Annual Review 2011 - The Nuance Group

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The Nuance Group President & Annual Review 2011 CEO’s report 10 Breaking new ground In 2011, we responded to the challenging retail environment by developing a new duty free store ‘blueprint’ driven by extensive consumer research and customer understanding. First unveiled at Antalya in Turkey in May, this innovative concept incorporates pioneering interactive technology in-store to appeal to today’s increasingly technology-aware consumer. +20% Delivering our strategy Our performance continues to be driven by our Group strategy, which has two key priorities: 1. Improve the profitability of continuing business We worked hard during the year to profitably renew expiring contracts and extend contract life. For example, we extended the perfume and cosmetics concession at Singapore until 2014 and at the time of going to print (April 2012), we are defending an important duty free contract in Hong Kong. Our portfolio constantly changes as market conditions dictate and the year saw us close a number of locations as part of this evolutionary process. In Paris, it became clear that our joint venture partner Aéroports de Paris (ADP) no longer shared our vision and with reluctance, we made the decision to sell our stake in Duty Free Paris. We wish them every success in the future. In 2011, we also ended our operations at a few smaller European locations. Improving performance management and sharing best practice are key aspects of the drive towards increased profitability and in 2011, we began to reap the rewards of the integration of our Singapore and Hong Kong ventures under a regional structure. We have leveraged our airport operations in the region and introduced initiatives that have enabled the locations to benefit from the skills and experiences of each other. Best practice will also be central to our efforts in the coming months to support and drive our Australian business. Increasingly, we are working together across regions in new and better ways, and we anticipate that this, together with our Group-wide focus on deepening consumer understanding will have a positive impact in 2012. We take our responsibilities seriously, both to our industry and to the local communities where we operate. As a major player, we are committed to using our influence to the benefit of the travel business as a whole, and specifically the duty free sector. Partnership is very important to us and we strive to create collaborative relationships that bring advantages to all parties. Throughout the year we again worked closely with our Trinity Partners – the airports and the suppliers – to strengthen the bonds between us and to guarantee that customers will benefit from our continued partnership. 2. Pursue strong growth This has been a landmark year for organic growth, with many significant achievements. Chief among these was the historic opening of the first Swiss Arrivals stores, in Zurich and Geneva. These events were the culmination of many years of working alongside legislators to help bring about a change in the law. Now, for the first time, travellers flying into Switzerland and Swiss residents returning home can enjoy duty free privileges on arrival. This is a fine example of how Nuance responds to consumer demands for a more convenient shopping experience by putting the customer at the heart of everything we do. In another ‘first’, we were proud to launch a radically new duty free store concept, at Antalya in Turkey. Here, a series of boutiques present our core categories as individual departments, each with a distinctive design and finish, and supported by leading brands. The boutiques also feature a high level of interactive technology – customers can use iPad-style tablets to explore the products and experiences available. Not only is this a breakthrough for our industry, it will also form the basis for many of our future operations. For example, towards the end of the year we incorporated many of the
The Nuance Group Annual Review 2011 Winning respect In 2011, many Nuance achievements were again recognised by our industry peers. We were awarded a clutch of accolades, including the prestigious Duty Free News International (DFNI) ‘Retailer of the Year’ award for our Hong Kong operation, which was also named ‘Airport Retailer of the Year’. Our expansive Sydney store also took ‘Best New Shop’ in these key global awards. In the DFNI section for Travel Excellence in Asia/Pacific, we won seven different awards for our operations in Singapore and successes piloted at Antalya in the launch of new stateof-the-art walk-through stores at our flagship Zurich operation, which signalled a further evolution of these exciting concepts. Beyond Europe, we won a seven-year duty free/duty paid contract at Orlando International Airport. Comprising two stores and 711 square metres of retail space, this contract will enable us to introduce exciting concepts into the North American market. The stores are due to open by January 2013. In Asia, we added and refurbished almost 653 square metres of space. In Singapore, we opened three Samsonite shops and two new perfume and cosmetic stores, giving us a total of 27 outlets spread across all four terminals. Our team was also busy in Hong Kong, where we relocated and redesigned our ‘Fortress’ electronics store and opened two shops for airport staff. Together, these achievements amounted to a very pleasing extension of the portfolio, and more than outweighed the minor setback at London City, where we were unsuccessful in a contract re-tender, and Cairns, where we decided not to participate in the re-tender. As we enhance our reputation as a leading retailer, many of our locations continue to be chosen to spearhead global airport retail debuts for various product categories. For example, we were selected to debut the Tommy Hilfiger brand in our Hong Kong general merchandise stores, the first time the brand has been featured in this way in an Asian airport. In Australia, we secured the exclusive distribution of Penfolds’ limited edition 2008 Special Bin 620 Coonawarra Cabernet Shiraz, reinforcing the successful partnership between Australia’s leading winemaker and our organisation. 11 Hong Kong, and in Europe, we also received a number of category plaudits in the DFNI Product Awards, with Antalya being recognised as ‘Best New Store – Liquor’ and our Swarovski concept in Zurich taking ‘Best New Store – Jewellery’. As a company, we take real pride in delivering great service to our customers and are pleased that in 2011 many of our team members were recognised for their efforts, picking up individual and team awards in Hong Kong and Singapore for customer service excellence and courtesy. RS&D played its part in fulfilling our growth potential. Together with several other notable achievements, the business won a contract to supply and manage the duty free store at Karachi Airport as well as in-flight contracts for Lufthansa Worldshop (Swiss), and plans are underway to establish a forward based logistics and added value platform in Riga to manage operations in Russia and the CIS states. Acquisitions are the second pillar of our growth strategy and we are constantly identifying, evaluating and, where appropriate, pursuing opportunities to acquire target organisations. At the end of January 2012, we purchased a further 27% stake in our Turkish joint venture with Net Holding A.S. This brings our ownership to 82% with an option to buy the remaining 18% before March 2013. Our operations in Turkey have already been a resounding success and the increase in our stake in the joint venture gives us the possibility to capitalise on the further potential in this exciting market. Global strength with a local touch With over 4,600 people serving 31 million customers through 343 stores in 17 countries and territories, Nuance is a truly global organisation. Yet whilst we share best practice, drawing on our experiences in one market to create profitable solutions in another, we also place high value on local knowledge and expertise. Our regions enjoy a high degree of autonomy and are able to develop unique retail concepts that meet the needs of local travellers, reflect local customs and are aligned with the design and histories of local airports. The result? Retail solutions that have a sense of place and are tailored exactly to local circumstances but, at the same time, are able to draw on all the skills and experience of a company with worldwide presence and strengths. Overview Review of 2011 Financial statements
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Annual Review 2011 - The Nuance Group

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