offer. In the past two years we have successfully built and deployed our digital platforms, which allow us to engage more frequently with customers and to provide them with additional services, with the ultimate goal of driving sales. For Dufry, digitalization is and remains a key element of our strategy, which supports and evolves a strong business model to the next level, to continuously improve our offer to the travelers we welcome in our shops.

Normally customers come to our stores while they are waiting to board their plane or train, or while they enjoy their stay on a cruise liner, in a casino or hotel. They enjoy strolling through the attractive retail spaces and take away memorable shopping experiences. Sales are often generated by impulse decisions and/or immediate needs, which protect travel retail from the direct competition of online platforms. To attract more customers to our stores we want to provide a superior customer experience and in addition, create further value through a more efficient business. Thus, the use of digital and online technology is changing our business in three major areas: how we communicate with our customers, how we sell products, and how we organize our processes internally and in the value chain.

Capitalizing on digital opportunities.

Specifically, this means that we will be further increasing personalized digital communication with customers at home, during their whole journey, and in particular when they are at the airports close to our shops. We are also digitalizing the shops to increase conversion rates and to simplify in-store processes, such as product consultations, payments, individual promotions etc. Lastly, we will further improve customer service and individualize product offers for specific customer profiles.

Related Information

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Swiss heritage and travel retail

Our Business Operating Model

More about Dufry

Learn more about the Dufry group in more depth:

Our Brand Values


Our Retail Brands

Contact Information