Delegates attending the second Executive Conference session (Tuesday 20 March) at this year’s Duty Free and Travel Retail Summit of the Americas were warned not to lose sight of the ‘new generation’ customer entering DF&TR stores.

Meanwhile, they were taught a valuable lesson on how to harness increased spending on cruise lines.

In an important address, Dufry Group CEO Julián Díaz began by outlining the evolution of travel retail in a changing world.

Dufry currently accounts for 24% of the duty free market, with the Americas taking a 40% share of its existing business at approximately CHF3.2bn ($3.4bn). Last year, spend per ticket increased by 2.5% in the region.

DEVELOPMENTAL SHIFTS

Online and travel retail will remain the main centres of growth in the future, Díaz stated, as passenger demographics, motivations and expectations continue to progress.

“I think if we are able to identify where we are and where the customers are evolving, we will obviously be in the position to succeed,” he said.

Setting the growth of the company firmly in context, Díaz explained that five to ten years ago, the focus was predominantly on ‘processes’.

Today, a developmental shift has resulted in stakeholders being consolidated, professional and firmly focused on the customer.

“This is also creating a transparency in terms of pricing policies, assortment and promotions that we didn’t have in the past,” he said.

The conversation remains focused on millennials, but he stressed that it is merely indicative of an ‘attitude’ towards the changing retailing landscape; how to make contact with the group is an entirely different matter.

He said the most important opportunity lies in connecting with the customer, yet he warned: “If we don’t react in time, we are not reaching all the customers’ goals.

“We need to generate end value for retailers, suppliers and stakeholders, the problem is how to do it.”

E-MOTION: DUFRY’S DIGITAL LEAD

Díaz then moved to explain in detail how digital disruption is shaping new ways of consumer purchasing in an environment tailored towards convenience and personalised experiences.

He warned that investment in research will not pay off if stakeholders do not interact with consumers.

With that in mind, Díaz shared with the audience Dufry’s new streamlined approach to physical and digital travel retail engagement – E-Motion.

This relies on utilising a 360-degree experience through loyalty programmes, social media, staff, digitalisation, immersive communication and reserve and collect services to fuse digital and physical retail plays.

Utilising new technologies to improve the customer journey should not be a Dufry exercise – rather, a market one, he made clear.

Invariably, the aim is to elevate industry standards by aligning key stakeholders, customers, airports and suppliers.

Díaz explained: “How are you going to increase the penetration rate and spend per ticket? That is the question.”

Addressing delegates, he stated that creating new assortments, products and specific presentations for travel retail is something the industry excels at and this should continue accordingly.

Channel differentiation – as distinct from the high street – with proper brand representation is thus required to enhance value, he maintained.

REINVENTION PATH

For Dufry itself, Díaz stressed the need to improve creativity in its merchandising capabilities.

Concluding, he says the last 15 years have drastically changed the way we travel and spend time shopping.

Combining digital and physical experiences is paramount, but it relies on working together to build excitement around the industry.

The associated risk is that the industry does not evolve at the same pace as passengers’ behaviours.

“We are a great channel for launching and testing new products,” he said. “If you suppliers don’t react to this specific point, it will be too late.”

Tackling this requires a complete omni-channel strategy that feeds in qualities of communication and digital as principle success factors, he suggested.

He highlighted the need to develop joint commercial concepts that facilitate engagement towards the new- age millennials group, relevant in a market where 80% of the products Dufry sells are appealing, international, branded goods.

“We need to invent something else in terms of product and services – something specific, tailored towards this new generation of customers,” he argued.

In a Q&A with Moderator Martin Moodie, Díaz revealed that currently Dufry pays out about 27.5% of its total sales in concession fees. The fees have been even healthier in the past at approximately 23%-24% of the revenue share.

Touching on a point he has made time and time again over the years, Díaz reiterated that that the concession model needs to change to yield success.

“Everyone talks about partnerships, but what is partnership?” He questioned.

More to follow…

For a conference report from day one, click here.