NEWS/ANALYSIS: JR/DUTY FREE
“We have been known for having a strong range, but there are certain instances where we would like to have products, but unsure we want to buy the quantities.”
Garry Stock, JR Duty Free
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When asked by TRBusiness if other companies were in the frame as far as the joint-venture opportunity was concerned, Stock remarks: “Clearly, theoretically there were
other alternatives, but Heinemann approached us and we thought it made sense. “It was clear early on we both
Heinemann’s stature in DF&TR, he emphasises. “It is all about an overlay and the input of another strong operator giving us know-how. “Sometimes, they have something
to suggest and other times they don’t. “There are occasions when they
might make suggestions and end up realising they aren’t relevant in the Israel environment.”
Seamless transition The transition into a joint-venture is seamless from the consumer point of view, according to Stock, who reiterates that the real focus is on using Heinemann’s input to try and improve. “The brand name hasn’t changed,”
Stock emphasises. “The entity that is owning the business is James Richardson/Gebr. Heinemann, but to the whole world it is still James Richardson/JR Duty Free.” Making consumers aware of the
partnership through changing the name or branding, for example, was discussed but quickly dismissed. “This was a no brainer because
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the real strength of the business is its knowledge by the Israeli consumer that it is James Richardson. “To do something like this would
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have been ridiculous. Both parties understood it was important to keep the name and that the business was being run on a daily basis by James Richardson.”
adapted it for our own purpose.” Strategic
collaboration
opportunities aside, the joint- venture should enable JR Duty Free
www.trbusiness.com/subscriptions Stock (centre) during a panel discussion at the recent ACI Europe event in Tel Aviv. 24 TRBUSINESS
enough to put us in touch with the relevant people at the airport and we travelled to Norway. “We had a look at the system and
wanted to work together and both parties felt they could. That was what it came down to fundamentally.” Elaborating on the previously
established connection between the two companies, Stock recalls how JR Duty Free sought advice from Heinemann shortly after the 2013 Tel Aviv Ben Gurion duty free tender in which it ultimately triumphed. “After the tender [which Heinemann
also took part in] I ran into Managing Director Raoul Spanger in Singapore at the next conference. “As the tender was over and
we were no longer competing, I concluded there might be some things we can help each other with. “I told him we were building a new
shop in Tel Aviv, expecting increased passenger numbers and worried about our queuing system.” Spanger subsequently explained
the system in place for Heinemann’s own queuing system at Oslo Gardermoen International Airport where it runs the arrivals and departures duty free concessions as part of the joint-venture between Travel Retail Norway and Norse trade. Stock comments: “He was kind
to widen its already strong and expansive product range. He explains: “We have been
known for having a strong range, but there are certain instances where we would like to have products, but unsure we want to buy the quantities. “With Heinemann, we will be able
to get these products in the quantities we need and widen the range in wines, spirits and confectionery in particular.”
Initial outlook More than four months into the joint-venture, Stock says it is too early to tell how things will pan out, but admits his concern over the 19% year-on-year passenger increase at the end of February in Tel Aviv. “Passenger numbers are
dramatically up which is a worry. This makes it very hard to maintain strong penetration in-store.” On the plus side, the operation
in Ben Gurion T1, which re-opened for departing passengers on 19 June 2017, is functioning well. The terminal is expected to handle
around 1.5m departing passengers annually, but according to Stock more passengers than the IAA planned are now leaving from T1. “We rebuilt the Terminal One shop
[which is around 500sq m] and it is all up and running,” says Stock. “It is not as big in terms of size and
range as our operation in T3, which means we are unable to achieve the same dollar per passenger spend in T1 as T3. “We are conscious of that, but
overall it is performing well.” On the Australian airport business,
which includes Brisbane, Canberra, Darwin and Perth (until the end of the year) and additionally the Melbourne downtown DF store (Swanston Street) Stock says: “Australia is steady but there are certain challenges. “We have been unable to replace
the effect of the reduced tobacco allowance for inbound passengers last year which now stands at 25 sticks and one open packet. The previous allowance was 50 sticks of tobacco. “Moves made by the government
on the duty free tobacco category have really hurt the business.” «
MAY 2018
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