NEWS/INSIGHT: DUFRY GROUP
market in the world and I think the growth of the economy will facilitate any retail activity, especially travel retail, as we benefit from both sides – retail and travel. Obviously, events like the possible opening of duty free shops on Brazil’s border following the *approval and gradual increase in inbound allowances are good triggers for increasing and accelerating value. In the past in Brazil, we had
changes in allowances and the sales were really good. It is obvious that if you have a limit of $500 [Brazil’s current inbound limit] with US inflation justifying an increase to a minimum $900, it means you cannot sell anything above $500 and the combination of any product cannot be above $500. This is limiting the possibility to display 60% to 70% of products in the shop, which is obviously a tremendous challenge.
A key piece of news has been customs’ move to permit duty free stores in any of the 32 twin cities on the Brazil side. Talk to me about the scale of this opportunity for Dufry and Latin American duty free? It is not the typical ‘border approach’ where you go through and buy, it is twin cities where you have a special area granted with the characteristics of holding the taxes and duties with a limit threshold of $300 per person, per month – this is different. What we are talking about is a
bonded area system and you need to attract customers inside, it is very different. Border shops today are similar to an airport; you have a captive audience because they have to go through specific territories, usually between two countries and they can stop and buy. Here, you need to attract people inside. It is a combination between border and special bonded areas. This is closer to high street retail
Unlock the full potential...
Again, we need to understand the customer’s behaviour and motivation in going to places where you can go without any restriction. We are quite concerned that this system is not understood properly before it is implemented.
[*ASUTIL confirmed during the
Duty Free and Travel Retail Summit of the Americas that regulation had been approved to pave the way for duty free stores to open in any of the 32 border twin cities on Brazil’s side with neighbouring countries such as Colombia, Venezuela, Argentina, Paraguay and Uruguay].
North America also enjoyed solid growth (+6.5%) backed by the strong combination of duty free and duty paid. Are you happy with the concession balance you have between duty free and duty paid operations at present? Are you keen to shift the momentum towards one or the other? Retail in the US and Canada is different than in the rest of the world in terms of administrative processes, merchandise display and even the tax regime. The reality is there is still significant room for improvement in the commercial development of US airports. This is going to come sooner or later. The challenge here is if the legislation or the way the concessions are rented should allow companies to implement what is needed. One business model is an inter-
This content is for subscribers only.
than the typical border shops worldwide. It is a tremendous social opportunity, [but] a difficult one as we have to compete with the same tools as the high street. There is great value to deliver. Dufry is involved right now and
one of the priorities in the country is to participate in the new market.
MAY 2018
To receive a full digital copy of the April issue, plus 12 monthly print editions and the critically acclaimed TRBusiness Top 10 International Operators Report, please visit
medium between the airport and concessionaire (master concessionaire) where everything is organised and super-leased to the operators. This, in my view, is having a limitation in terms of possible development. Secondly, how can duty free evolve when you don’t pay taxes until you get there? In theory, prices you check are without taxes. Historically, this has been a
www.trbusiness.com/subscriptions
threat for the business as no one understands what duty free in airports [in the US] is about. Education in terms of buying products when you are travelling is another important issue. I think there is a significant opportunity in retail – duty free or duty paid, but it requires a significant change in the way the commercial business is run,
Dufry tax and duty free store in Argentina. TRBUSINESS 21
have [for Asia] is clear, but attacking first-tier airports is a concern because I have seen the model and I don’t like it. I like models where we create sustainable business. Second tier airports where we can provide value and [explore] alternative channels are probably the best next steps for Dufry to develop the business in this territory. «
Julián Díaz, CEO, Dufry Group
legally and structurally.
Approximately 30,000sq m of concession space was opened globally in 2017 and the plan is to increase that by 15,000sq m throughout 2018/2019. Where are you looking to prioritise the spread of that space? Regionally, it is very important that we expand the business in Asia. As we all know, the increasing number of potential customers will be double digit in the Middle East and Far East during the next five to ten years. This is more or less the projected range. We’ve done it in the past in South America, North America Europe and Africa, but Asia is still a question mark for us as we have only generated 10% of the total business so far in this region when we are generating 42% of the total business in the Americas and 26% in Central Europe and the UK. How do we do it? The strategy we
“Asia is still a question mark for us as we have only generated 10% of the total business so far in this region when we are generating 42% of the total business in the Americas and 26% in Central Europe and the UK.”
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164
