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San Francisco victory ‘especially rewarding’ after tough battle


Having worked with the San Francisco Airport Commission since 1972, DFS Group will be relishing the opportunity to continue the relationship having defended its duty free concession for at least another 14 years. Andrew Pentol reports.


Above: DFS completed a beauty refresh and renovation in the Tom Bradley International Terminal last year.


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fter retaining its San Francisco International Airport (SFO) duty free


contract for another 14 years in 2017 following what reliable sources described as a “tough and long process”, DFS Group was able to draw breath and look to the future. Last November, DFS was named


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preferred bidder by the San Francisco Airport Commission, which came as a massive relief to the retailer that has operated the duty concession at the airport since 1983. DFS won its last 10-year master duty free and duty paid concession in the airport’s (then new) international terminal in 1999 and commenced operations in May 2000. In December, it was all official.


“We submitted a strong, high-quality bid based on our understanding of the market and future opportunity at the airport.”


Mark Sullivan, Managing Director, DFS North America


42 TRBUSINESS


The proposal evaluation process and recommendation of DFS for the lead term was complete after an internal meeting. The contract covers the operation and management of 11 duty free and luxury store locations over 4,300sq m of space, 10 in SFO’s International Terminal and one in Terminal 1. As reported by TRBusiness in December, DFS Group will pay an initial minimum annual guarantee of $42m, plus a percentage rent financial offer covering 45.8% of gross revenues achieved up to and including $100,000,000.00; 41.8% of gross revenues from $100,000,000.01 up to and including $160,000,000.00; plus 30% of gross revenues achieved over $160,000,000.00. Looking back on a competitive


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tender, which included what was understood to be a strong challenge from Dufry-owned World Duty Free – DFS North America Managing Director Mark Sullivan tells TRBusiness: “We were delighted to retain the International Terminal Duty Free and Luxury Stores concession at San Francisco International Airport last year. “Obviously,


competition


was particularly tough due to San Francisco’s well-deserved reputation as a leading destination for international travellers and an important gateway to the US. But it was especially rewarding for us to keep the concession as we have worked with the SFO Airport Commission since 1972. It’s a strong partnership and one we look forward to expanding upon in the next 14 years.”


Retail ‘on another level’ Sullivan recalls a clear and transparent bid process where the stakes were high amid a strong field of competitors. “We submitted a strong, high-quality bid based on our understanding of the market and future opportunity at the airport.” What set DFS’ proposal apart from


the rest? Local market knowledge and awareness of the opportunity it represented were key factors, emphasises Sullivan. “Our bid was based on how we see the passenger profile evolving there, with well- travelled customers who are quite demanding and discerning.” DFS now has a wonderful


opportunity to provide an exciting retail experience with the best


MARCH 2018


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