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Global Airport Retailing | Verdict Channel Report

Summary

After two years of slowing growth due to a weak global economy, we forecast that airport retail sales will gain momentum in 2014 and grow by 7.7%. More passengers and higher levels of spend per passenger, as the economy improves, the BRIC countries strengthen and MINT nations emerge. The future prospects for the channel remain buoyant, with growth improving every year to 11.0% in 2019.

Key Findings

  • Forecasts of global and regional sales, passenger numbers, spend per passenger and sector spend up to 2019 to enable opportunities to be identified.
  • Briefings on the 10 main players in the airport sector, with market shares up to 2014, coverage of recent key events and what it means for the market.
  • An analysis of the major trends within the airport sector, how it will affect it operators and if a potential threat, how it can be overcome.
Synopsis

While all sectors are set to achieve robust growth over the next five years, the best performing ones will be beauty products and alcohol. Beauty products will be supported by new products stimulating demand and a reluctance by customers to cut back. The ability to not pay tax or duty on alcohol at an airport will support this sector up to 2019.

The growth of low cost carriers (LCC) continues, and accounted for 24.8% of all air traffic in 2012. This growth tends to suppress airport spend as these shoppers are either ineligible for duty free or have little appetite for it. With more long haul flights for LCC's planned, retailers must adjust their offer to serve these customers.

Dufry is set to retain top spot in the airport market in 2014 with a share just under 10%. The company has been driven by acquisitions, such as the complete acquisition of Hellenic Duty Free in 2013, and significant expansion plans within Europe, Middle East and North America, with new stores set to open in Dallas, JFK in New York, and Brazil.

Reasons To Buy
  • Which regions and sectors are set to outperform the market over the next five years? What factors are behind this performance?
  • How will online and multichannel retail affect the airport retail market?
  • Which companies are set to gain share in 2014 and who is set to fall back?


  • Overview
  • Key Findings
    • We expect growth through airports to ease marginally in 2015
    • 2015 passenger numbers will remain consistent with 2014
    • Beauty and electricals sales drive growth
    • Growth set to accelerate over next five years
    • Asia Pacific drives the market, both now and in the future
    • Relaxation of visas rules for Asian passengers will increase airport sales
    • Following its acquisitions, Dufry is the undisputed market leader
    • Greater consolidation will change the landscape of the channel
    • Airside will increase its share of the market by 2020
  • Market Size
    • Market definition
      • Table Airside and landside definitions, 2015
    • Overall market
      • Table Global airport retailing market size ($m) and year-on-year change (%), 2011-15e
      • Sales growth remains consistent in 2015
    • Market size by region
      • Table Global airport retail market size ($m) and year-on-year change (%), by region, 2011-15e
      • Asia Pacific drives growth globally
      • Europe continues its recovery
      • The Americas and the Middle East and Africa continue to gather momentum
    • Passenger numbers by region
      • Table Passenger numbers (million) and year-on-year change (%), by region, 2011-15e
      • The Middle East and Africa has been the fastest growing region since 2012
      • Passenger numbers in Asia Pacific continue to cool
      • A recovery in the euro supported the European sector
      • We expect the momentum in the Americas to continue into 2015
    • Spend per passenger
      • Table Sales per passenger ($) and year-on-year change (%), by region, 2011-15e
    • Market size by category
      • Table Global airport retailing market size ($m) and year-on-year change (%), by category, 2013-15e
      • Beauty sees strongest growth in 2015
      • Electricals growth ratchets upwards
      • Alcohol sales recover in 2015 after a challenging year
      • Tobacco's share of the global airport market will decline sharply in 2015
        • Table Asia Pacific airport retailing market size ($m) and year-on-year change (%), by category, 2013-15e
        • Table Europe airport retailing market size ($m) and year-on-year change (%), by category, 2013-15e
        • Table Americas airport retailing market size ($m) and year-on-year change (%), by category, 2013-15e
        • Table Middle East and Africa airport retailing market size ($m) and year-on-year change (%), by category, 2013-15e
  • Market Forecast
    • Market size by region
      • Table Airport retailing market size ($m) and year-on-year change (%), by region, 2015e-20e
      • Global sales continue to rise
      • Asia Pacific fastest growing market
      • Asia Pacific market will nearly double by 2020
      • New airports open to satisfy increasing demand
      • Europe sees slowest growth over next five years
      • Sales in Americas to grow 50.6% in next five years
    • Passenger numbers by region
      • Table Passenger numbers (million) and year-on-year change (%), by region, 2015e-20e
    • Spend per passenger
      • Table Sales per passenger ($) and year-on-year change (%), by region, 2015e-20e
      • Spend per passenger to increase across all regions
    • Market size by category
      • Table Global airport retailing market size ($m) and year-on-year change (%), by category, 2015e-20e
      • Table Asia Pacific airport retailing market size ($m) and year-on-year change (%), by category, 2015e-20e
      • Table Americas airport retailing market size ($m) and year-on-year change (%), by category, 2015e-20e
      • Table Europe airport retailing market size ($m) and growth (%), by category, 2015e-20e
      • Table Middle East and Africa airport retailing market size ($m) and year-on-year change (%), by category, 2015e-20e
  • Outlook
    • Mobile and pre-order shopping
      • More airport retail operators now offer pre-order shopping
      • Pre-order purchases encourage more time-constrained customer to increase spend
      • Pre-order shopping benefits from a captive audience
      • Operators aiming to outdo each other in terms of convenience
      • For pre-order to be effective, a robust infrastructure is required
      • Improving how the website looks will help attract luxury brands and drive sales
      • Operators should capitalise more on driving sales through mobiles
      • Shopping walls for grocery are an option to drive sales through mobiles
      • Increasing awareness of this offer is pivotal
    • Relaxation of Asia Pacific visas
      • The UK has relaxed its visa requirements
      • Many countries have worked to attract Chinese tourists
      • Growing economy and perceptions of disposable income fuel this desire
      • China has a strong appetite for luxury products
      • Chinese luxury shoppers prefer more understated products
      • India extends visa-on-arrival scheme
      • Boosting visitor numbers a focus for Indian government
      • Passenger growth will drive duty free spend
      • Success dependent on duty free and airport operators working closely together
    • Increasing access to airside
      • Zurich airport invited non-passengers to go airside
      • Others implemented similar events
      • Security is a key consideration
      • Speed with which shoppers can get airside is important too
      • Who pays for excess duty will determine the promotion for the event
      • Restrictions need to be communicated clearly to customers
      • Need to maximise dwell time among shoppers
      • Timing of Zurich and Pittsburgh event would work best
      • Airports and duty free operators need to work together to maximise returns
    • Greater consolidation within travel retail expected
      • Travel retail sees its largest acquisition
      • Improved margins a key benefit of consolidation
      • Becoming larger players will create an upward spiral
      • Faster entry into new markets is another advantage
      • Consolidation also enables retailers to shore up weak parts of their offer
      • Large integration projects may take a significant share of resources
      • Remaining a nimble retailer at such a size will be tough
      • Operators run the risk of homogeneity
      • Operators will increasingly acquire or be acquired
    • Falling oil prices will impact Russia severely
      • The price of oil fell sharply toward the end of 2014
      • This drop will significantly impact Russia
      • Russian and other European airports have seen their 2014 suffer as a result
      • While the market will recover, it will suffer in the short term
  • Aer Rianta International
    • Company information
      • Table Aer Rianta International company information, 2015
    • Verdict outlook
      • India should remain important despite Mumbai withdrawal
      • Middle East will provide opportunities for growth
      • Innovation will help mature domestic market
      • Improving service proposition will help growth
    • Recent key events
      • Pulls out of Kunming and Mumbai International airports
      • Acquires managing stake in Cyprus operations
      • Wins the Auckland tender
      • Promotions help Delhi Duty Free post strong profits
      • Launches personal shopping service at Dublin airport
    • Proposition
      • Table ARI airport retail proposition, 2015
    • Financials
      • Table Aer Rianta International trading record, 2010-15e
      • Makes profit by selling off Russia/CIS interests
    • Market share
  • DFS Group
    • Company information
      • Table DFS Group company information, 2015
    • Verdict outlook
      • Will receive boost from operations in Singapore
      • Premium positioning should boost growth opportunities
      • Customer engagement strategy will drive footfall to stores
      • Strategic partnerships will be key in attracting Chinese consumers
    • Recent key events
      • Enters European market with move into Venice
      • Unveils plans for new format store at Singapore Changi Airport
      • Will enter Cambodian market with T Galleria mall near Angkor Wat
      • Partners with Bacardi to launch campaign across key airports
      • Targets Chinese shoppers with partnerships with Chinese players
      • Files misconduct case against Guam International Airport Authority
      • Completes San Francisco Airport renovation
      • Launches global beauty campaign
      • Receives one year extension to duty free contract at Los Angeles
    • Proposition
      • Table DFS airport locations, 2015
    • Financials
      • Table DFS Group trading record (€m), 2010-15
      • Table DFS Group trading record ($m), 2010-15e
      • Trading update
    • Market share
  • Dubai Duty Free
    • Company information
      • Table Dubai Duty Free company information, 2015
    • Verdict outlook
      • Changing demographic of passengers
      • Dubai Airports app offers multichannel potential to retailers
      • New opportunities for growth
      • Understanding consumers at Al Maktoum International Airport
      • Partnerships and promotions remain at centre of strategy
    • Recent key events
      • DDF celebrates 31st anniversary leading to new monthly sales record
      • Dubai Airports launches new mobile app
      • Exclusive partnerships with brands boost sales
      • DDF continues to enhance retail operations at Dubai International Airport
      • Growth in passenger traffic through Dubai's airports
      • Passenger numbers from Russia drop, but grow from India
    • Financials
      • Table Dubai Duty Free trading record, 2010-15e
      • Table Dubai Duty Free sales growth (%) by category, 2013-14
      • Table Dubai Duty Free sales growth (%) by terminal, 2013-14
      • Table Dubai Duty Free sales growth (%) by location, 2013-14
    • Market share
  • Dufry
    • Company information
      • Table Dufry company information, 2015
    • Verdict outlook
      • While the integration of Nuance and World Duty Free Group will be challenging, it offers significant benefits
      • Its expansion in Brazil should reap significant rewards for it over the next five years
      • Should roll out its pre-order shopping to a wider base faster
      • Lack of presence in Australia raises questions about Dufry's involvement in this market
    • Recent key events
      • Acquires majority stake in World Duty Free Group in March 2015
      • Dufry acquires Nuance in June 2014
      • Dufry aims to achieve CHF70m in savings via synergies
      • Roberto Graziani and Richard Rendek have both left the business
      • Brazil remains a key area for Dufry
      • Dufry wins tenders in Kenya and Nigeria
      • Helps Gap enter the Spanish market
      • Challenges the award of Kiev tender
      • Loses the Sydney tender to Gebr Heinemann
      • Nuance extends Orlando contract until 2022
      • Introduces pre-order shopping at Bengaluru International Airport
    • Proposition
      • Table Dufry global presence, 2015
      • Table Dufry retail store concepts, 2015
      • Table Nuance global airport presence, 2014
      • Table Nuance airport retail brands, 2014
    • Financials
      • Table Dufry trading record (CHFm), 2010-15e
      • Table Dufry trading record ($m), 2010-15e
    • Market share
  • Duty Free Americas
    • Company information
      • Table Duty Free Americas company information, 2015
    • Verdict outlook
      • Multichannel expansion offers growth prospects
      • Exploit growing market in Latin America
    • Recent key events
      • Expands at Washington Dulles International Airport
      • Launches online pre-order system
      • Wins first Brazilian airport duty free contract
      • Opens exclusive Diageo liquor store in Colombia
      • Appeals lower court ruling in dispute with Estée Lauder
      • Introduces luxury sunglasses concept store with Luxottica
    • Proposition
      • Table Duty Free Americas retail store concepts, 2015
    • Financials
      • Growing airport retail operations only one part of the business
        • Table Duty Free Americas trading record ($m), 2010-15e
    • Market share
  • Gebrüder Heinemann
    • Company information
      • Table Gebr Heinemann company information, 2015
    • Verdict outlook
      • Asia Pacific expansion gains momentum
      • Must manage exposure to volatile Russian market
      • Focus on multichannel strategy
    • Recent key events
      • Heinemann wins heavily contested contract for Sydney Airport
      • Partners with Etihad to offer customer rewards
      • Enters North Africa with Egypt and Tunisia tender wins
      • Wins Istanbul tender in January 2015
      • Oreo helps Gebr Heinemann grow confectionery sales
      • Partners with Finnair for inflight duty free deal
      • Launches home delivery service in Germany
      • Set to invest €130m in 2015
    • Proposition
      • Table Gebr Heinemann retail store concepts, 2015
    • Financials
      • Table Gebr Heinemann trading record (€m), 2010-15e
      • Table Gebr Heinemann trading record ($m), 2010-15e
    • Market share
  • Lotte Duty Free
    • Company information
      • Table Lotte Duty Free company information, 2015
    • Verdict outlook
      • Significant long-term aspirations for international growth
      • Retaining the Incheon tender sets the business in good stead
      • Increasing presence in Indonesia will boost performance
    • Recent key events
      • Opens retail offer at Guam International Airport
      • Boutiques open at Guam
      • New CEO steps up
      • Increases presence within the Japanese market
      • Aiming to increase its presence in Indonesia
      • Has won four store packages at Incheon Airport
      • Lotte launches English pre-order site in December 2014
    • Proposition
      • Table Lotte Duty Free airport stores, 2014
    • Financials
      • Table Lotte Duty Free trading record ($m), 2010-15e
    • Market share
  • LS Travel Retail
    • Company information
      • Table LS Travel Retail company information, 2015
    • Proposition
      • Table LS Travel Retail global airport presence, 2015
      • Store concepts in Europe in 2015
        • Table LS Travel Retail store concepts in Europe, 2015
      • Store concepts in Asia Pacific in 2015
        • Table LS Travel Retail store concepts in Asia Pacific, 2015
      • Store concepts in North America in 2015
        • Table LS Travel Retail store concepts in North America, 2015
    • Verdict outlook
      • Food & Beverage division provides expansion opportunities
      • Asia Pacific offers growth
      • Personalisation will give competitive edge
      • Must focus on multichannel
    • Recent key events
      • Rebrands Aelia Duty Free with focus on digital
      • Bids for Istanbul Grand Airport duty free concession
      • Wins food and beverage concession at Iceland's Keflavik Airport
      • Wins five fashion tenders for Spanish airports
      • Opens new fashion stores at Shenzhen Airport
      • Grows Relay brand in India
      • Opens M&M concept store at Paris Charles de Gaulle Airport
      • Opens MY Lifestyle Gallery store in Kuala Lumpur
      • Consolidates presence in Adelaide
    • Financials
      • Table LS Travel Retail consolidated sales (€m and $m), 2010-15e
    • Market share
  • Shilla Group
    • Company information
      • Table Shilla Group company information, 2015
    • Proposition
      • Table Shilla Duty Free global airport presence, 2015
    • Verdict outlook
      • New SME legislation could impact profitability
      • International expansion offers growth opportunities
    • Recent key events
      • Aiming to expand internationally by acquiring stake in DFASS and hiring former Nuance head
      • Changes imminent in Korean travel retail
      • Chinese visitor numbers continue to rise
      • Japanese visitor numbers drop due to weak yen
      • Shilla retains Incheon
      • Macau operations begin
      • Beauty concession opens at Changi Airport
      • Withdrawal from Kuala Lumpur
    • Financials
      • Table Shilla Duty Free sales ($m), 2010-15e
    • Market share
  • World Duty Free
    • Company information
      • Table World Duty Free company information, 2015
    • Verdict outlook
      • Secure contractual base in key markets
      • Troubles at Barajas impact Spanish performance
    • Recent key events
      • Opens first duty free outlet in Saudi Arabia's Eastern Province
      • Extends Heathrow and Los Angeles duty free offer
      • Wins Kuwaiti tender
      • Redevelops a number of British stores
      • Concierge desk improves service credentials
      • Becomes the only duty free operator at Helsinki Airport
    • Proposition
      • Table World Duty Free Group retail own brands, 2015
    • Financials
      • Table World Duty Free trading record (€m), 2010-15e
      • Table World Duty Free trading record ($m), 2010-15e
      • Trading update
      • Turnover by country
      • Turnover by category
    • Market share
  • Appendix
    • About Verdict Retail
    • Disclaimer

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