Duty Free Philippines Corporation (DFPC), a state-owned attached agency of the Department of Tourism is targeting net income of around Php335m ($6.5m) in 2019.

The company, which soft-opened its new Luxe Duty Free shopping outlet at the SM Mall of Asia entertainment and leisure complex in Pasay City, Manila last October, reported net income of Php172m ($3.3m) in 2017 (its 30^th anniversary year) and Php325m ($6.3m) in 2018.

Net sales in 2018 amounted to $217.93m compared to $213m in 2017 and $218m the previous year.

AIRPORT OPERATIONS

Currently, DFPC has airport operations at Ninoy Aquino (Terminals 1, 2 and 3), Clark International, Bacolod, Iloilo, Kalibo, Mactan and Davao. It also runs the Fiestamall store, located meters from Ninoy Aquino Airport T1 and the new Luxe shopping destination.

The Ninoy Aquino stores comprise around 55% of total business, while the Fiesta Mall contributes around 35%. The sales share from Mactan Airport in Cebu has risen from 5% to around 10% with the remaining contribution coming from the small stores in different provincial airports.

Speaking to TRBusiness, Vicente Pelagio Angala, Duty Free Philippines Corporation, Chief Operating Officer reveals details of an extensive renovation project at MNL. “We are renovating in Terminal 1, which is why we are in discussions with various suppliers.

“As part of the project, we are taking additional spaces and coordinating closely with the airport authority. The revamp will be completed this year.”

Regarding Terminal 2, Angala commented: “There will be a major renovation of all the stores which will also happen in 2019. This will include the opening of a new shop in the terminal.”

DFPC will also open a new outlet in Terminal 3, where the retailer operates a landside store. “This is like a mini Fiesta Mall where travellers can meet their families. It has a selling area of around 4,0000sq m.”

He added: “The airport is run by the Department of Transportation and the duty free operations by the Department of Tourism. We are the biggest concessionaire in the airport and have a great relationship with both parties. Negotiations have always resulted in excellent spaces.”

Reflecting on the soft-opening of the Luxe store, which features around 3,000sq m of retail space over two floors, Angala is confident all boutiques will be ready by November.

“The product selection at Luxe will focus on fashion, perfumes, cosmetics and health and beauty. Our target is mostly the tourists within the Mall of Asia area,” he revealed.

In order to boost tourist numbers visiting the store, DFPC is coordinating with various hotels in the area to increase footfall from Chinese and Koreans in particular.

Angala said: “We are developing our relationships with different travel agencies that bring in these tourists. Overall, we are close to fulfilling our targets set prior to the soft opening, but as I said, we must continue developing relationships with nearby hotels and travel agencies.”

CHINESE CONSUMERS

Younger Chinese consumers comprise the majority of the customer mix in the Luxe store, according to Angala. “It is mostly Chinese in the Luxe complex as there are many Chinese people working in that area.

“The Younger Chinese consumers tend to focus on perfumes and cosmetics and health and beauty products. This is where the majority of our sales come from anyway.”

Until recently, Balikbayans (Filipino citizens who have been continuously out of the country for a minumum one year) and Overseas Filipino Workers have been the main focus for DFPC, but things have changed, acknowledged Angala. “Balikbayans and Overseas Filipino Workers have long been the focus of our marketing efforts, but we are now concentrating on the Chinese and Korean markets as well.”

Additionally, the company is focusing on the sale and promotion of local products, particularly consumables such as chocolate,  in the Fiesta Mall and various airport departure areas.

This emphasis on local products was outlined by the country’s new Department of Tourism Secretary Berna Romulu Puyat who was appointed by President Rodrigo Duterte on 11 May 2018.

“In the Luxe complex, there is a 50sq m space allocated to our Go Lokal retail concept. This is a partnership between DFPC and the Department of Trade and Industry, which offers local Filipino products.”

Aside consumables, the retailer will introduce high-end goods such as fashion and fashion accessories made by local entrepreneurs.

“We are actually improving the local sections in our different airports stores,” Angala emphasised.

Offering an insight into the product category mix across the entire business, chocolate leads the way accounting for 35% of total sales. “Next is liquor, followed by cosmetics and fashion. The new trend is for cosmetics, because a lot of people are buying these products as they are extremely affordable.”

ONLINE BUSINESS

The retailer’s online business, which was launched last year also appears to be progressing well. Created in partnership with online gift delivery service Speed Regalo, passengers travelling to the Philippines can make advanced purchases online and collect their items on arrival at their destination airport.

Angala commented: “The online store is fully operational, but we are still looking to add additional merchandise to make the online business more attractive.

The online platform actually has two phases. The first involves passengers ordering online and collecting at the airport. The second, which is under development will result in products being delivered to homes and hotels in the country.”

Lifting the lid on furhter potential commercial projects, Angala says the retailer is conducting a feasibility study with a view to building new stores in the provincial airports where it currently operates.

“Right now, our focus is on the accessory stores. We need to do a facelift and renovation to attract new and existing customers,” he concluded.