Award tenders on ‘retailing’ merits, urges Lagardère TR

By Luke Barras-hill |

DagAmbroisevideoplayLagardère Travel Retail Chairman and CEO Dag Rasmussen has told TRBusiness that the industry should address ‘imbalances’ in the business model and pivot away from competing for commercial tenders in a system weighted towards financial proposals.

In an exclusive interview during the TFWA World Exhibition & Conference earlier this month, Rasmussen said: “Airports could set the MAG or even percentage rents they need – and some airports do – and [allow retail operators to] fight on the commercial [retailing aspects].

“Today, when we answer tenders, 80% of the time it is on the financial part. It doesn’t make sense. If you want to grow the pie, spend 80% on the commercial aspect. That’s where we can make money and be more innovative. If you fail, you change.

“We want to optimise the industry for the benefit of the passenger first and globally for the brands, airports and for us.”

[Watch the full interview below.]

HOME MARKET IMPORTANCE

As reported, Lagardère Travel Retail posted first-half 2018 sales of €1.72bn ($2bn), up 9.9% on a like-for-like basis, matched by a strong performance across its three core business lines: Duty Free and Fashion, Travel Essentials and Foodservice.

Chiefly, the result has been boosted by favourable passenger traffic growth and network expansion from the EMEA and APAC regions, which Rasmussen is confident will continue.

“We think growth will last; there can be bumps here and there but the long-term forecast for passenger growth is very good. We know that spend per pax can be a challenge, if we take the European case for instance, 100% of traffic growth is low cost and although we make lots of effort to cater to their needs, they usually don’t spend as much as Chinese pax for instance.”

“Yes we are concentrated on development, but the whole team is also focused on driving organic growth,” he remarked. “If we only succeeded in external development, I wouldn’t see it as a success.”

In wide-ranging interview, with Rasmussen and Chief Business Officer Ambroise Fondeur, Lagardère Travel Retail outlined its excitement on finalising refurbishments at its Geneva Airport concession, where it is understood to have opened a new-look 800sq m Aelia Duty Free departure store last week.

“You’ll see a really strong focus on local brands and products and we hope it will be exciting for the Geneva passengers,” commented Fondeur.

ParisLagardere

Next wave airport retail concepts are due to arrive at Paris CDG and Orly in Q1 2019.

Elsewhere, Rasmussen says the potentially impending Brexit deal – or no deal – scenario does present a risk to passenger volumes due to potential flight impacts, but the knock-on effect to the duty free business could be positive, dependent on the scenario.

In Asia, the launch of duty free arrivals at Incheon International Airport on a test trial basis is viewed as less a threat and more of a challenge to international business operators, he maintained.

Fondeur also spoke about commencing a new multi-brand fashion contract at Vienna International Airport’s Terminal 2 next year, as revealed exclusively by TRBusiness, and says the travel retailer is receiving more interest from operators in mixing foodservice and retail concepts to lift the passenger experience.

For more detailed analysis and exclusive comment on Lagardère Travel Retail’s development over the past 21 months, see the Top International Operators report.

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