US. Aer Rianta International (ARI), the airport retail company owned by Dublin Airport Authority (DAA), and Korean travel retailer The Shilla Duty Free have formed a joint venture to bid for the duty free retail contract at Los Angeles International Airport (LAX). The tender closed on 2 April.
The alliance brings together the world’s ninth and tenth biggest travel retailers by turnover (2010 figures), according to industry rankings compiled by The Moodie Report Research. LAX is a key gateway for North Asian travellers, notably Koreans, Chinese and Japanese and the combination of Shilla’s expertise with this consumer profile and ARI’s on-the-ground knowledge of US airports looks a powerful one.
The partnership will challenge incumbent DFS Group and several other players likely to include
Dufry, Duty Free Americas, The Nuance Group, World Duty Free Group and Travel Retail USA (a venture led by Gebr Heinemann), all of whom attended the original concession day last December hosted by Los Angeles World Airports (LAWA)
Another contender is Shilla’s arch Korean rival Lotte, which missed the original meeting but was subsequently granted permission to enter the tender process. Lotte is partnering local company USFI, a distributor of food products to US forces in South Korea. It is a joint venture between US Foods International and Hyundai Department Stores.
LAX is the sixth-busiest airport in the world and the third largest in the US by passenger volume. Almost 62 million passengers travelled through the airport in 2011, including just over eight million international departing passengers. The airport is the largest point of entry to the US for Asian passengers, who comprise up to one third of its international traffic (and a much higher proportion of duty free spending).
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As reported, LAWA invited bids from retailers to operate in excess of 37,000sq ft of commercial space across eight terminals. The largest, the Tom Bradley International Terminal (TBIT), comprises about 25,000sq ft in a major construction project that will transfer the duty free area to a post-passenger security position.
The duty free contract at LAX has a term of ten years with the option to extend for up to three years through individual annual contracts. Categories include cosmetics, perfumes & fragrances, liquor, tobacco, electronics, fashion and luxury accessories.
“We are really excited by our partnership with Shilla and what we believe is a very strong bid to operate at LAX,” said ARI North America & Caribbean Regional Manager John Bolger.
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The joint venture brings together two of the world’s most powerful travel retailers |
“Shilla, through its major downtown stores in Seoul and its operations at Incheon and other Korean airports, brings a unique insight into Asian customers, which comprise a significant and growing share of international passengers at LAX.”
“ARI has long-standing experience of successful partnership arrangements in many regions of the world, including the Middle East, Cyprus and India,” said Shilla Senior Manager, Business Development Team Jay Cho.
“Through its award-winning operations in Montreal, where it successfully lobbied US Customs to allow the transfer of duty free stores to the post security area, [as well as] three other Canadian cities and in Barbados, ARI also brings detailed knowledge of the North American passenger.”
ARI has operations in 12 countries, annual managed sales in excess of €1 billion and more than 3,500 employees. As lead partner in a local consortium, it secured its first contract in Asia in 2010 with the opening of duty free and duty paid stores at Delhi International Airport’s new Terminal 3. ARI opens its first stores in China next June, at Kunming Changshui International Airport in the south-west of that country.
Shilla, owned by Samsung, is one of Asia’s leading travel retailers. Last year sales across its downtown and airport network soared by +30% to around US$1.4 billion (from US$1.1 billion in 2010), buoyed by the September opening of the world’s first Louis Vuitton airport store, at Incheon International.
Incheon Airport was the world’s biggest single duty free location last year with sales of US$1.53 billion.
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DFS has operated the duty free concession at Los Angeles International for many years |
