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“Some perspective is certainly required here. They have not made an “˜apples vs apples’ comparison“ |
Michael Schriver Chief Operating Officer DFS |
INDONESIA/GUAM. DFS Group has reacted to a press release from Lotte Duty Free published on The Moodie Report.com this week relating to the Korean travel retailer’s claimed market share leadership at Soekarno-Hatta International Airport Terminal 2 in Jakarta. Lotte opened there on 31 January 2012.
The Korean retailer said that it generated duty free sales of over US$8.7 million in its 11 months of trading at the Indonesian gateway, equating to 42.7% of total retail revenues at the airport from an area of 9,400sq ft, which represents 19.8% of the airport’s whole 47,000sq ft of retail space. This, Lotte said, moved it ahead of other duty free shop operators at the airport, including DFS and Plaza Bali.
However, approached by The Moodie Report for reaction to Lotte’s market share claims, DFS said the Korean retailer was not comparing like for like.
“Some perspective is certainly required here,” said Chief Operating Officer Michael Schriver.
“They have not made an “˜apples vs apples’ comparison. To compare our operations with Lotte’s in Jakarta in terms of productivity is about as relevant as comparing DFS’s business at Changi Airport, where we have operated the core duty free liquor & tobacco concession for over 30 years along with 19 separate concessions in fashion, watches, wine & cigars to the two general merchandise concessions Lotte acquired last year.”
On the “˜apples vs apples’ principle, Schriver said the relevant comparison was between the two retailers’ pure duty free interests at Soekarno-Hatta International .
“By definition of what was reported, Lotte operates a 9,400sq ft duty free concession compared to DFS’s duty free concession at just over 5,000sq ft,” he said.
“Based on DFS’s actual duty free sales and the Lotte information published yesterday, DFS duty free store productivity is over +30% higher than Lotte at US$1,320 per square foot. [Based on both company’s figures and statements, Moodie Research estimates DFS’s duty free sales at Soekarno-Hatta International to be around US$6.7 million, with duty paid and destination merchandise sales on top -Ed].
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DFS claims that its productivity per square foot for ‘pure duty free’ at Soekarno-Hatta International is over +30% higher than Lotte’s |
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“When we then consider that DFS occupies the third position in terms of location on the concourse among the duty free operators (Lotte being in the prime position) we believe that result demonstrates our ability to maximise the value of our retail space,” Schriver continued.
“The balance of our space, 3,200sq ft, is primarily devoted to locally sourced duty paid food and souvenir products consistent with our global strategy for localisation.”
COMMITMENT TO LOCALISATION IN GUAM
DFS also responded to Lotte’s claims regarding “˜localisation’ in its bid for the Guam A.B.Won Pat International Airport duty free and travel retail tender. As reported, DFS (the incumbent) is locked in a tough battle with Lotte, The Shilla Duty Free and JR/Duty Free for the concession, which has been the subject of a long delay in awarding.
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An artist’s rendering of the DFS commitment to local culture in the retailer’s Guam bid |
Lotte noted this week that it had proposed a strict localisation strategy in Guam, involving remodelling the airport interior and offering spaces for local brands.
While not disputing the Lotte claims, Schriver underlined DFS Group’s intense commitment to the local community in Guam, noting: “For the Guam airport tender we have proposed a substantial commitment of space to locally made products in a unique locally inspired environment.
“To enrich the consumer experience in our retail space and at the airport we have proposed a local architectural design concept for all the common areas surrounding our stores to leave the traveller with a strong taste of the Guam culture on departure.
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“Our commitment to this important element goes far beyond simply being a retailer of products. Several months ago we announced the GUMA [Guam Unique Merchandise and Arts] programme (pictured) – a non-profit programme designed to incubate local Guam artisans in providing them training and expertise to build their passion and creativity into a sustainable enterprise.
“Part of this programme gives the participants a unique opportunity to showcase their products in our Made in Guam space at the airport along with our Galleria store downtown. We believe this programme elevates our localisation efforts to a new level and showcases our commitment to Corporate Social Responsibility. It has been very well received by the community in Guam and we are excited about the results thus far.”
COMMENT: In the interests of balance, The Moodie Report has published both the original Lotte press release and DFS response, both edited to ensure balance and accuracy. In a highly competitive environment, it is our role to publish impartial coverage of industry developments, supported by independent statistical analysis wherever possible.
