Heathrow Airport Commercial Director Brian Woodhead and World Duty Free CEO Eugenio Andrades talked to Doug Newhouse at yesterday’s grand opening of the newly transformed 2,850sq m tax and duty free store.

 

Q: THIS IS YOUR FLAGSHIP AND THE STORE THAT EVERYBODY LOOKS TO. HOW IMPORTANT IS IT THAT YOU GET IT RIGHT HERE FOR THE REST OF THE BUSINESS AND ALSO IN TERMS OF BEING ABLE TO INSPIRE YOU AS A COMPANY TO DO THINGS DIFFERENTLY – BECAUSE YOU HAVE SCALE HERE?

 

ANDRADES: Clearly, as has been the case in all of the transformations of all of the group Heathrow for World Duty Free is critical and I still remember how I was talking to Mark (Mark Riches) about how important T5 was as the big development and that it was first in class.

 

When we started to join and we were having these conversations with him and Brian as Aldeasa when we started to get together with World Duty Free, we said we were moving to the next stage together and you can see the difference in [Heathrow] T2 and T5 and now with Dufry.

 

 

“So the point is that nothing is perfect and nothing is completely right and it is an evolution. What you are going to be seeing with us and together with Heathrow will be the next evolution. So obviously getting it in the right direction is critical, but our aspiration is that nothing is perfect and we are already thinking together of what is going to be next and that’s where we are.

 

Q: WAS THIS TRANSFORMATION HERE ALWAYS BUILT IN AS PART OF THE NEW CONTRACT ARRANGEMENT, OR WAS IT SOMETHING BOTH PARTIES DECIDED TO DO AFTERWARDS?

 

WOODHEAD: This was in train really, wasn’t it…

 

ANDRADES: This is part of the way we work. I mean clearly it is not only a contract. The contract needs to be there and it is critical and we need it because we are quoted companies.

 

But the important thing is that we know that once things are there we there need to evolve and they have our compromise that we will be putting money into this and putting effort into that one and they have been extremely flexible in helping also on the layout and you can see all of the changes that they have to go through in the terminal. So it is part of our relations really and it is not part of the contract.

 

 

Q: WHAT IS YOUR VIEW BRIAN?

 

WOODHEAD: This is a fantastic store that the have got here and the key – and you have already picked on some of the examples here – is how do you target to the customer?

 

If we are obsessed about one thing it is about making sure that we satisfy customers needs and that then we really build on that from a service point of view and really excel in terms of what their expectations are and the store here and the activities that you can see.

 

That is in terms of people having their makeup done and tailoring promotions and making sure they are in the right time and the right place for the passengers. This is what we have to do and what we are obsessed about and what we have a great working relationship with World Duty Free on achieving.

 

Q: THERE ARE A FEW PEOPLE IN THE INDUSTRY WHO CONSTANTLY REMIND US ABOUT HOW WONDERFUL DOMESTIC RETAIL MARKETS ARE, BUT THIS HAS GOT TO BE UP THERE WITH THAT STANDARD HASN’T IT?

 

WOODHEAD: Yes, I think these things go a little bit in cycles sometimes, don’t they… I was referring in my speech earlier to people imitating things and that’s a great form of flattery and I think you can certainly see in the UK High Street that some of the things that World Duty Free did a number of years ago were frankly replicated in the UK High Street.

 

 

I think when you look at this store you can expect that the High Street will take some inspiration from what World Duty Free with their brand partners have managed to achieve here.

 

Q: I AM TOLD YOU CAN CHANGE THE PRODUCT SELECTION IN THE CONTENTAINMENT INSIDE BETWEEN FIVE AND SEVEN MINUTES, IS THAT RIGHT?

 

ANDRADES: That is not only in the contentainment, but also in the bar. We have just been talking about how we can move it even further on the digital side. My view is that being part of a bigger group and the largest group is going to be a huge asset, because this is also about the scale and having the right people and joining them.

 

Obviously, one of the challenges that we have had from Heathrow has been that they know how we can take it further and we’re starting to adapt faster to the passenger profiles.

 

I mean one day the Russians might be very, very important, but the next day we need to come back to our British passengers and make it work, because all of these passengers go through the same locations.

 

 

Q: SO WE ALL KNOW ABOUT ACI AND ITS AIRPORT SERVICE QUALITY (ASQ) STANDARDS. HEATHROW AIRPORT OBVIOUSLY RESEARCHES ITS OWN ASQ ON WORLD DUTY FREE, SO WHAT SORT OF MARK ARE THEY GETTING FROM THE PASSENGERS AT THE MOMENT?

 

WOODHEAD: Pretty positive in terms of SKUs. You have to forgive me because I can’t quite remember the number off the top of my head, but generally it is very positive and World Duty Free is very complimentary to what we are trying to achieve overall at Heathrow.

 

As you know, I have worked both from an operator’s point of view in terms of running terminals and also from a retail point of view and the more and more I am in this business I am making sure that the two marry.

 

There is no point in one bit being faster than the other bit. What we need to do is be in absolute tandem so that you get a complete customer experience. That’s the bit from the Heathrow point of view as we chase our overall ASQ of how we kind of transform Heathrow through services – which is very much a key part of what we are trying to do now.

 

 

Q: ARE YOU GETTING THERE WITH RETAIL AND OPERATIONS BLENDING TOGETHER?

 

WOODHEAD: Yes, very much so. Probably it helps at a personal level that I have done both so I can kind of appreciate both sides of those arguments as it were.

 

I would probably say in my first year of being Commercial Director I don’t think we have had any internal arguments on that, because we’ve been clear now – put the customer at the centre of what we are doing and they help to tell you what the right answer is and that is just a positive way forward.

 

Q: SO HEATHROW TERMINAL 3 IS NEXT… IS THAT RIGHT?

 

WOODHEAD: Terminal 3.. it is looking that way and we have got a meeting tomorrow, so we will learn a bit more tomorrow.

 

Q: IF YOU GO AHEAD WITH THAT WILL IT ALSO BE BIG?

 

ANDRADES: It is too early to say.

 

WOODHEAD: Terminal 3 is still within the Heathrow master plan. We’ve obviously got things we hope are going to happen positively from the third runway point of view, but whichever kind of scenario we are looking at T3 is going to be here for a long time.

 

It is a crucial part of both of our mutual business, so I am sure that whatever we come up with will keep us writing and talking and thinking again.

 

 

Q: THE REPEAT USE FACTOR IN THIS TERMINAL IS ABOUT 35-40% ISN’T IT?

 

Yes.

 

Q: THAT IS A BIG FACTOR IN FAVOUR OF BEING ABLE TO CHANGE THINGS IN THE SHOPS ISN’T IT, IN TERMS OF KEEPING THEM FRESH FOR THE PASSENGERS WHEN THEY COME THROUGH – WAS THAT PART OF YOUR THINKING?

 

WOODHEAD: Yes, I think having it fresh is really important from my perspective, but whatever we try and however we try to recreate ourselves, having that wow and something unexpected for our passengers is clear from the feedback that they give to us.

 

We have always got to be up to that and delivering to their expectations – and hopefully exceeding them.

 

ANDRADES: This is probably the greatest terminal, but at the same time it is challenging in the sense that you need to attend to a lot of people from different countries, but at the same time you have a lot of repetitive.

 

[He said here that digital is part of this and also being clear on how to offer more value to customers and how they can be targeted in advance].

 

So we are going to be working a lot together on that, to try to tell them more in advance and be more attractive. I think that part of the future is not only about having great locations and great service, but telling people and making sure that they have a bigger service outside of the locations.

 

Q: [ADDRESSING ANDRADES….] YOUR CEO TALKED A FEW WEEKS AGO IN HONG KONG ABOUT THE THREAT OF ONLINE, OR THE OPPORTUNITY… DEPENDING ON WHICH WAY YOU WANT TO LOOK AT IT. DO YOU THINK YOUR BUSINESS IS ABOUT COMPETING WITH THAT TYPE OF RETAIL, AS WELL AS ADVISING CUSTOMERS OF WHAT IS AVAILABLE IN ADVANCE?

 

ANDRADES: Well online is there and it is here to stay. I think Dufry, World Duty Free and Heathrow are aware of that. That it is going to be an issue and a competitor is a fact, so we need to be wise.

 

Again, it is not about how you compete with that, but how you use it to your advantage, because we have things online that we have never had, so it is how you use it in advance.

 

Q: THREAT OR OPPORTUNITY BRIAN?

 

WOODHEAD: It has got to be an opportunity. I certainly don’t think anybody in our organisation in terms of Heathrow – and I am pretty sure in World Duty Free – is in a place where they are thinking I can play King Canute here and pretend this isn’t happening.

 

This is happening and we just need to embrace that and we need to find the right way and I will go back to the customer again. How does the customer want to interact and how do you get them the right information at the right time and deliver and that’s what we are about.