Belgian travel retailer International Duty Free (IDF) has revealed to TRBusiness it is ‘open to every kind of opportunity’ after celebrating its 60^thanniversary in 2018.

During a recent visit to Brussels Airport, which handles around 25m passengers annually (60% EU flights and 40% non-EU flights), TRBusiness toured the independently-owned retailer’s Terminal A and Terminal B shops in the company of Nicolas Van Brandt, CEO, IDF.

“Our main philosophy is to have frank and honest relations with partners,” said Van Brandt in the first of a two-part interview. If people want this type of relationship we can work together.”

LONG HISTORY

The history of travel retail in Belgium dates back to 1958, when IDF Founder Aldo Vastapane, a Belgian and Visionary businessman, created the first duty free shops at Brussels Airport.

IDF, which is 100% owned by Groupe Frere-Bourgeois, a Belgian Holding Company, controlled by Belgian Entrepreneur Albert Frère, is the world’s second oldest duty free operator after Aer Rianta International. The latter opened the first ever duty free shop at Shannon Airport in 1947.

In 1994, IDF opened 12 new stores in the new Terminal B at Brussels Airport, four years before Vastapane sold the duty free business to CNP, a non-listed Belgian holding company controlled by Groupe Frere-Bourgeois.

The inauguration of Brussels Airport Terminal A in 2002, paved the way for 14 new IDF shops. Further openings followed, including two Victoria’s Secret stores in 2013, an exclusive temporary Jo Malone shop the following year and The Belgian Chocolate House in 2015.

WALKTHROUGH OPENINGS

Eight new boutiques and a 1,700sq m Schengen walkthrough store in the Connector facility, which links the terminal above ground to Pier A and Pier B, also opened in 2015.

More recently, a second walkthrough opened in the Non-Schengen part of the terminal (Pier B) in 2017, along with a Luxury Hall store in the same location. This year, has seen the remodelling of several stores including its Gift Box, Fashion Studio and Epicure outlets.

The opening of the Schengen walkthrough in 2015 coincided with company changing its name from Belgian Sky Shops to IDF.

While IDF is content with its airport store portfolio in Brussels and Brussels South Charleroi, overseas expansion has certainly been considered.

“When we started to consider international opportunities, we wondered if our existing Belgian Sky Shops name gave us the credibility to go global,” Van Brandt explained: “We decided it didn’t and that we needed a new dynamic.

“In order to be seriously considered for opportunities at other airports we realised we needed to change our name.”

He continued: “When you ask Chinese or Americans where Belgium is, some only know it as part of Europe.

The switch of name has certainly had the desired impact, according to Van Brandt. “From company culture and credibility points of view, it has worked extremely well and improved our perception.

“When talking to other airports, they view us as an international entity even though we are not actually operating outside Belgium.”

INTERNATIONAL EXPANSION

While international expansion seems firmly on the agenda, hence the new company name, Van Brandt had his own say on the matter.

“Opportunistically, we would consider overseas expansion, but strategically no. We are a very small company and very profitable with operational excellency.

“We are not a company with a flagship strategy and do not compete for sales. We are just here to create value and to serve the customer.”

That said, Van Brandt refuses to rule out overseas expansion. “If we can be intelligent, agile and flexible then such opportunities could be appealing.

“Either way though, we are not out to compete against the big players and cannot afford big losses.

“If an interesting opportunity arises for us or the shareholders, we will be interested of course.”

CHARLEROI OPERATIONS

IDF may operate around 30 boutiques in Brussels Airport including the aforementioned Terminal A and Terminal B walkthroughs, The Belgian Chocolate House in both terminals and Terminal A Luxury Hall outlet, but it has also established itself at Brussels South Charleroi International Airport.

Located around 60km from Brussels, the airport, which handled 7.7m passengers in 2017m, has just two concourses making it extremely convenient for passengers. IDF opened the only duty free store there in 2002.

“We are just beginning the creation of a new 1,500sq m duty free store in Brussels South Charleroi,” Van Brandt enthused.

“The new shop will not be completed until 2020, because the existing store will remain open while work takes place. This is doubling the amount of time required to complete the project.”

Looking ahead to the opening of the new store, Van Brant added: “It is a very good looking and exciting shop.

“When talking about shops I always say the last one is the best one. This is because we are always learning from what we did previously so we can improve in the next.”

Since joining the company around 11 years ago, Van Brandt (left) said it had changed a lot. “We have drastically changed the look and feel of the shops and invested massively in them.

“We are top of the pile for shop design and have reached a certain level of operational excellence.

“The next challenge is to convert more passengers into buyers and attract more buyers through our online sales platform.”

Launched in October 2016, the e-commerce platform is accessible to all passengers passing through Belgian airports where IDF operates physical shops. Duty free products can be collected on departure or arrival, at various other pick-up points or at home.

In terms of informational technology, IDF is well organised. Sales information is available in real-time on an app with forecasts based on passenger projections. Data is then shared with the airport company as and when required.

“I am able to see in real-time how the beauty advisors, for example, in the walkthroughs are performing”, Van Brandt remarked. “I am also informed when stock is low for a particular sku and if certain products did not sell when they were expected to.”

IDF works closely with an artificial intelligence company which ‘predicts everything’, according to Van Brandt. “We have out of stock forecasts. If we discover certain items could be out stock in a particular shop within two or three hours, we have time to replenish.”

STRONG RELATIONSHIP

While some operators and landlords have tense relationships often relating to rent, disagreements over new proposals and even the handling of external influences, IDF and Brussels Airport Company have no such problems.

Earlier this year, Lotte Duty Free, for example, partially withdrew from Seoul Incheon International Airport Terminal 1 due to ‘burdening rent increase’ in the wake of THAAD.

Lotte Duty Free and Incheon International Airport Corporation were unable to find a solution, resulting in the former withdrawing its perfumes and cosmetics (DF1), leathergoods and fashion (DF5) and all items (DF8) concessions.

IDF and Brussels Airport Company have seemingly established a level of cooperation where both parties work as a team. “There is no conflict. We are just solution providers,” emphasised Van Brandt. “This is one of the reasons spend per passenger has increased over the past 18 months.

“We had a slight decrease in 2015 and 2016, but since last year, sales per passenger has been up 5% or 6%.”

Brussels Airport Company appears to adopt a ‘can-do’ approach which makes for a strong partnership. “When you propose something, the answer is always yes. If we want to change the opening hours of a particular shop, for example, they tell us we can.

“This is why I believe our success is based on this relationship. The airport is more concerned about the experience of the passenger than anything else.”

He added: “Our relationship with the airport is fantastic. It sometimes feels we are one company.”

TERRORIST ATTACKS

The relationship of both parties was certainly tested in the aftermath of the tragic terrorist attacks in Brussels on 22 March 2016 which killed 32 people from around the world.

Speaking candidly and emotionally to TRBusiness, Van Brandt recalls the support of IDF’s shareholder and airport company in the aftermath of the attacks.

“It had a huge impact emotionally and on business,” he explained. “Our shareholder played a very big role in reminding us it was not our fault and that we were not under any sort of pressure to compensate.”

In the aftermath of the attacks, things took six weeks to normalise, recalls Van Brandt. “The whole thing made us consider how we would manage the situation if it happened again.”

The 2016 terrorist attacks actually marked the start of a ‘new relationship’ between Brussels Airport Company and IDF.

“We do not work as landlord and retailer,” asserted Van Brandt. “We are real partners. It is all about how we can be stronger together.”

TRBusiness will bring you further insights from Nicolas Van Brandt, CEO, International Duty Free in the second part of our exclusive interview in due course.