Additional reporting by Luke Barras-Hill
Gebr. Heinemann Co-owner Claus Heinemann says the travel retailer’s close ties with joint-venture partner Imperial Duty Free (IDF) JSC at Moscow Sheremetyevo International Airport (SVO) sets a blueprint for future growth.
The comments come as Imperial Duty Free, a major player in duty free shop operations across the Russian Federation, unveils a dramatic expansion to its retail footprint at the airport.
A much-anticipated opening includes 10 new outlets: main, gate, arrival, fashion & accessories and watches & jewellery (FA + WJ boutique), Max Mara, Hugo Boss, Paul & Shark, CK Underwear, Traveller Concept and a children’s shop at the brand new Terminal B, which handles Aeroflot’s domestic operations among others.
Additionally, all four of the existing shops at Terminal E (main, FA + WJ Boutique, Swarovski and a children’s shop) have been transformed in a four-phase process.
“IDF has established itself as a reliable and competent duty free operator at Moscow Sheremetyevo Airport since 2014 and we are very proud of long-term fair partnership with the airport,” said Claus Heinemann.
“For us, the expansion of our joint travel retail operations represents a great confirmation of our entrepreneurial commitment in Russia, which we will continue to develop in the future.”
He added: “Thanks to our joint venture partnership with the airport, we are extremely close to what is going on and can develop the best concept for the other new terminals, thus guaranteeing economic success. This is reflected in the growth plans for our joint company for the next few years.”
In opening the tranche of new and refurbished shops, IDF Heinemann increases its footprint by approximately 4,000sq m to total 10,700sq m.
A ‘futuristic design’ is embodied through a more contemporary layout that benefits from more open and bright spaces.
IDF says the currency turbulence witnessed in recent years has honed demand for a more luxury offer from Russian passengers, who, while price-savvy and discerning in their comparisons with the domestic market, are keen to spend in airport shops.
As a result, IDF adds that the new fashion & accessory brands spread in particular has been ‘well received’.
At Terminal E, the takeover and integration of additional retail space has allowed the travel retailer to increase the shop area by approximately 80%.
Clearer sightlines and a fuller category offer now greets passengers, with the main P&C and LTC store benefitting from a walkthrough layout.
IDF says in a statement that considerable interest in the format has resulted in a demonstrable rise in turnover.
Alexander Ponomarenko, Chairman of SVO International Airport said he was very proud of the airport’s collaboration with Gebr Heinemann. He also highlighted the company’s ‘great experience’ in the market and acknowledged its expertise in utilising innovative solutions for DF&TR retail space. “The result of our joint project is a world-class duty free area that consistently exceeds general expectations of a conventional duty free store.
“We hope that the new duty free shopping area will be positively perceived by the passengers, making our partnership with Heinemann a role model for international duty free ventures. We will now start designing the duty free area in the new Terminal C, which will be commissioned in December 2019.”
Since the summer, passengers have enjoyed a new multi-brand concept for fashion and accessories and jewellery and watches, visible across a 760sq m accessories boutique and 70sq m multi-brand sunglasses shop.
With its three-wall boutiques and see-through units, the design and atmosphere is inspired by global stationary department stores. In addition to new brands, the framework of the fashion and accessories and watches and jewellery shop has been redeveloped in cooperation with design office Plajer + Franz. Fashion and accessories (including watches and jewellery) is expected to comprise 25% to 35% of total sales.
Materials such as brass, oiled white oak and Italian terrazzo stone emphasise the luxurious ambience of the design settings and differentiates Sheremetyevo Duty Free Heinemann from its competitors, according to the company.
New brands and long-term global partners such as Cartier, Coach, MCM, Ferragamo, Tumi, Bulgari, Montblanc, Etro and Pinko are represented. Hublot, IWC, Jaeger LeCoultre and exclusive luxury jewellery brands complete the new luxury multi-brand shop line-up.
In conversation with TRBusiness, Jan Richter, Director Purchase, Fashion & Accessories, said the main idea was to have the aforementioned see-through walls in the middle, flexibility to change the brands in accordance with new trends and three wall-boutiques where the brands are personalised. “The selection of brands is always linked to the customer so it is important to have the correct brand mix,” he said.
“Coach, for example, is a new brand in our portfolio. It can be seen all over the world and is one of the best in the fashion and accessories segment.”
Director Purchase Watches & Jewellery Olaf Benjamin, told TRBusiness the surprise factor associated with the multi-brand concept, which will be rolled-out elsewhere, could make it a big hit among consumers. “If customers did not plan on buying something, this new kind of environment will encourage them to do so.”
According to Richter, the aim was ‘not to show too many products.’ He explained: “In addition to focusing on the assortment, we knew we had to deliver great merchandising to highlight the products. The Furla area, for example, is not overcrowded with products, which gives us more desirability.”
Russian flag carrier Aeroflot views SVO as an important strategic hub between Europe and Asia and as a result the airport has made a concerted effort to target ‘above-average’ spending Asian customers.
Like Russian passengers, Asians are also sensitive to pricing in duty free shops versus online, hence the move towards an attractive pricing strategy, says IDF.
To accommodate for the expected hike in passenger demand, SVO is constructing three new terminals; Terminal B, which focuses on domestic travellers was the first to open and construction continues at Terminal C1, which will offer great potential to tap into arrivals duty free spending when the first shops in the EEU open in earnest.
Meanwhile, the ‘futuristic design’ of the new Terminal B is complemented by an attractive offer for domestic travellers, which have a taste for luxury following the currency turbulence of recent years.
According to Heinemann, they have become more demanding and price focused and compare prices with those on the domestic market.
Heinemann also says that the new fashion and accessories area has been well received and compensates for the ban on liquor and tobacco sales for domestic flights.
Executive Director Purchasing, Fulfilment & Logistics Kay Spanger told TRBusiness: “There is no need to fear competition from the domestic market. I often wonder why brands tend to differentiate between international and domestic.
“This is a travel retail environment in a fantastic terminal and people are ready to buy. They take their time and want to purchase gifts or please themselves. All things considered it is the same travel retail as the international terminal.”
Penetration levels across its domestic operations might also be similar to those in the international terminal, suggested Spanger. “Obviously this will depend on the timing of flights and passenger dwell times, but I think this will be the case.”
Reflecting on the overall project itself, the new shops are enjoying strong early performance. “We are above plan which is extremely promising. This is a great example for the future.”
In terms of the IDF partnership and its evolution, Spanger commented: “I always say internally that the best years were 2014 and 2015, which surprises many people as they were the most challenging.
“When things are going well there is no need to question the success of a partnership as it is automatically good. During the tough times, Heinemann and our partners believed in Moscow and Sheremetyevo and continued to invest. This is why I am always telling the industry it can rely us as we don’t look short-term but mid to long-term.”
In October, SVO will also introduce the Heinemann & Me loyalty programme.
Sheremetyevo Duty Free Heinemann runs more than 50 shops located at Terminals A, B, D, E and F at Sheremetyevo International Airport.
TRBusiness Senior Editor Andrew Pentol was on location at SVO and will bring you further analysis and comment on the grand unveil in due course.