Targeting the 'Me' generation - The Moodie Report
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OCT/NOV 06 FAST, FACTUAL, FREE www.ThEmOOdiEREpORT.COm<br />
<strong>Targeting</strong> <strong>the</strong><br />
‘Me’ <strong>generation</strong><br />
Travel retail’s beauty makeover<br />
Gebr Heinemann:<br />
inspiring innovation<br />
Aelia’s towering ambition<br />
Sung-Joo Kim and<br />
<strong>the</strong> rebirth of MCM<br />
How DFASS won <strong>the</strong> race<br />
for Singapore Airlines<br />
DubrovniK’S HeroeS • Kyiv DuTy Free • ArlAnDA’S revoluTion
FROM THE EDITOR October/November 2006<br />
Welcome to <strong>The</strong> <strong>Moodie</strong> <strong>Report</strong>. We hope<br />
you’ll find this our most stimulating print<br />
edition yet.<br />
If so, we hope it’s partly down to <strong>the</strong> quality of <strong>the</strong> writing<br />
– we think trade press should be both entertaining and<br />
informed – but it will also be thanks to <strong>the</strong> fascinating<br />
people and companies that feature in this issue, and <strong>the</strong><br />
stories <strong>the</strong>y have trusted us to tell.<br />
On one level, <strong>the</strong>se are simply stories about our industry’s<br />
niche within <strong>the</strong> travel business. But on ano<strong>the</strong>r, <strong>the</strong>y<br />
are also tales of innovation and daring, of ambition<br />
and courage.<br />
One such story is that of Dubrovnik Airport, its duty free<br />
shop and <strong>the</strong> people who work <strong>the</strong>re. At little over €7<br />
million in annual sales, it doesn’t rank among <strong>the</strong> heavyhitting<br />
retail operations of <strong>the</strong> world. And at a cramped<br />
300sq m, <strong>the</strong> shop isn’t likely to be shortlisted for any<br />
industry awards in <strong>the</strong> near future. But its management<br />
team takes as much pride in growing its business by double-digit<br />
amounts – as it will this year – as <strong>the</strong> World Duty<br />
Free team does at Heathrow, or <strong>the</strong> Dubai Duty Free<br />
team does at Dubai International Airport.<br />
In some ways, <strong>the</strong>ir achievement means even more. Less<br />
than 15 years ago, when <strong>the</strong> rest of <strong>the</strong> trade in Europe<br />
was fighting early sorties in a battle that would eventually<br />
lead to intra-EU duty free abolition, <strong>the</strong> team at<br />
Dubrovnik Airport were fighting for <strong>the</strong>ir lives. Between<br />
October 1991 and October 1992 Serb shellfire bombarded<br />
<strong>the</strong> villages along <strong>the</strong> sou<strong>the</strong>rn Croatian coast –<br />
and destroyed <strong>the</strong> airport.<br />
When <strong>the</strong> soldiers left all that remained was a pile of rubble<br />
and a crumbling runway. But defiant and proud, <strong>the</strong><br />
team at Dubrovnik Airport – all of whom were local to<br />
<strong>the</strong> area, all of whom had lived without any income for a<br />
year – immediately set about rebuilding <strong>the</strong>ir workplace.<br />
<strong>The</strong> retail team – led by Croatian duty free legend<br />
EDITOR’S<br />
DESK<br />
Nik ^ sa Milanović – brea<strong>the</strong>d new life into <strong>the</strong> shop, and<br />
<strong>the</strong>ir passion and dedication has maintained <strong>the</strong> growth<br />
ever since.<br />
Today Dubrovnik Airport is preparing for <strong>the</strong> next phase<br />
of its development, with plans for a new terminal and a<br />
700sq m duty free shop which will eventually lift sales<br />
through <strong>the</strong> €10 million barrier (page 155). As <strong>The</strong><br />
<strong>Moodie</strong> <strong>Report</strong> discovered on a visit to Dubrovnik last<br />
month, many of <strong>the</strong> same team – including Milanović –<br />
are guiding <strong>the</strong> company, and <strong>the</strong>re’s no sign of <strong>the</strong> passion<br />
fading.<br />
Passion is a quality again to <strong>the</strong> fore with Aelia Chairman<br />
and CEO Michel Perol who talked to us at his Paris<br />
office about his company’s journey to becoming a travel<br />
retailer of global repute (page 49). Following Aelia’s<br />
recent ground-breaking deal with Aéroports de Paris,<br />
<strong>the</strong>ir joint venture will operate all <strong>the</strong> key retail concessions<br />
across Paris Charles de Gaulle and Paris Orly from<br />
1 January. It’s a monumental step and a rare example of<br />
landlord and retailer working in a genuine framework of<br />
risk and reward, with profits shared 50:50.<br />
Just as importantly for Perol, we sense, that Paris base<br />
gives Aelia <strong>the</strong> security to put its international ambitions<br />
to <strong>the</strong> test. That appetite for expansion has been whetted<br />
by its involvement at <strong>the</strong> business end of recent tenders<br />
at Copenhagen and Sydney (<strong>the</strong> latter in joint venture<br />
with James Richardson).<br />
But how will it translate that vision and passion into victories<br />
ra<strong>the</strong>r than close-run defeats? Won’t this midsized<br />
French company, we ask Perol, simply lack <strong>the</strong><br />
firepower to muscle in at a Seoul Incheon or a Singapore<br />
Changi once <strong>the</strong> big guns start firing?<br />
With a wry smile Perol points us towards <strong>the</strong> example of<br />
ano<strong>the</strong>r medium-sized company that became a global<br />
powerhouse. 20 years ago it operated only in France,<br />
and wasn’t even a big name <strong>the</strong>re. But it had ambition,<br />
4 <strong>The</strong> <strong>Moodie</strong> <strong>Report</strong>
www.guerlain.com
October/November 2006 FROM THE EDITOR<br />
passionate people and a sense of direction. It’s now <strong>the</strong><br />
world’s leading name in press retailing at airports. <strong>The</strong><br />
company’s name? Relay – a sister Hachette group company<br />
to Aelia. Now <strong>the</strong> Relay baton is being handed to<br />
Aelia. Watch its journey over <strong>the</strong> next few years – it’s a<br />
French power play of real significance.<br />
Aelia will have learned many lessons from its friendly rival<br />
Gebr Heinemann. <strong>The</strong> German travel retailer too was once<br />
a mid-sized player with a dominant position in its home<br />
market but relatively small pickings elsewhere. Now it’s<br />
a global force competing for <strong>the</strong> cream of <strong>the</strong> world’s duty<br />
free contracts. It’s not hard to see why: <strong>the</strong> Gebr Heinemann<br />
template is built around superb supply chain management,<br />
speed, efficiency and as little hierarchy as possible.<br />
But <strong>the</strong> company is far more than just a finely-tuned<br />
German engine. This modest company may not scream<br />
its own virtues from <strong>the</strong> Hanseatic rooftops but time<br />
and again it understands <strong>the</strong> needs of its airport authority<br />
clients and its travelling consumers. In turn it constantly<br />
responds with initiatives designed to keep those<br />
consumers – <strong>the</strong> ‘Me’ <strong>generation</strong> we depict on <strong>the</strong> cover<br />
of this issue – engaged.<br />
Most of Gebr Heinemann’s big recent initiatives have<br />
come from <strong>the</strong> retailer’s intensely close relationship with<br />
beauty brands. It is those brands – and retailers such as<br />
Gebr Heinemann – that are redrawing <strong>the</strong> boundaries of<br />
travel retail. Take a glance through <strong>the</strong> pages that follow:<br />
virtually every retail business we visited in preparing this<br />
issue has beauty at its core. And as our front cover suggests,<br />
many of <strong>the</strong> events that brea<strong>the</strong> life into <strong>the</strong>se<br />
stores are driven by <strong>the</strong> beauty category.<br />
That doesn’t happen by accident, and certainly not at Gebr<br />
Heinemann’s stores. It comes from a willingness to take<br />
risks; to innovate where o<strong>the</strong>rs imitate. It’s about <strong>the</strong> trust<br />
that management places in its people, and <strong>the</strong> passion – that<br />
word again – of those people. People like Kay Spanger, who<br />
after 27 years with Heinemann – from apprentice to Board<br />
Member – still wakes up each day determined to put <strong>the</strong><br />
same intensity into his job (page 143).<br />
Such traits are shared by many of <strong>the</strong> people we met in<br />
preparing this edition. People like Sung-Joo Kim, <strong>the</strong><br />
remarkable woman who is resurrecting <strong>the</strong> fortunes of<br />
lea<strong>the</strong>rgoods brand MCM with an unusual blend of<br />
steel, style, humanitarianism, feminism and verve (page<br />
238). Or Jean-Paul Bonnel, <strong>the</strong> Frenchman recruited<br />
by <strong>The</strong> Nuance Group to guide its fortunes in Europe.<br />
Over a coffee at Malmö-Sturup Airport, Bonnel speaks<br />
Aelia’s new beauty look at Paris CDG2 F1 – it’s a look<br />
we could see around <strong>the</strong> world<br />
quickly and eloquently, his words pouring out with <strong>the</strong><br />
same brisk energy that you know he will use to enhance<br />
Nuance’s position in <strong>the</strong> European market – a market still<br />
ripe with possibilities, he insists (page 67).<br />
Such possibilities brought Aer Rianta International to<br />
Ukraine back in 1992. Its wholly owned subsidiary <strong>the</strong>re<br />
is delivering strong double-digit sales growth, based – like<br />
so many of <strong>the</strong> best companies in this business – on a<br />
company culture that transcends national identities and<br />
traditions. Instead it incorporates <strong>the</strong> best of each. You<br />
can see it in <strong>the</strong> passion and professionalism on <strong>the</strong> Kyiv<br />
Duty Free shop floor (page 180).<br />
And since passion is our <strong>the</strong>me, who summed up that<br />
quality more – in his life and in his work – than Alberto<br />
C Motta Snr, who sadly died last month? Motta fought<br />
tirelessly to legitimise and nurture <strong>the</strong> duty free idea<br />
down <strong>the</strong> years. It’s that – and his profound human qualities<br />
– that elicited such a strong reaction since his death,<br />
from <strong>the</strong> people who knew him best (page 271).<br />
This is my first edition fully in charge as Editor, and it is one<br />
in which I have tried to broaden our geographic coverage<br />
and our appeal. <strong>The</strong> heavyweight companies in our industry<br />
command <strong>the</strong>ir place, as ever, because <strong>the</strong>ir fortunes<br />
are closely tied to <strong>the</strong> fortunes of almost our entire readership.<br />
But we’ve also tried to tell <strong>the</strong> stories of people and<br />
companies whose voices one doesn’t hear quite so often.<br />
Different voices, different places – yet many of <strong>the</strong>m<br />
have ano<strong>the</strong>r thing in common. From Nik ^ sa Milanović<br />
at Dubrovnik, to Sung-Joo Kim in Seoul to Alberto<br />
Motta in Panama, <strong>the</strong>y’ve had to overcome fierce<br />
adversity. In each case a passionate spirit and a willingness<br />
to take <strong>the</strong> hard road has defined <strong>the</strong>m. For<br />
people like <strong>the</strong>se, it’s not <strong>the</strong> arrival but <strong>the</strong> journey that<br />
matters most. – Dermot Davitt, Editor ■<br />
(Cover photo: ME boutique, King Power Duty Free, Suvarnabhumi Airport, Bangkok)<br />
<strong>The</strong> <strong>Moodie</strong> <strong>Report</strong> 7
October/November 2006 CONTENTS<br />
34<br />
Clockwise from left:<br />
Julián Díaz on profits<br />
and <strong>the</strong> pressure of<br />
growth; Aelia's global<br />
ambition; Stockholm-<br />
Arlanda’s quiet<br />
revolution; <strong>the</strong><br />
transformation of<br />
Nuance’s Swedish<br />
business<br />
4 Editor’s Desk: Exploring <strong>the</strong> passion and power of <strong>the</strong><br />
beauty category<br />
19 <strong>The</strong> <strong>Moodie</strong> View: <strong>The</strong> hard lessons of 10 August<br />
22 Heavyweight contest: How DFASS won <strong>the</strong> race<br />
for Singapore Airlines – and gained a crucial foothold in Asia<br />
28 Singapore surprise: Valiram’s fashion bid at Changi<br />
– analysis of a high-octane tender<br />
34 Dufry’s quantum leap: A year on from <strong>the</strong><br />
company's IPO, Julián Díaz assesses <strong>the</strong> challenge of<br />
managing growth at <strong>the</strong> Swiss travel retailer<br />
49 Aspiring Aelia: Partnership in Paris is fuelling<br />
global ambitions at France’s leading airport retailer, says<br />
CEO Michel Perol<br />
67 <strong>The</strong> Nuance view: CEO Europe Jean-Paul Bonnel<br />
on a critical time for <strong>the</strong> Swiss travel retail group in Europe’s<br />
“mature” consumer markets<br />
73 Arlanda alliance: How a partnership between <strong>the</strong><br />
landlord and its key retail tenant is transforming <strong>the</strong> shopping<br />
offer at Sweden’s gateway<br />
87 Malmö makeover: Profile of <strong>the</strong> latest addition to<br />
<strong>the</strong> Nuance portfolio in Nor<strong>the</strong>rn Europe – and how a retail<br />
facelift is driving sales<br />
Inside<br />
<strong>The</strong> <strong>Moodie</strong> <strong>Report</strong><br />
<strong>The</strong> <strong>Moodie</strong> <strong>Report</strong> 9<br />
49<br />
73<br />
87
October/November 2006 CONTENTS<br />
93 Local knowledge: How China<br />
Duty Free Group plans to fight its corner<br />
with a new division<br />
103 Sunrise in Beijing: A story<br />
of double-digit duty free increases<br />
110 Tuli, madly, deeply: King<br />
Power (Hong Kong) Managing Director<br />
Travel Retail Sunil Tuli on China, Changi<br />
and <strong>the</strong> challenge of growth<br />
127 <strong>The</strong> Chinese consumer in<br />
focus: A fascinating study into <strong>the</strong><br />
Mainland Chinese traveller<br />
137 Letter from Shanghai:<br />
Kevin Chen, <strong>The</strong> <strong>Moodie</strong> <strong>Report</strong>’s man in<br />
China, on <strong>the</strong> growing influence of <strong>the</strong><br />
Internet – and an opportunity many<br />
international brands have yet to grasp<br />
143 Gebr Heinemann’s wakeup<br />
call: Kay Spanger on innovation and<br />
inspiration at <strong>the</strong> German powerhouse<br />
155 Lunch with… This issue’s<br />
subject Nik ^ sa Milanović, a legend of<br />
Croatia’s duty free trade, tells a story of<br />
true duty free heroes<br />
166 Capital gain in Croatia:<br />
Zagreb Airport rides <strong>the</strong> wave of one of<br />
Europe’s last remaining ‘pure’ duty free<br />
markets<br />
172 Surging Split: Managing <strong>the</strong><br />
peaks and troughs of seasonal trade on<br />
Croatia’s Dalmatian coast<br />
180 An Irish-Ukrainian<br />
alliance: A story of rising spends at<br />
Kyiv Duty Free<br />
<strong>The</strong> <strong>Moodie</strong> <strong>Report</strong> 11<br />
93<br />
155<br />
110<br />
143<br />
Clockwise from top left:<br />
Destination everywhere for<br />
China Duty Free Group; King<br />
Power (Hong Kong)’s Sunil<br />
Tuli pulls no punches; Gebr<br />
Heinemann’s Kay Spanger on<br />
passion and professionalism;<br />
<strong>the</strong> highs and lows of<br />
retailing with Split Airport’s<br />
Ante Teklić; Nik ^ sa Milanović,<br />
a Croatian duty free legend<br />
172
Swiss made – www.swatch.com
CONTENTS October/November 2006<br />
238<br />
203 Tender analysis 1: How Gebr Heinemann captured<br />
<strong>the</strong> most coveted prize of <strong>the</strong> year in European duty free – <strong>the</strong><br />
Copenhagen Airport duty and tax free concession<br />
207 Tender analysis 2: Spotlight on three of <strong>the</strong><br />
world’s most intriguing recent tenders – at Sydney, Atlanta<br />
and Bangalore airports<br />
211 Website Awards: <strong>The</strong> shortlist for <strong>the</strong> first-ever<br />
Travel Retail Website of <strong>the</strong> Year Awards, with <strong>the</strong> trade’s best<br />
Internet portals reviewed<br />
218 Trinity activity: Partnership at work in Zürich<br />
Airport’s Soul of Chocolate<br />
221 Voyage of discovery: Abu Dhabi Duty Free sails<br />
into new territory with its own lifestyle brand – and maintains<br />
a tradition of innovation in <strong>the</strong> process<br />
227 Dubai dazzles: Dubai Duty Free unveils record<br />
third-quarter sales – and sets course for a new high in 2006<br />
233 Best practice in Buenos Aires: How<br />
Argentina’s InterBaires is repaying customer loyalty with a<br />
VIP Lounge, and investing in a dramatic expansion of space<br />
236 Brazilian benchmark: A stand-alone destination<br />
merchandise concept – DoBrasil – is driving sales growth at<br />
Brazil’s international airports<br />
238 A brand reborn: “I want to create an Asian<br />
powerhouse,” says Sung-Joo Kim about MCM, <strong>the</strong> German<br />
lea<strong>the</strong>rgoods brand she is revitalising with style and verve<br />
246 Fashion in a bottle: <strong>The</strong> marketing story behind<br />
<strong>the</strong> incredible rise of Grey Goose vodka<br />
203 218<br />
Clockwise from left: Sung-Joo Kim and <strong>the</strong><br />
re-birth of MCM; Copenhagen Airport’s<br />
Henrik Busch on Europe’s tender of <strong>the</strong> year;<br />
<strong>the</strong> Trinity in action at Zürich Airport;<br />
Vespucci sets sail from Abu Dhabi Duty Free;<br />
rewarding loyalty at InterBaires<br />
14 <strong>The</strong> <strong>Moodie</strong> <strong>Report</strong><br />
221<br />
233
October/November 2006 CONTENTS<br />
257<br />
Clockwise from left:<br />
James Prescott gets<br />
excited about <strong>the</strong><br />
Scotch whisky<br />
category; Stuart<br />
McGuire on family<br />
values; a tribute to<br />
Alberto Motta<br />
248 Better by design: Standards of design in travel<br />
retail have now overtaken <strong>the</strong> high street, says Austrian shop<br />
design expert Umdasch<br />
251 Sekonda’s impeccable timing: <strong>The</strong> UK watch<br />
brand carves out a niche in an ultra-competitive market, with<br />
fast, disposable fashion<br />
257 <strong>The</strong> right spirit: James Prescott joins Whyte and<br />
Mackay, and says <strong>the</strong> company can now start to punch above<br />
its weight in travel retail<br />
260 Fighting <strong>the</strong> counterfeit menace: One<br />
company offers some new and innovative solutions to an<br />
age-old industry problem<br />
264 True Britt: <strong>The</strong> determination of a Costa Rican<br />
coffee house to make its name in airport retail – in <strong>the</strong><br />
Caribbean and beyond<br />
268<br />
266 A time for Heroes: Rewarding excellence at<br />
Alpha’s vibrant Sri Lankan operations – and preparing for <strong>the</strong><br />
next phase of expansion<br />
268 Family values: Scorpio Distributors’ Stuart McGuire<br />
on building a business through blood, sweat and tears<br />
271 Alberto C Motta Snr: A tribute to one of <strong>the</strong><br />
industry's founding fa<strong>the</strong>rs, and one of its greatest pioneers,<br />
from <strong>the</strong> people who knew him best<br />
272 Partners’ Index: <strong>The</strong> brands that help <strong>The</strong> <strong>Moodie</strong><br />
<strong>Report</strong> to help you<br />
271<br />
THE MOODIE REPORT VOLUME 4 ISSUE 4<br />
1 Editor & Publisher Martin <strong>Moodie</strong><br />
+44 20 8231 8901<br />
martin@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
2 Chief Operating Officer Bob Wilby<br />
+44 20 8231 8880<br />
bob.wilby@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
3 Deputy Publisher & Editor Print Division<br />
Dermot Davitt +353 91 388957<br />
dermot.davitt@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
4 Associate Editor Rebecca Mann<br />
+44 1277 624595<br />
rebecca.mann@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
5 Online Editor Salina Christmas<br />
+44 20 8231 8904<br />
salina.christmas@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
6 Brands Editor Mary Jane Pittilla<br />
+44 1622 891543<br />
maryjanepittilla@btinternet.com<br />
7 Asia Editor Hui Min Neo<br />
+44 7931 416060<br />
huimin.neo@gmail.com<br />
8 Staff <strong>Report</strong>er Michael Fryer<br />
michael.fryer@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
9 Production Editor Jon Elphick<br />
+44 1981 541170<br />
jon.elphick@gmail.com<br />
10 Designer Ray Heath<br />
+44 20 8402 9812<br />
ray.heath@<strong>the</strong>moodiereport.com<br />
11 Commercial Director Mandy Shine<br />
+44 20 8248 1236<br />
mandy.shine@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
12 Advertising Development Director Claire Wates<br />
+44 20 8231 8902<br />
claire.wates@<strong>The</strong><strong>Moodie</strong><strong>Report</strong>.com<br />
13 Web Development Director Dilantha Fernando<br />
dilantha@revomobile.com<br />
©<strong>The</strong> <strong>Moodie</strong> <strong>Report</strong> is published by <strong>Moodie</strong> International Ltd and is a<br />
registered trademark. All rights reserved. Nothing may be reprinted or<br />
reproduced in whole or in part without written permission from <strong>the</strong> publisher.<br />
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