Shay Tangi, CEO, Layam

Israeli travel retailer Layam has reported a 50% sales increase across its diplomatic duty free business, driven by the company’s home-delivery service.

Founded in 1936, Layam, which is among the oldest duty free operators in the Middle East, operates a diplomatic duty free shop in the heart of Tel Aviv.

The store has remained open during the coronavirus (Covid-19) pandemic, with a restricted number of visitors at any one time. A home-delivery service has been operational during the lock-down in Israel, offering drinks, tobacco, beauty, electronics, chocolate, toys, food and accessories.

Diplomats have been using their unique username and password to log into the online store and make purchases.

The lockdown in the country is now being eased and the economy is gradually starting to reopen.

Shay Tangi, CEO, Layam told TRBusiness: “The home delivery service for diplomats, which has been approved by the Israeli Customs authorities has definitely helped us increase sales.”

MAINTAINING CONTACT

New online promotions are being offered daily and Layam is in constant touch with diplomats. “We contact each and every diplomat in Israel and tell them we have an active online website. All in all, the diplomatic section of the business is up 50% and even more than that in some categories. The most popular categories are perfume and tobacco.”

An interior shot of the Layam diplomatic duty free store in Tel Aviv.

Looking ahead to the easing of restrictions in the diplomatic store, which is located close to the Tel Aviv mall, Tangi remarked: “Once everything in the store returns to normal, we will probably have new customers. This is due to our regular dialogue with the diplomats and the promotions we have created for them.

“Those who have purchased online, but not visited the physical shop will probably do so in the future.”

In addition to generating sales from the diplomatic business, Layam has continued operating its seaport shops in Haifa and Ashdod.

During the crisis, Israel’s seaports have remained open when most places have been closed because they are deemed essential by the Israeli government.

Layam’s port stores and logistics centres in Haifa and Ashdod, have therefore been operating as normal.

A member of the International Ship supplier Association, Layam also serves many vessels and crew with food (provisions/branded goods and commodities) and deck and engine/technical suppliers.

Tangi commented: “We are the sole duty free operator and ship supply business in all Israeli ports. We have business in the ports of Haifa, Ashdod, Eilat and Hadera.”

He added: “Hadera is where Israel’s largest power station is located. We supply the ships that bring the coal for the power plant.”

Layam operates port duty free stores in Ashdod (pictured) and Haifa.

With neighbouring ports in Spain, Turkey and Cyprus, for example, finding it difficult to operate during the pandemic, ships have been docking in Haifa or Ashdod.

“Some ships usually obtain their supplies in Spain, Turkey or Cyprus, but because most ship supply companies have not been operating, our business has increased in the Israeli ports.

“Even ships, which have never purchased supplies in Israel have asked us to supply the vessels,” Tangi explained.

Aside the diplomatic (online and physical stores), port and ship supply businesses, which have proved vital for the company during the pandemic, Layam runs stores at Tel Aviv Ben Gurion Airport. These outlets comprise around 25% of total business.

All airport shops, with the exception of a few food and beverage outlets have remained closed since 15 March. Arriving passengers from abroad must continue following restrictions which require them enter quarantine for 14 days at a government-designated facility.

Tobacco and confectionery are among the products on offer in the Haifa port store.

As reported, Layam added to its Ben Gurion Airport store portfolio with the opening of a 100sq m Terminal 3 souvenir shop in December 2019. This followed the capture of an eight-year contract last August.

Layam, which is continuing to pursue mergers and acquisitions to grow its airport business outside Israel, also runs a 450sq m toy shop and 100sq m kids fashion shop in Terminal 3 and 70sq m toy shop in Terminal 1.

LANDLORD SUPPORT

While its stores remain closed, the company is thankful for the rental support it is receiving from Israel Airports Authority. “We have not paid rent for March or April and they have even said they will alter the monthly turnover percentage when things return to normal.

“They are extremely cooperative and open minded so I believe everything will be okay.”

Asked by TRBusiness how he expects overall airport business to pan out in 2020, taking into account the impact of the pandemic, Tangi said: “It all depends on the passenger. If passenger numbers drop 50% compared to 2019, then turnover will be around 50% down. This is the same for all duty free businesses worldwide.”

Reflecting on a record 2019, Layam was confident of performing even better this year under the full ownership of the Teddy Sagi Group.

“We have strong financial backing and support from our shareholder. Even though cash flow is a bit of an issue because there is stock in our warehouses and we have to pay suppliers, everybody is calm and relaxed.”

The Israeli company opened a new 100sq m souvenir store last year in Tel Aviv Ben Gurion International Airport Terminal 3.

Much like Israel Airports Authority, all major brands have been extremely supportive and understanding. Tangi said: “We promise all suppliers and companies which service us that Layam is a very stable company. They have nothing to worry about in terms of invoices or anything like that.

“Even though overall business is down and orders and cash flow are a little tight in our industry these days, everyone knows we are paying our suppliers.

“This kind of certainty is unique these days because some companies do not know if they will be operating in two or three months from now.”

As previously mentioned, Layam is continuing to seek overseas duty fee expansion opportunities. This includes new duty free tenders and the chance to purchase duty free companies.

“Even at the moment, there are opportunities in the market. As a company, we are not only thinking about the near future, but looking three or four years ahead,” he concluded.