NEW ZEALAND. Interest is mounting in the Auckland Airport duty free tender after the Request for Proposals (RFP) was released on 21 July.
Ten Expressions of Interest were received before the RFP was issued. Bids are due to close in October with the new concessions expected to start trading on 1 July 2015. Based on 2013 figures, Auckland is Australasia’s second-biggest airport after Sydney in international passenger terms.
Auckland Airport General Manager Retail & Commercial Richard Barker told The Moodie Report: “There has been exceptional interest shown, all from high-quality, globally successful and proven duty free operators.”
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DFS Group (top two pictures) and JR/Duty Free (bottom two) are the two incumbents but are certain to face strong competition in the tender |
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As previously reported, the incumbents are DFS Group and JR/Duty Free, with Auckland Airport again opting for a dual-operator model.
Added intrigue comes from the fact that the duty free tender at Sydney Airport, across the Tasman Sea in Australia, should be resolved by early September (Sydney Airport General Manager Retail Glyn Williams told us earlier this month: “In regards to the duty free tender at Sydney Airport, we are thrilled by the level of interest on a global basis. The creativity shown has been amazing and we are currently working through submissions.”)
Sydney Airport is not revealing any further details but it is understood that Lotte Duty followed by Heinemann Asia Pacific were the top two bidders in financial terms for the core duty free offer with other bids coming from LS travel retail, long-term incumbent The Nuance Group (soon to be acquired by Dufry) and The Shilla Duty Free.
Other than The Nuance Group (barred under the terms of the sale of its former New Zealand business from re-entering the market), any of the unsuccessful Sydney bidders could enter the Auckland fray, along with other parties that have expressed interest. It is unlikely that the winner of Sydney would bid on Auckland due to the intense competition between the two airports for both Arrivals and Departures business.
The Auckland RFP includes the core duty free sites (offering liquor, tobacco, fragrances, cosmetics and confectionery) plus other retail categories. The airport is also offering what it describes as “a significant new opportunity” in a 400sqm last-minute duty free store close to gates 1-10.
A number of specialty sites are also available, including a new 214sqm area on Level 2 opposite the proposed last-minute outlet. First, or in many cases second, site visits are underway as bidders assess the opportunities and prepare their offers.
Auckland Airport is understood to have focused its RFP on four key attractions for retailers. These include the unique, strong and stable trans-Tasman (New Zealand and Australian) market (critical for both Arrivals and Departures duty free); the rise in Asian and particularly Chinese travel to New Zealand; the ability to grow current levels of business; and the airport’s collaborative approach with retailers.
The company is particularly keen to show that it does not “set and forget” the terms of its retail partnerships, arguing that it consistently aims to optimise existing business and work with retailers to increase customer engagement and sales.
Auckland Airport has been buoyed by this month’s announcement that Singapore Airlines is to introduce an A380 aircraft on its daily service to Auckland during the peak New Zealand summer period from late October onwards. This will provide an additional 55,000 seats and an additional NZ$45 million in tourism spend to the country.
FOOD & BEVERAGE RFP “INUNDATED”
The airport company has recently unveiled a host of initiatives that it believes reflect its “collaborative and proactive” approach.
For example, it invested in several improvements to the airside Level 1 area to increase dwell time and sales. The retail team noted that the area was already performing well but that there was untapped potential. Consequently it undertook a study to maximise the utilisation and opportunities in the level’s Food & Beverage precinct – both from a spend and dwell perspective – given its close proximity to the main duty free stores.
Barker said: “Changes to the flooring and seating facilitated a more intuitive flow and encouraged greater penetration and dwell. In conjunction with our retail design specialists we set about creating an innovative design template for new F&B kiosks. Hayama Sushi was retained as a tenant and expanded their menu to include hot noodles and udon, much to the delight of our airside customers.
“The Hayama kiosk was a complete change-out and grew slightly in size to cater to the expanded menu. With its new design, their sales have been tracking up +80% from their previous outlet in the same area.”
The retail team also brought in popular local café brand Shaky Isles to partner an existing F&B supplier, leading to a +25% hike in sales.
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(Above and below) Juicy Details is trading above plan since the airport rung the changes for its food & beverage offer | |
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Customer insight prompted the airport to conduct an RFP for a fresh and healthy F&B offer airside. The RFP was “inundated”, the airport claims, with offers proving the allure and demand of Auckland Airport as a retail destination.
Juicy Details (pictured above and below) has made its Australasian airport debut with a kiosk offering fresh food, smoothies and other healthy options, including premium local ingredients such as Matakana Super Foods and Rocket Apples from Hawke’s Bay.
The outlet is trading above plan already as customers have quickly embraced the new offer,Barker said. The latest arrival – a Heineken/DB bar that will be able to change out the craft beers and brands showcased- has also led to a significant reason to dwell on Level 1, positioning customers close to the main duty free stores.
Existing kiosks (air travel health drink 1Above and Sunglass Hut) were each moved to the Level 2 retail area and both have also enjoyed positive sales growth since. The airport also introduced Comvita, the world’s leading Manuka honey manufacturer, in its own stand-alone single brand kiosk, which caters in particular to the increasing Chinese traveller market.
“China is a core market for us and with traveller numbers from China increasing considerably in the past year, and the fact that more than 90% of Chinese visitors into New Zealand arrive through Auckland Airport, the international terminal made perfect sense for a bespoke, specialist Comvita offering,” said Barker, reflecting a key attraction for those retailers set to contest the duty free tender.
We’ll bring you more details on the Auckland bid as they become available.
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(Above and below) Auckland Airport has worked hard to improve the proximity of the main duty free stores to the extensive food & beverage offer |
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(Above and below) Shaky Isles but rock solid sales with another change to the food & beverage line-up |
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