For DFA, 2014 started off slow, but the operator’s President, Leon Falic, is neither fazed nor surprised: “So far 2014 has been slower than expected, but business is picking up now. I think it’s partly down to the fact that some big economies are still struggling.” But despite the ups and downs, Falic is predicting a growth, in annual sales, of around 4% to $1.25bn.

 

“But we’ve had a lot of exposure and heightened visibility during the summer so far.” Falic refers to the little-known football tournament that saw one billion viewers tune in for its Final: Argentina vs Germany.

 

And plenty of sports fans actually made the trip to Brazil, driving traffic throughout the Americas. “We’ve seen a lot of passengers through the US airports, especially New York JFK where we see an increase of Chinese passengers. So yes things started slow, but it’s definitely picking up now.”

 

But recent measures by US airports threaten to hamper growth for the Americas operator. As reported by TRBusiness.com, following new intelligence, US Department of Homeland Security Secretary Jeh Johnson has put the Transportation Security Administration (TSA) on heightened alert.

 

Duty Free Americas Miami Airport.

SECURITY MEASURES IN THE US

Falic told TRBusiness that he is not afraid of the new measures being implemented. “I don’t anticipate any negative effects from the recent heightening of security regulation at US airports.”

 

“I think that when shoppers have to clear through a lot more security, they will arrive at the airport a lot earlier as they fear missing their flights. I think people get to the airport with plenty of time to spare anyway, but if they start arriving even earlier [because of recent developments], then they’ll be able to spend more time in our stores.

 

“We’ve seen a lot of passengers through the US airports, especially New York JFK where we see an increase of Chinese passengers. So yes things started slow, but it’s definitely picking up now.”

 

Last time, TRBusiness spoke to Falic, it wasn’t heightened security or passenger processing that was the problem for DFA. Last year the Brazilian and Venezuelan currencies had made trading more challenging than normal.

 

CURRENCY FLUCTUATION

Commenting on 2014, Falic says: “It is a little better, I’m not saying it’s where it should be, but it’s certainly better. The Brazilian real is pretty stable right now. I think 2014 will be better, but I don’t think we can expect it to be much better.”

 

DFA President, Leon Falic.

 

But what about DFA’s other territories such as the Mexican and Canadian borders? “The Mexican and Canadian border stores performed, but with strict regulations coming into force, it made our job that bit harder,” said Falic.

 

In February, the Canadian Government revealed, during the budget announcement, that is was going to implement big tobacco excise tax hikes, leaving the duty free industry fuming as it eliminates previous preferential treatment for the channel.

 

Although tobacco is not one of DFA’s top-selling categories, it’s just one more blow to the industry. “Both borders are very strict on allowances which can’t be helped,” adds Falic who admits that there’s not a huge amount of growth potential at these borders.

 

OUTSIDE OF THE AMERICAS

But when asked if that might prompt DFA’s withdrawal from the regions, Falic was adamant that they weren’t going anywhere. “Both borders are very important to us and to be honest we’re the dominant retailer by far, and we want it to stay that way.”

 

In search of growth potential and perhaps a greater level of stability, this may be why the company has focused a lot of its energy on ventures outside of the Americas, such as Macao, Hong Kong and Israel.

 

“Of course we’re focusing on South America, Chile, Uruguay, Bogota, but there’s also Israel, and other parts of the world with enormous potential.”

 

But developments in US airports are really reaping rewards for the company; especially in Miami.

 

DFA partners with top international brands all over the world, like Armani in Uruguay.

 

TOP INTERNATIONAL LUXURY BRANDS

DFA opened one Michael Kors boutique in Miami Airport, a first in the US, and opened an additional store just recently. “We’re looking at a few other brands, to partner with in this way in the future.”

 

Business in South America is opening up for DFA, calling for additional stores in Chile’s Iquique. “In Chile we’ve opened up three stores including in Iquique as business is booming there…we expect a lot of growth from the region,” adds Falic.

 

After winning a bid to operate the beauty concession at the mall, DFA has even invested in a warehouse. Another successful region for DFA is the Dominican Republic where it is opening new stores at Punta Cana Airport. “They are opening a new terminal there so we are working on three new stores.”

 

Along with the three, standalone boutiques, DFA will open a 700-800sq m walkthrough store on 1 December, this year. “We’re also doubling the size of our existing store at the current terminal,” says Falic.

 

But what’s on the horizon for DFA. “Well, we’re always bidding…. We’re not cautious, if we want something we’ll go after it…We have some smaller locations that are doing very well like Hawaii, San Diego Airport, Salt Lake City and other smaller airports that nobody looks at but they’re actually quite busy.”

 

For the full-length feature see the August issue of TRBusiness magazine.