Fresh from this week’s official unveiling of its new shops at Moscow Sheremetyevo International Airport, Gebr Heinemann and local partner Greenway International (a Co-Owner of Imperial Duty Free) are looking ahead to the start of operations in the new international terminal at Domodedovo International Airport in November.

As reported, Travel Retail Domodedovo (the partnership between Gebr. Heinemann and Greenway International) won the seven-year contract to become exclusive operator at the airport’s new international terminal in January. A new walkthrough duty free space will be located directly behind the security checkpoint.

Speaking to TRBusiness during Tuesday’s inauguration, Greenway International Owner Araz Mehdiyev, whose company has a joint venture with Heinemann covering various Russian airports including Domodedovo, Samara and Ekaterinburg said: “We will soon be opening a 7,000sq m area at Domodedovo with all the main categories including liquor and tobacco, perfumes and cosmetics and some last-minute souvenirs.

“There will also be two large areas dedicated to world class fashion boutiques which will be unveiled six months after the opening in spring.”

DOMODEDOVO TENDER

Reflecting on the Domodedovo tender process, Mehdiyev commented: “It is a new terminal and we were operating in the old one with other colleagues. There were three other bids and we triumphed because of our flexibility among other elements.”

Offering his own take on the challenges which have faced the Russian duty free business in recent years, Mehdiyev said: “After the sanctions imposed by various countries on Russia [during the Ukrainian crisis – Ed] and devaluation of the Russian rouble, duty free revenue decreased dramatically.

“Thankfully, Russians travel a lot domestically so the number of duty paid travellers increased. We had strong support from Russian domestic tourists.”

Meanwhile, the new concept in Moscow Sheremetyevo domestic Terminal B, which has the ability to handle 20m passengers, is having a strong impact, according to Mehdiyev. “If you compare the new domestic terminal with the old one, we have 90% more turnover per square metre. The conversion rate is also 40% higher.”

While the importance of domestic travel must not be underestimated, especially during the testing times of recent years, the gradual return of international Russian travellers is a welcome boost.

STABLE ROUBLE

The stability of the Russian rouble since late 2016 has certainly contributed and the lifting of the ban on charter flights from Russia to Turkey last year also helped.

“This year is shaping up well,” Mehdiyev remarked. “Looking back, 2015 and 2016 were dramatic years for the wrong reasons, but last year we started to see growth and 2018 has been much better.”

Executive Director Purchasing, Fulfilment & Logistics Kay Spanger told TRBusiness: “Russian spend is back, but not like it was previously in 2013, for example. It is now growing healthily and steadily which is better from a long-term perspective as there are no ups and downs.”

Pressed by TRBusiness on whether any further projects are in the pipeline, Mehdiyev pointed to the start of arrivals duty free in the country, now scheduled for the first quarter of 2019, which will account for around 15% of total turnover across Heinemann’s Russian business.

He added: “Maybe further down the line, we will explore the idea of downtown and post-arrival duty free.”

PARTNERSHIP APPROACH

On the partnership itself, which began in 2012 when Heinemann had just two small shops in Domodedovo and a ‘shaky partnership’ in Shermetyevo, Mehdiyev recalled: “We developed the partnership step by step, but it was very hard as we had the big players in the market. With consistent hard work, we managed to build the relationship and make decisions immediately without any bureaucracy.”

Gebr Heinemann Co-Owner Claus Heinemann told TRBusiness: “In Russia, you have to convince your partner which model is best. This is achieved by developing relationships and convincing them of our long-term plan.

 “It is always wonderful if you have a partner which has so many plans and gives us new terminals and space to develop the whole environment. This is a wonderful challenge for us.”

“As you can see here [in Moscow Sheremetyevo – Ed] we have developed new concepts which the partner is open to.”

VILNIUS OPENING

Away from Russia, Travel Retail Vilnius, a wholly-owned Gebr. Heinemann subsidiary, will open its new non-Schengen walkthrough store at Vilnius International Airport on 17 October. This follows a six-year contract extension at the start of the year. Bernard Schlafstein, Sales Director Russia/CIS at Gebr. Heinemann said: “At the moment, we have 10 shops in total, but there will soon be eight with one main [walkthrough] shop spanning 845sq m.”