SINGAPORE. Incumbent Nuance-Watson (Singapore) has successfully defended its Perfumes & Cosmetics concession at Singapore Changi Airport. The Civil Aviation Authority of Singapore announced the award of a new 38-month contract to Nuance-Watson today.
It covers 4,424sq m of space across Terminals One and Two, the Budget Terminal plus the new Terminal Three which opens on 9 January 2008. This is an increase of 1,459sq m compared to the existing contract.
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Ken Tse: “Our efforts in providing a truly outstanding shopping experience and at the same time delivering a sound financial performance have paid off” |
The result is a triumph for Nuance-Watson (Singapore) Executive General Manager Ken Tse and his team who have built one of the industry’s most acclaimed beauty operations at Changi.
Tse expressed his delight at being awarded the new concession. He said: “Having been chosen as the Perfumes & Cosmetics retailer at Singapore Changi Airport for a second concession period confirms that our efforts in providing a truly outstanding shopping experience and at the same time delivering a sound financial performance have paid off.
“We look forward to shaping the face of the airport’s shopping offer for the next three years and will continue our efforts to constantly improve our already high standards to the benefit of customers at Changi Airport.”
The Nuance Group President & CEO Roberto Graziani added: “Singapore is one of the key airports in the increasingly important Asia Pacific region and one of the biggest single operations within our worldwide portfolio. By retaining this important contract we further strengthen our position in this region and confirm our position as leading airport operator on a global basis.
“We operate both at Hong Kong and Singapore airports through our Nuance-Watson joint ventures. This presence enables us to constantly update our in-depth information on changing trends in customer behaviour in this part of the world.”
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| Roberto Graziani: “Singapore is one of the key airports in the increasingly important Asia Pacific region and one of the biggest single operations within our worldwide portfolio” |
Nuance-Watson said the shops would feature “refurbishments driven by passenger segmentation and the evolution of categories and merchandise”. The company added: “They will also include two new shop-in-shop concepts designed to offer even more unique and personalised service. These include Beauty Cabins that offer pampering facial and body treatment services to passengers.”
Nuance-Watson was the highest bidder for the contract, ahead of DFS Group, Aelia, Hotel Lotte and Aldeasa. The Changi business represents one of the biggest duty free opportunities in the beauty sector.
The retailer offered a monthly guarantee over S$800,000 a month more than nearest challenger DFS (S$10,191,000 against S$9,388,368) in year one, over S$960,000 in year two (S$10,591,000 compared to S$9,626,888) and almost S$1 million more in the final 14 months (S$10,803,000 compared to S$9,821,388). DFS topped up its minimum monthly guarantees with annual bonus payments above certain thresholds (see full bids below).
By offering S$122.3 million in first year guarantees, Nuance-Watson pulled out all the stops to retain this key contract. If sales were to reach S$244 million this year, up from S$205 million last year, it would still represent a 50% offer, based on 2006 sales. The retailer clearly believes it can grow the business significantly, buoyed by the impact of the new T3.
Here is the full list of bids for the concession:
Aelia: Additional rental: 45% of total monthly gross sales OR a minimum monthly guarantee of:- Year 1: S$8,600,000, Year 2: S$9,600,000, Year 3 and 2 months: S$9,600,000, whichever is higher, PLUS a bonus of:- Year 1: 5% of incremental gross sales for total annual gross sales above S$250,000,000, Year 2 and Year 3: 5% of incremental gross sales for total annual gross sales above S$300,000,000, and Remaining 2 months: 5% of incremental gross sales for total gross sales above S$50,000,000.
Aldeasa: Additional rental: 45% of total monthly gross sales OR a minimum monthly guarantee of Singapore Dollars S$8,002,201, whichever is higher.
DFS Additional rental: 45% of total monthly gross sales OR a minimum monthly guarantee of Singapore Dollars :- Year 1: S$9,388,368, Year 2: S$9,626,888, Year 3 and 2 months: S$9,821,388, whichever is higher, PLUS Bonus incentive of:- Year 1, Year 2 and Year 3: 5% of incremental annual sales above S$290,000,000 and remaining 2 months: 5% of incremental sales above S$48,333,333.33.
Hotel Lotte: Additional rental: 45% of total monthly gross sales OR a minimum monthly guarantee of S$9,535,200, whichever is higher.
Nuance-Watson (Singapore): Additional rental: 45% of total monthly gross sales OR a minimum monthly guarantee of : Year 1: S$10,191,000, Year 2: S$10,591,000, Year 3 and 2 months: S$10,803,000, whichever is higher.
Over the life of the contract Nuance-Watson offered S$400.6 million in guarantees. DFS offered S$365.6 million plus bonuses; Hotel Lotte S$362 million and Aelia S$352 million plus bonuses. Aldeasa offered S$304 million.
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