DFS Ventures (Emerson) Duty Free is set to begin construction of a new state-of-the-art land border duty free facility in line with a major port of entry (POE) redevelopment project, TRBusiness can reveal exclusively.

The demolition of Emerson’s existing operation in Manitoba province and the build out of a new facility will coincide with the ongoing POE redevelopment project, being in implemented in two phases (northbound and southbound).

Northbound construction is slated for Spring this year, with the grand opening scheduled for end of summer 2020.

“When we open our doors in our new store, we expect to double our capture rate and consequently the number of customers,” Simon Resch, General Manager, Emerson Duty Free Shop, told TRBusiness.

“If we alleviate impediments caused by the traffic conditions at the port, we believe there is a very reasonable expectation that we can overnight convert our capture rate by more than 20% – up from 13%.”

Emerson’s current store measures 1,860 sqm, but there are no plans to increase the size of the space.

The retail development will include a focus on online retailing but while Resch says the retailer is working on some exciting new categories with its partners, he could not provide further detail at this stage.

“We are working hard to expand the industry offerings,” Resch continued. “The land border duty free industry in Canada has always enjoyed a very good relationship with our federal administrators and every operator understands the premise of the programme is to repatriate sales otherwise lost when Canadian or foreigners exit our country.”

“We want to ensure we maximise the benefits provided under this programme.”

BEYOND THE BORDER ACTION PLAN

Emerson’s store is situated at a key outpost on the Mid-Continent Trade and Transportation Corridor connecting Manitoba to the central North American market.

Resch says the economic impact and trade value of goods flowing to the port is roughly 20bn today.

This is expected to double in the next 20 years, with a corresponding increase in commercial and passenger vehicle traffic to the port.

Commercial drivers, who are prohibited by law from carrying alcohol products into the US, account for 40% of Emerson’s current southbound passenger traffic mix, but the new store layout will look to stock merchandise tailored to that mix.

An independent bi-national body established between Canada and the US is tasked with assessing and developing ports of entry infrastructure on Canada’s borders via an oversight and steering committee to stimulate international trade.

Former US President Barack Obama and former Canadian Prime Minister Stephen Harper’s establishment of the ‘Beyond the Border Action Plan’ in 2011 provided the basis for the steering committee inauguration.

Research on the plans have been conducted by Manitoba Infrastructure and Transportation, North Dakota Department of Transportation, Transport Canada, Canada Border Services Agency, US Customs and Border Protection, General Services Agency and Gannett Fleming.*

The project could be completed in 15 to 20 years under government guidance or potentially within two to three years based on investment alliances with the private sector, TRBusiness understands.

“Are we interested in private sector development at this stage? We don’t know. If it comes up, we may look at it,” commented Resch.

There are 40 stakeholders identified at the port, including the Canadian and US Federal governments alongside state and provincial authorities, with duty free earmarked as a “major” stakeholder.

Duty Free Americas (DFA), which operates a store on the US side of the Canadian border in Pembina approximately 7.5km south of Emerson’s store, will also benefit significantly from the POE redevelopment, it is understood.

TRAFFIC CAPTURE RATES +1.3%

As reported in our special report on the Canadian markets in the March print issue, Emerson experienced a small decrease in total southbound traffic to the port, although the corresponding capture rate in the number of vehicles passing through its POE increased by 1.3%.

“Although we had fewer available customers, a greater proportion of them came into the shop,” Resch comments. “The southbound travel statistics have plateaued, and we can expect that as we get closer to an 80 cent Canadian dollar we should see an increase to the travel numbers.”

SPIRITS LEADS ON PERFORMANCE

Resch says the spirits category experienced the best returns last year, with 18% year-on-year unit sale growth led by products such as Aberfeldy 12 Year Old 0ne-litre bottles as well as Gibson’s finest Canadian whisky.

Confectionery sales and clothing and accessories also netted good year-on-year growth, at 7% and 5%, respectively.

“Given the strong value of the US dollar to the Canadian dollar,  many more US travellers are choosing Canada over other travel destinations, and our Canadian land border Duty Free shops have seen a corresponding increase in US shoppers, ours included,” Resch added.

*Pembina-Emerson Port of Entry Transportation Study