Delhi Duty Free to ‘keep moving the dial’ on spends

By Andrew Pentol |

DDFS-team-shot-small

Left-right: Delhi Duty Free Services Company Secretary and Head of Legal Parveen Gupta; Chief Financial Officer Rajiv Madan; Chief Operations Officer Ashish Chopra; CEO Philip Eckles; ARI CEO Ray Hernan; Head of Marketing Abhijit Das; and Head of Human Resources Siddhartha Jain at the recent inauguration.

Delhi Duty Free Services (DDFS), has vowed to ensure its product offer remains relevant following Monday’s (22 July) unveiling of its new premium shopping experience for arriving and departing passengers at Delhi Indira Gandhi International Airport Terminal 3.

DDFS, the joint-venture between Delhi International Airport Limited (DIAL), Aer Rianta International subsidiary, Yalorvin Limited and GMR Airports Limited, begun planning the new walkthrough duty free stores in late 2014, just four years after the business was established in 2010.

The remodelled arrivals store ultimately opened in June 2018, while the departures store revamp was completed on 17 April 2019.

RELEVANT PRODUCT OFFER

Speaking to TRBusiness as part of a revealing an extensive interview in India as the project neared completion, Philip Eckles, CEO, DDFS, who assumed the role last year said: “For us, it is now about ensuring the product offering is relevant to passengers. This is measured by transaction values and capture rates.

“Our aim is to keep moving the dial on spends and to ensure the average units per basket and average transaction values keep increasing.

“At Delhi Duty Free, our average transaction value is pretty high, so the easiest way to succeed is to get more people spending in the shops.”

The way to do this is ensure it has the right product mix so it can continue maximising its investment in stock. This will enable DDFS to have the correct products available and to tweak the assortment when necessary.

“We also have to ensure our staff are professional and highly trained with the ability to make passengers confident enough to purchase,” Eckles remarked.

Last year was another record one for DDFS, with turnover growing almost 15% year-on-year. But the budget, however, for this year is  challenging. He explained: “A lot of this is built around the target of significantly increasing capture rates and continuing to push transaction value.

“That being said, multiple transactions do not necessarily mean high value transactions. There may be plenty of people in the shops, but they might well spend low amounts.”

Referencing one the retailers biggest lines — The Johnnie Walker Black Label Twin Pack priced at INR3,990 ($58) — Eckles remarked: “Our average transaction value is twice that, so getting more people in-store just to buy a Johnnie Walker Black Label Twin Pack actually decreases our overall transaction value. What is does do, however, is build up our overall spend per passenger.”

Delhi-Arrivals-1

An interior shot of the tobacco and confectionery offers in the revamped Delhi Duty Free Services arrivals duty free shop.

Eckles, who simply wants DDFS to generate the highest possible sales, whether through transaction values or additional penetration, believes it must undertake more focused marketing. “This will enable us to raise awareness of DDFS and the offers and products we have before passengers get to us.

“In doing so, we will be able to increase transaction values and penetration in a more effective way.”

Looking back on the transformation project, some might believe it was too early to contemplate renovating the arrivals and departures stores when they were a little over four years old.

Eckles, however, who was not in India when the business was established, but arrived a year later to head up ARI’s Middle East division, believes it was the right time to begin the process.

Arrivals-Delhi-spirits

According to Delhi Duty Free Services, 86% of liquor purchasers utilise their full allowance when purchasing in arrivals at Delhi Indira Gandhi International Airport Terminal 3.

“The requirements or benefits that are known from making 100% walkthroughs are irrefutable,” he emphasised.

Eckles recalls how former late DDFS CEO, Duncan Lawley, undertook planning work on the revamp of the stores and how it was clear there was a massive opportunity opportunity following discussions with DIAL. “The opportunity was not just for us and the duty free operations, but actually for DIAL to really enhance the retail and commercial offering to the benefit of the wider airport environment.

“The plan to create the 100% walkthrough arrivals and departures stores was the catalyst and germinating seed. All plans grew from that and the results are there for all to see.”

He added: “There was never any thought the stores we created back in 2010 were not up to the required standard.

“We were just losing a lot in terms of penetration and needed to increase that. We also needed to ensure the offering was 100% world-class and on a par with what people would expect to see in London, Bangkok, Dubai and Hong Kong. I think we have achieved that.”

Beauty-offer-Delhi-arrivals

Fragrances and cosmetics sales rose 30% in arrivals during the 2018/2019 financial year.

ARRIVALS DEVELOPMENT

First to open, was the revamped 1,081sq m arrivals store in June 2018, which Eckles is proud of for two reasons. “The first, is because we were actually able to get through the project and complete it through a live operational environment. The second, is the end result of the arrivals revamp.”

Financially, the arrivals duty free year-on-year sales figures make excellent reading. “On conclusion of our 2018/2019 financial year at the end of March, sales had increased 27%, but more significantly, they actually increased 51% from the pre-construction period in 2017 to the post-construction period in 2019. This certainly says something.”

While perfumes and cosmetics sales rose 30% in arrivals during DDFS’ 2018/2019 financial year, this was not the category with the biggest increase. Eckles said: “This actually came from fashion and there was also a 16% increase in confectionery and 28% surge in liquor sales — 86% of liquor purchasers utilise their full allowance.

“It is important to reiterate that these sales are based on the entire financial year. The arrivals store didn’t actually open until June 2018 so there was the whole first quarter when the store was under re-construction.”

Johnnie-Walker-house-Delhi

The Johnnie Walker House is the first big installation customers will see when they enter the arrivals store.

Now selling luxury product categories in arrivals for the first time — luxury premium brands include Jo Malone, Kiehl’s Michael Kors, Hugo Boss, Tom Ford, La Prairie, Estée Lauder, Bobby Brown, Chanel, Dior and Benefit — Eckles is philosophical about their contribution.

“We are not talking about a huge sales contribution. It is probably only a percentage or two. Nevertheless, it is still an add on sale and helps build overall spend and maybe even penetration in that it gets people to the back of the shop.”

In terms of the current store layout, Eckles recalls how the arrivals duty free area was not quite a walkthrough store. “If anything, it probably appeared more like two stores with a corridor running through both.

“On the left-hand side, we had the perfume and cosmetics as passengers left immigration and on the right-hand side there was liquor and tobacco and confectionery. If passengers entered the liquor store, they would then have to travel a long way to the back-end of the shop to see some of the products there.”

Delhi-Departure-1

The renovation of the 1,892sq m departures store commenced in October 2017.

After seeking the views of the Boston Consulting Group, which were working with the airport company on the development of the entire retail environment, DDFS decided to create an arrivals retail offer with different stages. “This meant passing through all the liquor and all the P&C before reaching confectionery at the end. There was a lot of debate about this, but I think we got it right. A similar approach was also taken for the remodelled departures store.”

More than year has passed since the completion of the arrivals store and the hard work continues. DDFS has a ‘very challenging budget’ to work with when it comes to arrivals so must obtain more from innovating brands and product ranges and ensure it offers what passengers are looking for.

“We must also ensure staff training is correct and that staff find the balance between being strong sales people and actually serving customers appropriately. The last thing we want is an overly aggressive retail environment.”

Mac-Delhi-Duty-Free-departures

A Mac installation in the new Delhi Duty Free departures store.

DEPARTURES RENOVATION

The same can be said for the 1,892sq m departures duty free store, on which renovation work commenced in October 2017. Like with the arrivals project, the aim was to get the passenger closer to the products though the creation of a walkthrough.

Eckles said: “In the old departures area, we literally had two stores either side of a corridor. Now, we have one homogenous retail space. When passengers enter the duty free, they are immediately immersed in our retail environment and remain that way until they exit, hopefully having been tempted by many of the exiting products we have inside.”

Following the same philosophy of the arrivals store revamp, DDFS split the categories across both sides of the aisle. This was so passengers do not feel there is one type of shop on one side and another type of outlet on the other.

Delhi-Departures-beauty-offer

The departures store offer begins with cigarettes, followed by brown spirits on the right, white spirits on the left and fragrances and cosmetics.

Eckles, who reveals the fragrances and cosmetics offer has around 14 new brands commented: “There is a lot of emphasis on destination products, which we can’t sell in arrivals such as tea.”

The completion of phase one of the departures store revamp in November 2018 — phase two opened on 17 April 2019 — was a major milestone in his tenure as DDFS CEO. “I had only been here a month and we still managed to get the store open after being under refurbishment for more than a year.

“Phase one departures was the smaller part of the space. Out of the current 1,892sq m, we were probably only talking about 850sq m. Now, this space comprises all liquor and destination products, but previously, everything was there including perfumes and cosmetics.”

Stay close to TRBusiness.com for an in-depth interview with DIAL and keep an eye on future issues of the magazine for more from Delhi Duty Free Services on this major transformation.

Destination-Merchandise-Delhi

Destination products, particularly tea are an important part of the retail offer in departures.

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