EXCLUSIVE: San Ysidro’s Duty Free City talks to TRBusiness

By Doug Newhouse |


San Ysidro, Calexico and McAllen Texas will be the first three locations for the new Duty Free City US/Mexican border operation says the operator.

Duty Free City’s Director of Marketing Alejandra Rudner (above) says the imminent opening of the 14,000sq ft San Ysidro luxury store on the US/Mexican border will be followed by store openings in Calexico and McAllen Texas, before taking the 25-store opening programme into the second phase US/Canadian border expansion.

As the former Marketing Manager of the Aventura Mall in Miami, Florida, Alejandra Rudner is no stranger to big retail projects. Her former employer – the Aventura Mall – is the largest conventional shopping mall in Florida, and the third largest shopping centre in the US, handling ‘a mere 28m visitors a year’.

 

This latest duty free ‘project’ is not exactly new either, since the project’s backers – anonymous for now, according to Rudner – have been studying the viability of opening a luxury duty free outlet at San Ysidro for ‘a couple of years’.

 

Of course, the attraction is obvious considering San Ysidro in San Diego, California is easily the biggest and busiest land border crossing in the US. It is also classified as the busiest land port of entry in the Western Hemisphere, handling 50,000 northbound vehicles a day and 25,000 northbound pedestrians a day. Just as importantly, a study conducted by the San Diego Association of Governments (SANDAG) currently projects an 87% increase in vehicle traffic in San Ysidro by the year 2030.

So what made the Duty Free City backers decide to enter the market at this particular time, we asked?
Alejandra Rudner: We were looking into this project a couple of years ago. We solidified the San Ysidro location in 2012 and the reason that we chose San Ysidro as our flagship location – as the first of 25 stores – is because it is the biggest and busiest land border crossing.

It’s an opportunity to really capture all of these border crossers on a daily basis. In addition to being the busiest crossing we have research that people who cross the border each on a daily basis spend an average of five million dollars in retail shopping.

 

San Ysidro crossing: Before and after. How it is today (left) and how it is going to look when it is finished (below).


So it is an opportunity to bring luxury products and retail to these people who go to shopping malls in San Diego closer to home. Instead of having them go all the way some 20 or 30 miles into San Diego we bring them this luxury service as an experience right at the border.

Obviously the ongoing $700m-plus improvement and expansion at San Ysidro is a big project. How much of that has got to do with the timing of your decision to open now?
Well that was very, very strategic as well, because that whole project is scheduled to finish in 2016, so we wanted to open right before it and we selected a key location in the San Ysidro area. We are on San Ysidro Boulevard, so on completion of the whole construction project we are going to be on the main avenue where people exit from Mexico. So they are going to have to pass right by Duty Free City as soon as they exit Mexico.

 

 

 

[Q: SO WHO ARE THE FINANCIAL BACKERS OF THIS VENTURE?]
“IT’S A GROUP OF EUROPEAN INVESTORS. BASICALLY A GROUP HAS GOT TOGETHER AND SEEN THE POTENTIAL FOR THE SUCCESS OF THIS PROJECT.”
ALEJANDRA RUDNER, DIRECTOR OF MARKETING, DUTY FREE CITY.

This is a downtown store initiative when you talk about 24 or 25 stores around the US – or are you interested in airports as well?
Right now we are focusing on border stores. So our focus is on the US/Mexico borders and we are going to move forward and expand to the US/Canada borders as our second phase of the project. There is phase one and phase two and as soon as we finish opening this store in the next couple of months we should open the next two by the end of this year.

 

So what other cities are the priorities after San Ysidro, or would that be giving away too many secrets?

No, we can share that. The two cities are Calexico and McAllen Texas.

And what are the attractions there?
The high traffic at the border crossings.

[McAllen is the 20th most populated city in Texas and the largest city in Hidalgo County, Texas. It is located at the southern tip of Texas in the Rio Grande Valley facing the Mexican city of Reynosa. By contrast, Calexico is located next to the City of Mexicali, Baja California, Mexico-Ed].

You’ve mentioned some of the product categories which are important to the luxury operation and obviously you have talked to Estée Lauder on the beauty side, but have you talked to a number of other suppliers now?
Absolutely. In the beauty area we also have Clarins and L’Occitane and we are working with several other fragrances as well. We have Hermès. In the fragrances we have everything from Azzaro to Balenciaga to Burberry.

We also have several brands in men’s and in confectionery we are working with Godiva, Hersheys and Mars. We have a cigar lounge and that is going to have a wood and a vintage [look] that you would experience, except like in the UK you can’t smoke indoors in California. But we have the whole cigar lounge experience with the humidors and everything.

 

Another artist’s view of the new 14,000sq ft San Ysidro store.

 

“I AM VERY, VERY PROUD TO BE PART OF THIS AND I AM REALLY, REALLY LOOKING FORWARD TO THIS PROJECT COMING TO FRUITION IN SUCH A SHORT PERIOD OF TIME.”
ALEJANDRA RUDNER, DUTY FREE CITY.

 

You are offering wines and spirits as well…
Yes. We not only have a wine area, but we have what we are referring to as a tasting table where we are going to have tastings on a daily basis. We are referring to that area as the Vino Lounge and then we have got the beer and spirits area.

We also have a City Cafe where we are going to have sandwiches and snacks and coffee and we have a dedicated children’s area, where there is entertainment and where there will be kids digital activities.

We are going to have a kids club as well where we will celebrate children’s birthdays once a month and have very, very specific kids activities. In the nail area where we have nail products we will also have manicure and pedicure services. In the hair care area we are going to have blow dry and hair services as well.

It looks like a very intricate offer you are putting together?
Absolutely. We like to refer to it as retail entertainment, because it is duty free of course, but it is not just duty free. It’s a department store where you have entertainment and you also have services and there is really something for everyone.

So it is its own genre in retail. If you wanted to compare it with something you really can’t, because we are a store of our own in our own category. There is really nothing else like it.

I would imagine that the idea of it being a bit more luxurious with higher price points has gone down quite well with suppliers?
Exactly. We’ve got higher price points and it’s a lot more luxury and at the same time we’ve got the services.

We are situated right by the border and if you are familiar with San Ysidro you will know that there’s a very, very busy Well’s Fargo and HSBC and all of those banks. So we will be attracting all those people who work at the banks that will come to have their pedicures and the gentlemen who will come for their barber shaves.

They can come and have lunch at the cafe and have their coffee breaks and things like that right at the store, which will be just down the street from them.

 

The approach road to the border at San Ysidro.

 

So do you anticipate that the store will build a local following as much as be an attraction for those people who maybe cross the border twice a year?
Absolutely. Our tag line is a lifestyle destination and that is exactly what it is going to be.

It is going to a place to be and to be seen and a place people will talk about. It is going to be a place where people are going to go and see what’s there and purchase things and love to stay. It is going to be an experience to go there from the second you walk in.

We are going to have a 55-inch touchscreen directory where you walk in and let’s say you are looking for sunglasses. You can search by category. If you don’t know what kind of sunglasses you want you can click on accessories and click on eyewear and the little dot will start blinking in the sunglasses section. If you know you want some Raybans, you can type in Raybans and it will tell you exactly where Raybans are within the store.

If you then walk over to sunglasses area, we have regular mirrors to try them on and in addition we have developed a custom application just for Duty Free City where you can try on the sunglasses. Then with the App [application-Ed] it will take photos of you and can doodle on the photo and email it to yourself or a friend and then ask for their opinion on which glasses they like better.

So there is a lot of digital and interactive entertainment in addition to the plethora of brands.

So who are the financial backers of this venture?
It’s a group of European investors. Basically a group has got together and seen the potential for the success of this project.

Will they be making themselves known at some stage?
Eventually, but for now they are choosing not to.

So how many employees will you have?
At the store level we are looking at about 50 employees.

 

Beauty will be a big part of the store, according to Director of Marketing Alejandra Rudner.

 

“WE DON’T SEE OURSELVES AS COMPETITION FOR THOSE OTHER DUTY FREE STORES – WE ARE JUST ANOTHER NEW PLACE FOR PEOPLE TO GO TO.”
ALEJANDRA RUDNER, DUTY FREE CITY.

Have you already started recruiting – I guess you must have done?
Absolutely. We have our store director out in California and two assistant directors who are very, very busy in the recruitment process as we speak. As soon as this is complete there is a lot of training to be done, because there’s close to 300 brands when you include all the different wines and spirits that we have.

Of course, all of these brands will send people to train our staff and that may require them to travel to the brand headquarters for training and some of them will be certified beauty advisors. It is a very, very extensive training process.

How difficult is it finding good staff?
I mean it is like anything in the world. Because we are such a luxury establishment where this is really going to set us apart with the customer service and the experience, we want to ensure that the people that are there are going to be the best representation of our brand.

Whoever we are recruiting has to be the first face of the Duty Free City brand, so we are being very, very selective with the recruitment process.

How do you feel about competing with UETA, Baja Duty Free and Image Duty Free in the same town (San Ysidro)?
Well we are not really competing with other duty frees at all. Because there is so much money spent on retail on a daily basis in the San Diego area, there’s lots of shopping to be done and we are a retail establishment that is very, very different.

Brands are everywhere and brands are not just at the border. There are shopping centres, there are department stores and we are just another venue for people to do their shopping at.

We don’t see ourselves as competition for those other duty free stores – we are just another new place for people to go to.

So what are your three priorities between now and opening the new store?
That changes every fifteen minutes Doug. My priorities range from activating our advertising media plan, to planning the grand opening event, to organising the schedule for the Orlando trade show, to meeting with the vendors and scheduling all of the in-store visuals. You name it and I’m working on it – I wear so many different hats.

 

It is very, very exciting with this brand new venture and this marvellous team that I work with. There is never a dull moment. I am very, very proud to be part of this and I am really, really looking forward to this project coming to fruition in such a short period of time.

Editor’s Note: Full details from our original story, including key personnel and more brand information on the initial Duty Free City store opening in San Ysidro, plus the multi-million dollar development at the border crossing can be found at the following links:

http://www.trbusiness.com/index.php/regional/americas/14612-big-new-us-player-for-san-ysidro.html

http://www.trbusiness.com/index.php/regional/americas/14615-226m-federal-funds-for-san-ysidro.html

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