Aer Rianta International (ARI) will begin a five-year duty free and travel retail concession at Tivat and Podgorica Airports in Montenegro later this year.
The multi-location travel retailer will serve passengers from a 122sq m duty free shop at Podgorica Airport in Montenegro’s capital city and a 98.5sq m store at Tivat Airport.
Both shops will trade under the ‘Montenegro Duty Free’ fascia.
TRBusiness first reported on the contract win last year, but official confirmation of this and further details have only now surfaced.
The addition of the two airports bolsters ARI’s retail concessions portfolio in Europe to six airport locations, adding to operations at Dublin and Cork Airports and at Cyprus’s Larnaca and Paphos International Airport (CTC-ARI).
It is understood that ARI has taken over the contract at the Montenegro airports from local operator Regal-Impex GH.
Customers to the new shops will enjoy a medley of core and non-core merchandise, including perfumes & cosmetics, liquor, confectionery, jewellery and designer sunglasses.
ARI will offer luxury enthusiasts merchandise from the likes of Tom Ford, Chanel, Dior and By Kilian.
Tourists and Montenegrin travellers alike will also be able to browse from a varied choice of local wine and foods and destination-branded souvenirs, gifts and toys.
“We have an expectation that this is a long-term investment. It’s our first foray into the Balkans and first operation in Europe for some time as we’ve invested mostly outside Europe in recent years,” Nuno Amaral, Chief Operations Officer at ARI told TRBusiness.
Montenegro began negotiations with the EU in June 2012 and strives to join the bloc by 2025, according to the World Bank, but its current status makes it an attractive duty free proposition.
“Our sales there will be duty free which is always a nice offer,” said Amaral. “The Balkans has huge potential, is growing and it is a duty free destination still in Europe.
“The offer at Podgorica will be bigger than Tivat, but Tivat is very important in the summer as it is a leisure destination for Europeans and Russians as well so there is substantial traffic in the summer concentrated in Tivat.
“We are fitting out the shops, initially with temporary fixtures, then refit next year. Our priority is to open the shops as quickly as possible with temporary furniture. We would like to be ready for next summer and will invest in the refurbishment between Q1 and Q2.
“Passenger numbers are relatively small due to the Covid situation and the fact we are opening in the winter in a leisure destination. We will go a major refit at the beginning of next year when we relaunch and reopen the shops and we will do some activations. We will have the staple brands and are investing in local products, activations and categories.
“Internally, all companies are questioning investments but we decided internally that we are committed to this region and the opportunity.”
Continuous economic growth and improvements in the labour market have eased poverty levels in recent years, although its status as an open economy that relies on high capital inflows makes it susceptible to external shocks as it transitions to a market economy.
Asked by TRBusiness about the challenges associated with a foray into the market, Amaral responded: “It is a risk, but it is a managed risk. We have experience managing these airports and the airports are understanding coming in as a foreign company.
“Although there is an inherent risk in less mature markets and probably a bit more volatility, we are comfortable with that and believe both local airports and partners will help.
“Companies are questioning investments but we decided internally that we are committed to this region.”
Amaral points to the competitive landscape that exists in Europe’s travel retail market, but the combination of operations historically held by the company in developed and developing countries in the Middle East and Southeast Asia in particular augurs well for future expansion.
“This is a tactical opportunity to have something in the Balkans to try to leverage on our knowledge of the Russian consumer,” Amaral explained.
“What we know is in Europe is it is very competitive, contacts are very expensive. We would like to leverage and extend our global footprint, but not necessarily focusing on Europe.”
Located in Southeastern Europe along the Adriatic Coast, known for its rugged, mountainous landscape, Montenegro is flanked by Bosnia and Herzegovina in the north west, Serbia to the north east, Kosovo to the east and Albania in the south east.
As such, ARI says the concept for the new shops will be underpinned by fresh and contemporary finishes tailored to the passenger profile at each airport and reflecting each location’s sense of place.
The design for Tivat in particular is inspired by the beautiful coastal views and local scenery.
Ray Hernan, Chief Executive Officer, ARI stated: “Our decision to open new stores at Tivat and Pogorica this year is a sign of the strength of our balance sheet.
“We are still committed to profitable growth over the longer-term and will invest in the Montenegro market for at least the next five years. It is also a sign of our commitment to the industry and our confidence that it will return to strength.”
Danilo Orlandic, Executive Director of Airports of Montenegro added: “We at Airports of Montenegro are very pleased to be working with Aer Rianta International as they venture into Montenegro for the first time, to operate the duty-free shops in both Podgorica and Tivat Airports.
“ARI, as the founder of the duty-free industry, has a long heritage of operating in new locations and working closely with partners in order to deliver a heightened and truly global standard of duty-free shopping experiences.”
To read a detailed interview with ARI Chief Commercial Officer and Deputy CEO Anthony Kenny in the TRBusiness October Top 10 International Operators report, click here.