Targeting the 'Me' generation - The Moodie Report

OCT/NOV 06 FAST, FACTUAL, FREE www.ThEmOOdiEREpORT.COm
Targeting the
‘Me’ generation
Travel retail’s beauty makeover
Gebr Heinemann:
inspiring innovation
Aelia’s towering ambition
Sung-Joo Kim and
the rebirth of MCM
How DFASS won the race
for Singapore Airlines
DubrovniK’S HeroeS • Kyiv DuTy Free • ArlAnDA’S revoluTion

FROM THE EDITOR October/November 2006
Welcome to The Moodie Report. We hope
you’ll find this our most stimulating print
edition yet.
If so, we hope it’s partly down to the quality of the writing
– we think trade press should be both entertaining and
informed – but it will also be thanks to the fascinating
people and companies that feature in this issue, and the
stories they have trusted us to tell.
On one level, these are simply stories about our industry’s
niche within the travel business. But on another, they
are also tales of innovation and daring, of ambition
and courage.
One such story is that of Dubrovnik Airport, its duty free
shop and the people who work there. At little over €7
million in annual sales, it doesn’t rank among the heavyhitting
retail operations of the world. And at a cramped
300sq m, the shop isn’t likely to be shortlisted for any
industry awards in the near future. But its management
team takes as much pride in growing its business by double-digit
amounts – as it will this year – as the World Duty
Free team does at Heathrow, or the Dubai Duty Free
team does at Dubai International Airport.
In some ways, their achievement means even more. Less
than 15 years ago, when the rest of the trade in Europe
was fighting early sorties in a battle that would eventually
lead to intra-EU duty free abolition, the team at
Dubrovnik Airport were fighting for their lives. Between
October 1991 and October 1992 Serb shellfire bombarded
the villages along the southern Croatian coast –
and destroyed the airport.
When the soldiers left all that remained was a pile of rubble
and a crumbling runway. But defiant and proud, the
team at Dubrovnik Airport – all of whom were local to
the area, all of whom had lived without any income for a
year – immediately set about rebuilding their workplace.
The retail team – led by Croatian duty free legend
EDITOR’S
DESK
Nik ^ sa Milanović – breathed new life into the shop, and
their passion and dedication has maintained the growth
ever since.
Today Dubrovnik Airport is preparing for the next phase
of its development, with plans for a new terminal and a
700sq m duty free shop which will eventually lift sales
through the €10 million barrier (page 155). As The
Moodie Report discovered on a visit to Dubrovnik last
month, many of the same team – including Milanović –
are guiding the company, and there’s no sign of the passion
fading.
Passion is a quality again to the fore with Aelia Chairman
and CEO Michel Perol who talked to us at his Paris
office about his company’s journey to becoming a travel
retailer of global repute (page 49). Following Aelia’s
recent ground-breaking deal with Aéroports de Paris,
their joint venture will operate all the key retail concessions
across Paris Charles de Gaulle and Paris Orly from
1 January. It’s a monumental step and a rare example of
landlord and retailer working in a genuine framework of
risk and reward, with profits shared 50:50.
Just as importantly for Perol, we sense, that Paris base
gives Aelia the security to put its international ambitions
to the test. That appetite for expansion has been whetted
by its involvement at the business end of recent tenders
at Copenhagen and Sydney (the latter in joint venture
with James Richardson).
But how will it translate that vision and passion into victories
rather than close-run defeats? Won’t this midsized
French company, we ask Perol, simply lack the
firepower to muscle in at a Seoul Incheon or a Singapore
Changi once the big guns start firing?
With a wry smile Perol points us towards the example of
another medium-sized company that became a global
powerhouse. 20 years ago it operated only in France,
and wasn’t even a big name there. But it had ambition,
4 The Moodie Report

www.guerlain.com

October/November 2006 FROM THE EDITOR
passionate people and a sense of direction. It’s now the
world’s leading name in press retailing at airports. The
company’s name? Relay – a sister Hachette group company
to Aelia. Now the Relay baton is being handed to
Aelia. Watch its journey over the next few years – it’s a
French power play of real significance.
Aelia will have learned many lessons from its friendly rival
Gebr Heinemann. The German travel retailer too was once
a mid-sized player with a dominant position in its home
market but relatively small pickings elsewhere. Now it’s
a global force competing for the cream of the world’s duty
free contracts. It’s not hard to see why: the Gebr Heinemann
template is built around superb supply chain management,
speed, efficiency and as little hierarchy as possible.
But the company is far more than just a finely-tuned
German engine. This modest company may not scream
its own virtues from the Hanseatic rooftops but time
and again it understands the needs of its airport authority
clients and its travelling consumers. In turn it constantly
responds with initiatives designed to keep those
consumers – the ‘Me’ generation we depict on the cover
of this issue – engaged.
Most of Gebr Heinemann’s big recent initiatives have
come from the retailer’s intensely close relationship with
beauty brands. It is those brands – and retailers such as
Gebr Heinemann – that are redrawing the boundaries of
travel retail. Take a glance through the pages that follow:
virtually every retail business we visited in preparing this
issue has beauty at its core. And as our front cover suggests,
many of the events that breathe life into these
stores are driven by the beauty category.
That doesn’t happen by accident, and certainly not at Gebr
Heinemann’s stores. It comes from a willingness to take
risks; to innovate where others imitate. It’s about the trust
that management places in its people, and the passion – that
word again – of those people. People like Kay Spanger, who
after 27 years with Heinemann – from apprentice to Board
Member – still wakes up each day determined to put the
same intensity into his job (page 143).
Such traits are shared by many of the people we met in
preparing this edition. People like Sung-Joo Kim, the
remarkable woman who is resurrecting the fortunes of
leathergoods brand MCM with an unusual blend of
steel, style, humanitarianism, feminism and verve (page
238). Or Jean-Paul Bonnel, the Frenchman recruited
by The Nuance Group to guide its fortunes in Europe.
Over a coffee at Malmö-Sturup Airport, Bonnel speaks
Aelia’s new beauty look at Paris CDG2 F1 – it’s a look
we could see around the world
quickly and eloquently, his words pouring out with the
same brisk energy that you know he will use to enhance
Nuance’s position in the European market – a market still
ripe with possibilities, he insists (page 67).
Such possibilities brought Aer Rianta International to
Ukraine back in 1992. Its wholly owned subsidiary there
is delivering strong double-digit sales growth, based – like
so many of the best companies in this business – on a
company culture that transcends national identities and
traditions. Instead it incorporates the best of each. You
can see it in the passion and professionalism on the Kyiv
Duty Free shop floor (page 180).
And since passion is our theme, who summed up that
quality more – in his life and in his work – than Alberto
C Motta Snr, who sadly died last month? Motta fought
tirelessly to legitimise and nurture the duty free idea
down the years. It’s that – and his profound human qualities
– that elicited such a strong reaction since his death,
from the people who knew him best (page 271).
This is my first edition fully in charge as Editor, and it is one
in which I have tried to broaden our geographic coverage
and our appeal. The heavyweight companies in our industry
command their place, as ever, because their fortunes
are closely tied to the fortunes of almost our entire readership.
But we’ve also tried to tell the stories of people and
companies whose voices one doesn’t hear quite so often.
Different voices, different places – yet many of them
have another thing in common. From Nik ^ sa Milanović
at Dubrovnik, to Sung-Joo Kim in Seoul to Alberto
Motta in Panama, they’ve had to overcome fierce
adversity. In each case a passionate spirit and a willingness
to take the hard road has defined them. For
people like these, it’s not the arrival but the journey that
matters most. – Dermot Davitt, Editor ■
(Cover photo: ME boutique, King Power Duty Free, Suvarnabhumi Airport, Bangkok)
The Moodie Report 7

October/November 2006 CONTENTS
34
Clockwise from left:
Julián Díaz on profits
and the pressure of
growth; Aelia's global
ambition; Stockholm-
Arlanda’s quiet
revolution; the
transformation of
Nuance’s Swedish
business
4 Editor’s Desk: Exploring the passion and power of the
beauty category
19 The Moodie View: The hard lessons of 10 August
22 Heavyweight contest: How DFASS won the race
for Singapore Airlines – and gained a crucial foothold in Asia
28 Singapore surprise: Valiram’s fashion bid at Changi
– analysis of a high-octane tender
34 Dufry’s quantum leap: A year on from the
company's IPO, Julián Díaz assesses the challenge of
managing growth at the Swiss travel retailer
49 Aspiring Aelia: Partnership in Paris is fuelling
global ambitions at France’s leading airport retailer, says
CEO Michel Perol
67 The Nuance view: CEO Europe Jean-Paul Bonnel
on a critical time for the Swiss travel retail group in Europe’s
“mature” consumer markets
73 Arlanda alliance: How a partnership between the
landlord and its key retail tenant is transforming the shopping
offer at Sweden’s gateway
87 Malmö makeover: Profile of the latest addition to
the Nuance portfolio in Northern Europe – and how a retail
facelift is driving sales
Inside
The Moodie Report
The Moodie Report 9
49
73
87

October/November 2006 CONTENTS
93 Local knowledge: How China
Duty Free Group plans to fight its corner
with a new division
103 Sunrise in Beijing: A story
of double-digit duty free increases
110 Tuli, madly, deeply: King
Power (Hong Kong) Managing Director
Travel Retail Sunil Tuli on China, Changi
and the challenge of growth
127 The Chinese consumer in
focus: A fascinating study into the
Mainland Chinese traveller
137 Letter from Shanghai:
Kevin Chen, The Moodie Report’s man in
China, on the growing influence of the
Internet – and an opportunity many
international brands have yet to grasp
143 Gebr Heinemann’s wakeup
call: Kay Spanger on innovation and
inspiration at the German powerhouse
155 Lunch with… This issue’s
subject Nik ^ sa Milanović, a legend of
Croatia’s duty free trade, tells a story of
true duty free heroes
166 Capital gain in Croatia:
Zagreb Airport rides the wave of one of
Europe’s last remaining ‘pure’ duty free
markets
172 Surging Split: Managing the
peaks and troughs of seasonal trade on
Croatia’s Dalmatian coast
180 An Irish-Ukrainian
alliance: A story of rising spends at
Kyiv Duty Free
The Moodie Report 11
93
155
110
143
Clockwise from top left:
Destination everywhere for
China Duty Free Group; King
Power (Hong Kong)’s Sunil
Tuli pulls no punches; Gebr
Heinemann’s Kay Spanger on
passion and professionalism;
the highs and lows of
retailing with Split Airport’s
Ante Teklić; Nik ^ sa Milanović,
a Croatian duty free legend
172

Swiss made – www.swatch.com

CONTENTS October/November 2006
238
203 Tender analysis 1: How Gebr Heinemann captured
the most coveted prize of the year in European duty free – the
Copenhagen Airport duty and tax free concession
207 Tender analysis 2: Spotlight on three of the
world’s most intriguing recent tenders – at Sydney, Atlanta
and Bangalore airports
211 Website Awards: The shortlist for the first-ever
Travel Retail Website of the Year Awards, with the trade’s best
Internet portals reviewed
218 Trinity activity: Partnership at work in Zürich
Airport’s Soul of Chocolate
221 Voyage of discovery: Abu Dhabi Duty Free sails
into new territory with its own lifestyle brand – and maintains
a tradition of innovation in the process
227 Dubai dazzles: Dubai Duty Free unveils record
third-quarter sales – and sets course for a new high in 2006
233 Best practice in Buenos Aires: How
Argentina’s InterBaires is repaying customer loyalty with a
VIP Lounge, and investing in a dramatic expansion of space
236 Brazilian benchmark: A stand-alone destination
merchandise concept – DoBrasil – is driving sales growth at
Brazil’s international airports
238 A brand reborn: “I want to create an Asian
powerhouse,” says Sung-Joo Kim about MCM, the German
leathergoods brand she is revitalising with style and verve
246 Fashion in a bottle: The marketing story behind
the incredible rise of Grey Goose vodka
203 218
Clockwise from left: Sung-Joo Kim and the
re-birth of MCM; Copenhagen Airport’s
Henrik Busch on Europe’s tender of the year;
the Trinity in action at Zürich Airport;
Vespucci sets sail from Abu Dhabi Duty Free;
rewarding loyalty at InterBaires
14 The Moodie Report
221
233

October/November 2006 CONTENTS
257
Clockwise from left:
James Prescott gets
excited about the
Scotch whisky
category; Stuart
McGuire on family
values; a tribute to
Alberto Motta
248 Better by design: Standards of design in travel
retail have now overtaken the high street, says Austrian shop
design expert Umdasch
251 Sekonda’s impeccable timing: The UK watch
brand carves out a niche in an ultra-competitive market, with
fast, disposable fashion
257 The right spirit: James Prescott joins Whyte and
Mackay, and says the company can now start to punch above
its weight in travel retail
260 Fighting the counterfeit menace: One
company offers some new and innovative solutions to an
age-old industry problem
264 True Britt: The determination of a Costa Rican
coffee house to make its name in airport retail – in the
Caribbean and beyond
268
266 A time for Heroes: Rewarding excellence at
Alpha’s vibrant Sri Lankan operations – and preparing for the
next phase of expansion
268 Family values: Scorpio Distributors’ Stuart McGuire
on building a business through blood, sweat and tears
271 Alberto C Motta Snr: A tribute to one of the
industry's founding fathers, and one of its greatest pioneers,
from the people who knew him best
272 Partners’ Index: The brands that help The Moodie
Report to help you
271
THE MOODIE REPORT VOLUME 4 ISSUE 4
1 Editor & Publisher Martin Moodie
+44 20 8231 8901
martin@TheMoodieReport.com
2 Chief Operating Officer Bob Wilby
+44 20 8231 8880
bob.wilby@TheMoodieReport.com
3 Deputy Publisher & Editor Print Division
Dermot Davitt +353 91 388957
dermot.davitt@TheMoodieReport.com
4 Associate Editor Rebecca Mann
+44 1277 624595
rebecca.mann@TheMoodieReport.com
5 Online Editor Salina Christmas
+44 20 8231 8904
salina.christmas@TheMoodieReport.com
6 Brands Editor Mary Jane Pittilla
+44 1622 891543
maryjanepittilla@btinternet.com
7 Asia Editor Hui Min Neo
+44 7931 416060
huimin.neo@gmail.com
8 Staff Reporter Michael Fryer
michael.fryer@TheMoodieReport.com
9 Production Editor Jon Elphick
+44 1981 541170
jon.elphick@gmail.com
10 Designer Ray Heath
+44 20 8402 9812
ray.heath@themoodiereport.com
11 Commercial Director Mandy Shine
+44 20 8248 1236
mandy.shine@TheMoodieReport.com
12 Advertising Development Director Claire Wates
+44 20 8231 8902
claire.wates@TheMoodieReport.com
13 Web Development Director Dilantha Fernando
dilantha@revomobile.com
©The Moodie Report is published by Moodie International Ltd and is a
registered trademark. All rights reserved. Nothing may be reprinted or
reproduced in whole or in part without written permission from the publisher.
Moodie International Limited
Boston House, 69 Boston Manor Road, Brentford, Middlesex TW8 9JJ, UK
www.TheMoodieReport.com
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