DFS Group is to withdraw from its liquor and tobacco concession at Singapore Changi Airport in June 2020.

Last December, Changi Airport Group (CAG) revealed DFS would extend its liquor and tobacco concession at the airport for two years starting from 2020. The extended agreement, covering 8,000sq m of retail space across all four terminals was expected to run from 9 April 2020 to 8 April 2022.

But in a surprising turn of events, the long-standing incumbent decided not to proceed with the two-year extension, but agreed with CAG to extend the current tenancy by two months until 8 June 2020.

At the time, DFS intended to participate in the new CAG tender for the 18-store concession, which was launched on 4 June 2019, but decided against this. The submission deadline for the six-year contract (9 June 2020 to 8 June 2026) was today (26 August), having been extended from 6 August to give retailers more time to deliver ‘robust and compelling proposals.’

STAYING IN CHANGI ‘NOT FINANCIALLY VIABLE’

DFS Group’s luxury concessions at Singapore Changi and T Galleria by DFS and Singapore Cruise Center businesses are unaffected by its decision to withdraw from the concession.

A statement from Ed Brennan, DFS Group Chairman and Chief Executive Officer seen by TRBusiness said the decision not to bid was based on the retailer’s ‘unique understanding’ of the business environment as the current concessionaire.

He said: “Specifically, changing regulations concerning the sale of liquor and tobacco, against a global context of geopolitical uncertainty, meant that staying in Changi was not a financially viable option.

“Although this decision is the right one for our business, it was not taken lightly. DFS has held the concession at Changi Airport since 1980 and during this time we have exceeded all expectations for what travel retail can offer in an airport environment. We are proud of our achievements and deeply appreciative of the efforts of many talented people who have contributed to our success.”

He added: “We sincerely thank the Changi Airport Group for their past support and extend our best wishes as they take the liquor and tobacco concession operations forward in partnership with a new operator.”

Teo Chew Hoon, Group Senior Vice President, Airside Concessions, Changi Airport Group told TRBusiness: “Changi Airport Group has received several submissions and will begin the process of evaluating proposals. We expect to award the tender by the end of 2019.”

In a further CAG statement obtained by TRBusiness on 27 August, CAG paid tribute to DFS, which it describes as a valued partner. “We have worked with DFS Group at Changi Airport for the past 38 years.

“We are disappointed that they have opted not to participate in this tender but we will work closely with them to ensure a smooth transition to the new operator for the liquor & tobacco concession. We will also continue to work closely with them to grow their other concession businesses in Changi Airport.”