Dufry urges greater retail synergies and contract flexibility in changing world

By Luke Barras-hill |

Dufry-Uruguaiana-Duty-Free

Dufry’s first Brazilian border shop is located in Uruguaiana, Rio Grande do Sul.

The global DF&TR industry needs to improve stakeholder collaboration and work on creating greater cohesion at shop and board level to keep pace with consumers’ evolving demands, Dufry CEO Julian Díaz has reiterated to TRBusiness.

Providing his contribution to this year’s revered Global Industry Survey, available in the January edition, the head of the global travel retail giant said: “We need to improve the alignment and collaboration among the different industry stakeholders, such as airports, airlines, landlords and retailers.

“Specifically, we need to work more closely to align our offer, the shopping environments and the contractual frameworks to the changing expectations and the shopping habits of consumers.”

ADAPT LEASES TO COMPETE WITH ONLINE

Aside a wish for increased currency stability in emerging markets, Díaz said the industry must quicken the take-up of new technologies to attract consumers to spend more frequently – while providing them with extra services.

Julian Diaz 2016 pic

Julian Díaz, CEO, Dufry Group.

“We still have not solved one of the most important problems of our industry: how to adapt concessions and lease contracts to become more competitive with the new way of selling merchandise online. The royalty structure needs to be revised with the inclusion of all stakeholders.”

In 2020, Dufry hopes that the current macro-economic situation in South America – the region experienced stagnant growth in 2019 marked out by currency volatility, lingering trade tensions and uncertainty regarding the pace of monetary and policy reforms in the larger economies – will recover.

Indeed, while Dufry’s organic growth lifted by 4.1% in the third quarter and by 2.9% in the first nine months of 2019 [Dufry posted a 1.8% rise in turnover to CHF6.68bn for the period in question – Ed], the regional picture in Central and South America was less rosy, with organic growth at -8.4% and most operations impacted by the aforementioned currency devaluations.

Notwithstanding this, the long-awaited green light to open duty free shops on the Brazilian land border and subsequent increase in the Brazil duty free allowance have been well received by travel retail, with several sources alluding to the possibility of broadening the category mix and stimulating higher value purchases.

A ‘PRUDENT’ OUTLOOK

Calling the Brazilian allowance hike and border shop developments ‘encouraging’, Díaz was nonetheless clear that Dufry remains prudent with respect to its performance expectations in the region.

“For our other divisions we expect to see an ongoing positive development, provided that the political environment in specific areas does not create uncertainties for travellers,” he added.

“We are optimistic for the 2020 business year as we are perceiving a gradual performance improvement with some of our most important customer nationalities.”

Click here to subscribe and read the full interview.

Dufry Group will release its full-year 2019 results on 12 March.

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