Aer Rianta International (ARI) Chief Commercial Officer and Deputy CEO Anthony Kenny has told TRBusiness that the newly won Portugal Duty Free joint venture operations have been trading ‘ahead of forecast’, spurred by the busy summer season [see video below].

As reported, ARI inaugurated its duty free and duty paid operations with Vinci Airports-owned ANA Aeroportos de Portugal on 1 June after winning a seven-year contract for eight airports in February.

In an exclusive interview for the TRBusiness Top 10 International Operators report, Kenny shared an update on the extensive refurbishment project currently underway as part of an 18-month implementation strategy that covers 34 commercial spaces over 10,000sq m.

“Teams are in the process of finalising detailed store design and procurement, and are working to deliver the exciting, innovative retail concepts we previewed earlier this year – for example the Port Cellar, Dream Avenue and Love from Portugal,” Kenny told this publication.

“More than 600 new colleagues have transitioned over to ARI as part of the new Portugal Duty Free and are immersing themselves in the business from operations to company culture.

“There continues to be great collaboration between teams across the business, and many of our colleagues from ARI’s central office continue to travel back and forth to Portugal to support our new Portugal Duty Free team.”

Lack of visibility ‘is biggest challenge’

In a wide-ranging interview, Kenny describes 2021 as a ‘turning point’ for the business, with slow and gradual improvements witnessed across several locations.

“There was a lot to be positive about throughout 2021, including the successful migration of the retail business in Bahrain into the new terminal and fantastic new stores at Bahrain International Airport; a solid performance by the business in Riyadh due to its location in the domestic terminal; ARI’s Cypriot retail operations benefitted from a strong performance in the peak season period of the year and returned to profit in 2021; and implementation work in Montenegro was completed in 2021 with  the opening of our new retail stores in the first half of the year.”

This is telling, as a clutch of ARI’s operations – namely in Canada, India and New Zealand – were among those heavily hit by the pandemic and its rigid travel restrictions.

Managed turnover for ARI reached €468 million/$529 million in 20921, which marked an increase of +40% on 2020 and equated to a 39% share of 2019 turnover.

The biggest challenge, says Kenny, remains the lack of visibility on the short-, medium- and long-term impacts of geopolitical conflicts, rising inflation and consumer spend.

“The level of airport disruptions and passenger caps, for example, were widely underestimated across the industry this year, and these all present potential future challenges to the travel retail sector,” he explained.

ARI declined to comment on the concession fees arrangement for the Portugal contract or whether lower margin returns could be foreseeable in the short-term given the current macroeconomic and geopolitical instability, when asked by TRBusiness.

While the industry continues to stare at downside pressures linked to supply chain disruptions, inflationary-linked costs rises and spiralling energy prices due to the war in Ukraine, the multi-location travel retailer strikes a cautious but resoundingly upbeat chord.

“Business has been trading well this year and there are ambitious plans for growth, with hope for a continued recovery across the industry for the remainder of 2022 and into 2023,” noted Kenny.

“Our category teams work hard to prioritise newness, deliver travel retail exclusives, and offer an inclusive promotional strategy to cater to varying customer profiles.”

“We pride ourselves on creating a bespoke sense of place in each of our locations, crafting a unique experience for passengers that encapsulates the essence of each location. Most importantly, this engages customers and drives revenue.

“Retail theatre and sampling are back on the agenda across all our global locations, and our teams do an amazing job when it comes to ‘retailtainment’. This is integral to our ethos of ‘Experience is Everything’ and instilling joy into the travel retail experience.”

New brand strategy in 2023

The company is continuing to invest in its ‘Digital Centre of Excellence’ to engage with passengers at the pre-travel phase through a hyperconnected experience, TRBusiness learns.

Several new digital initiatives are being trialled across the estate as part of ARI’s enhanced Customer Value Proposition (CVP), with a particular focus on digital solutions to drive convenience.

Kenny says the core elements of the CVP remain the same – irrespective of the challenges.

“These core elements include a commitment to offering exceptional range and value, great gifting solutions, a hyperconnected experience, a bespoke sense of place, great retail theatre, improved convenience, superior customer service, lead in sustainability, and a safe environment to shop,” he enthused.

“Over the past two years we have been implementing changes as part of our new Customer Value Proposition to further enhance the customer experience, and currently there are over 60 initiatives underway across the global estate. Our Customer Value Proposition will be hugely reinforced by our new brand strategy which we are excited to share in early 2023.”

A number of big concession tenders are expected to materialise before then, notably in Spain where Aena this month did well to whet the appetites of prospective bidders, with further details of the anticipated lots expected to be offered when the tender arrives to market soon.

ARI was among those in attendance at a tender briefing hosted by Aena in Cannes. Asked about its potential involvement in the Spanish airports bidding and in a spate of other forthcoming bids including at Saudi Arabia’s King Khalid International Terminals 3 and 4, Kenny offered a measured response.

“We are selective in our bidding process – we bid strategically and where we know we can add real value to the operations. We are hungry for growth and are actively pursing a number of opportunities at the moment.

“We have demonstrated our capabilities with the opening of Portugal Duty Free this year, and it has reaffirmed our ambitions for continued growth. We have a world-class team and a global network of talent, with a competitive and compelling proposition for potential future partners.”

Sustainability ‘not an opt-in’

Elsewhere, Sustainability continues to be a core focus for the business.

“It is not an opt-in for any business or industry, and this has never been the case at ARI,” asseted Kenny. “Our partners expect it, our brands expect it, our teams expect it, and our customers expect it.

“We are increasingly exploring ways to bring our ESG strategy to life in the retail environment and help to empower our customers to drive sustainable change, for example with our recent Little Changes, Big Difference omni-channel global marketing campaign.”

For more on ARI’s global business operations, click here to read Top 10 International Operators report.