TOP 5 ASIA OPERATORS: DFS GROUP
May 2017 20
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DFS shifts priorities as HKIA enters new era Hong Seok Ho
When DFS lost out to Shilla Duty Free in the highly-publicised HKIA duty free tender in April, DFS CEO, Philippe Schaus told Charlotte Turner that although he was disappointed, the company could start afresh at the start of 2018 in a ‘very good financial situation’.
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FS CEO, Philippe Schaus told TRBusiness that the company believes it bid ‘at the right
level’, for the perfume and cosmetics tender at Hong Kong International Airport (HKIA), whilst knowing that it was highly likely that someone would bid well above it. Incumbent DFS lost out to
Shilla who has picked up both the perfumes & cosmetics and fashion accessories contracts at the airport, while Lagardère Travel Retail and China Duty Free Group partnership (CDF-Lagardère Company Limited) was awarded the duty free liquor and tobacco contract. “First of all we decided not to
bid on the liquor and tobacco; we bid on beauty,” Schaus confirmed to TRBusiness in April. “I think the process was managed very well by the airport…We have a considerable insight on what’s happening in this part of the world; what’s happening with the travellers; what’s happening in China with the new policy of the government; what’s happening to travel retail and the luxury industries and what’s happening here in Hong Kong. “So using that insight we bid at the level which we thought was the right
MAY 2017
one, knowing that there was a high likelihood that somebody else would bid well above that, which is what has happened. So no bad feelings, we wish of course the Shilla team a lot of success in this new operation.” DFS won all three core duty free
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been contributing to the inflation [of airport bidding].” Although DFS is disappointed
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contracts back in 2011, bidding competitively at a time when traffic and spend levels were admittedly healthier than they have been in the last couple of years – thanks to various measures implemented by the Chinese government to crackdown on conspicuous consumption in particular.
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Mistakes of the past... DFS decided to waive its right to take up its three-year extensions for its separate five-year liquor and tobacco, general merchandise and perfume & cosmetics concessions at the airport, last year. “You will remember that when
DFS first won the three airport bids in Hong Kong International Airport, one of the incumbents came out in public to criticise DFS for overbidding at that time. Of course we didn’t like that at the time, but if you look back in hindsight he was absolutely right. So we have in part also
not to have been successful at HKIA on this occasion, it is neatly shifting its priorities on to new business developments as well as ensuring the growth of its fledgling large-scale downtown gallerias in Venice and Cambodia, in particular. “We will exit Hong Kong
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International Airport by year-end, or at least the three big concessions. One of our priorities was to take out a significant loss-making source, so we will have succeeded in that by the end of the year. So that means we will be in a very much better, or actually a very good financial situation starting next year. “So basically we will have solved a certain number of mistakes of the
“We bid at the level which we thought was the right one, knowing that there was a high likelihood that somebody else would bid well above that, which is what has happened.”
Philippe Schaus, CEO, DFS TRBUSINESS 51
Above: Schaus says the company ‘bid at the right level’ for HKIA.
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