Gebr. Heinemann and its partners are eyeing the opening of 4,000sq m of retail space at Saudi Arabia’s King Abdulaziz International Airport (KAIA) in Jeddah in Q4.

The new retail space will include an emphasis on perfumes & cosmetics, confectionery, tobacco, local goods and souvenirs (excluding fashion).

An alliance comprising Gebr. Heinemann, Jordanian Duty Free Shops and Astra secured an agreement for the duty free contract in December after emerging as preferred bidder in October.

The joint venture was chosen to run approximately 11,500sq m of beauty, confectionery, food, tobacco, souvenirs, fashion, accessories and jewellery space across Terminal 1 and the North Terminal under seven- and five-year (plus a possible two-year extension) lease agreements, respectively.

Bernard Schlafstein, Sales Director MEA, Gebr. Heinemann: “What we can see in the first months of operation [in Jeddah] when you look at the category mix is there is a lot of focus on tobacco. We will have to see when we open more square metres how this evolves.”

Partnership learnings

“We opened Jeddah in Q3 and in Q4 we will open another 30-40% of the total space that will be finally opened in May 2025,” Bernard Schlafstein, Sales Director Middle East & Africa, updated TRBusiness.

“We are very satisfied and have a great partnership with JDFS and Astra Group, good exchanges and meetings. We are learning every day in other markets, especially for Jeddah, and our partners help us. But they are learning with us and supporting on the ground with HR, finance and construction.”

Asked about the evolution of the passenger profile in Saudi Arabia, Schlafstein said: “It’s still local, with people travelling to Mecca and outside the festival season. Tourism is coming, as is business [travel].

“What we can see in the first months of operation when you look at the category mix is there is a lot of focus on tobacco, pretty heavy actually, and quite a big share. We will have to see when we open more square metres how this evolves.”

The Hamburg-headquartered travel retailer notched turnover growth of +31% in the Middle East & Africa in 2023 – an 80% rise year-on-year.

Updating TRBusiness during the recent TFWA World Exhibition & Conference in Cannes, Schlafstein struck a decidedly upbeat tone on the travel retailer’s regional performance.

“This year has been a good year; the last three months will be too and we then focus on next year and different markets in the region.”

A positive first-half of the year translated to a flatter performance into the second half, he explains, though Africa is doing quite well against the backdrop of a “booming” wholesale business in the region.

Schlafstein reports a ‘stable’ performance in Turkey at Istanbul Airport where it operates the airside retail space alongside travel retailers Unifree and ATÜ Duty Free.

“It’s looking quite positive for Q4 ,” he commented. “We still have a lot of Russian passengers who will transit to Europe via Istanbul and buy a lot of fashion and luxury goods.”

“It has reduced from last year; we can see this in the fashion business but we still have a lot of Middle East clients: Saudi Arabians, Kuwaitis, people from Azerbaijan, Eastern Europe… we have those kind of passengers when it comes to the luxury segment and clients from all over the place when it comes to the mass with more than 40m international passengers travelling via Turkey. Core duty free is also doing quite well.”

While not disclosing figures, Schlafstein confirms that passenger average spend is “much better” versus 2023 and above its forecast.

Ambitions in Africa

Despite the fractious geopolitical situation in the Middle East, business continues to be surprisingly buoyant.

In Israel, Heinemann acquired 100% of James Richardson Group’s (JR/Group) shares in the long-standing joint venture partnership earlier this year.

Heinemann had been in a 50:50 alliance with the Danos family owned operation at Israel Ben Gurion International Airport in Tel Aviv since 2018.

Schlafstein confirms that there have been no management changes since the buyout of the Danos family’s shareholding. In turn, Heinemann has not diverted its own personnel to become involved in the operation in Israel in a conscious attempt to preserve the culture and values of the business.

“In terms of business, we have hardly any tourists there but Israelis are travelling quite a lot,” explained Schlafstein. “Not to Turkey but to Cyprus, Greece and Europe. They love to travel and shop. We are very happy with the results this year and didn’t estimate this on 7 October last year. We are very satisfied thanks to local management and marketing activities.”

Turning to Africa, which remains an important concentration for Heinemann, the ambition is to expand in the continent, having already established a footprint in the likes of South Africa, Nigeria and Egypt.

“We are finding a lot of partners for the wholesale business but we are also looking at retail,” concluded Schlafstein. “This is a clear focus.”

Lead, main and above images courtesy of KAIA/JEDCO.

For more on Gebr. Heinemann, read the TRBusiness Top 10 International Operators report by clicking here.

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