US. Duty Free Americas (DFA), owned by The Falic Group, has begun a highly ambitious upgrading of its US airport stores as it repositions itself as a global luxury travel retailer.
The company is also rolling out a series of upmarket land border stores in Uruguay that it believes will transform the reputation of the sector in South America.
In an interview for the forthcoming issue of The Moodie Report Digital Print Edition, Airport Division President Enrique Urioste said that the ambitious plans represent a re-positioning for the company. “DFA is ready to go to the second level, transforming itself into a global player,” he said.
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High-profile branding for Duty Free Americas is core to the retailer’s new approach. This rendering shows the exterior of the planned store at Miami International Airport’s recently opened South Terminal H |
DFA currently runs 150 shops across the Americas, including extensive US airport operations plus its retail chains on the US borders with Canada and Mexico. It also has stores in Honduras, Nicaragua, Columbia, Belize, Bolivia, Panama, El Salvador, Ecuador and Venezuela.
Urioste said the company didn’t sell products, it sells “dreams and fantasies”. In order to do that properly and to deliver the full potential of duty free retailing, it needed to give the brands an enhanced environment with more space, upscale shops, better trained staff and a “travel retail experience” for consumers, he said.
As a result DFA is revamping virtually its whole airport portfolio in 2008. It is building two new shops in the newly opened Miami South terminal and will soon start work on two new stores in the first phase of that airport’s North terminal, the expansion of concourse B.
At New York JFK Airport Terminal 7 the retailer is completely re-doing the store, adding in a new, upscale boutique with brands such as Cartier, Hermès, Ferragamo and (soon) Montblanc.
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This time an interior shot, from the perfumes & cosmetics department, of the Miami South store |
DFA’s stores at Washington Dulles Airport will gain enlarged space, new furniture, lighting and flooring. And the retailer will add a complete new shop there. Boston Logan Airport will have a new store by the summer while the main existing shop will be refurbished. Two new stores will follow at the new Detroit North terminal, due to open in September.
Urioste paid tribute to the airport authorities concerned. “In every case when we presented our programme and went through the necessary ingredients to have better sales and better shop penetration they were all very supportive. That’s a key ingredient, because if you don’t have an airport that is supportive, it doesn’t matter how big your vision is or how big your will to invest is – you will never do it.”
TARGETTING THE HIGH END
Urioste said the company was determined to change the image of duty free shopping in the US.
“We’re clearly going to be identifying the high-end area, that was up to now not very defined. We will have different floors, different ceilings and a strong presence of high-end brands. The perfumes & cosmetics area, for example, will feature different lighting and flooring from the rest of the areas. A key ingredient is that we are giving a lot of space to what I call the theatre of retail.”
Consumer interactivity will be a key to the approach in all stores, whatever their size, Urioste said. For example, each shop will feature a “beauty centre” featuring different animations from various brands every 15 days. Similar animations and sampling are planned for liquor and confectionery.
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Light, bright space – and plenty of it – in the new liquor, tobacco and confectionery store at Boston Logan Airport |
“The whole idea is that we’re investing in space in order to really give a great experience to our passengers. We want to surprise them with something they are not used to seeing in the US. In this way we can drive the spend per pax and the penetration rates.”
All that will be backed up by an intensive new staff training programme to ensure stronger brand knowledge allied to better selling and people skills at point of sale.
Urioste said the changes would amount to a “revolution” in US airport retailing. “This was the key element in establishing real partnerships with the airports for this concept. The idea is that we really need to develop our own stores and not just give sales away to the South Americans, the Europeans and the Asians.
“They have much better retail space available at their airports. We really brainstormed with the US airports and explored different alternatives. We are now all aligned that this is the way to get better results for US airports.
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(Left) A new treatment for a DFA store at Boston Logan; (Right) The smart new boutique area at New York JFK T7 | |
“We have the capability in most airports such as Miami, JFK and Washington to grow the size of the original spaces,” Urioste commented. “I am sure this will be the beginning of a new era where the duty free operations will gain much better recognition in future airport business development in the US.”
Branding will be a prime focus. All new and refurbished stores will be strongly branded under the DFA banner. “I truly believe that the passenger needs to identify themselves with the company,” Urioste explained.
“The stores will have huge frameless plasma screens on the outside that will be commanded from central office through the internet so that we can place online ads and other elements that will really surprise passengers.”
Another key element, Urioste says, is a strengthening of the team handling core categories. Perfumes and Cosmetics Director Lyn Albrecht (formerly with Starboard Cruise Services) and Accessories & Luxury Director Jerome Blanchard (ex-Rémy Cointreau) have joined established Liquor, Tobacco & Confectionary Director Jonathan Bonchick in developing a highly segmented, tailored offer to suit the different passenger portfolio at each of DFA’s locations.
“We no longer want to have a single assortment across the company,” says Urioste. “We are tailor making our approach to have the proper brands for the customers we have at our stores.”
To help ensure such a customised philosophy can work in practice, DFA has opened a new warehouse opposite Miami International Airport. “It serves the whole US and creates efficiency across the whole company,” says Urioste.
AN INTERNATIONAL, UPSCALE FUTURE
Urioste said that DFA [which recently tabled an unsuccessful £400 million-plus bid for World Duty Free -Ed] remains “absolutely committed” to the travel retail channel. And he reiterated DFA President Leon Falic’s recent words to The Moodie Report that the company has a US$1.2 billion war chest ready for acquisitions that make sense.
“We truly believe in duty free. So wherever we have the possibility to invest in a wise way, where we can money, we will go there. The Falics are very, very aggressive in the sense of looking for more opportunities and whenever there is a door that can be opened we will open it.”
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(Left) Style and minimalism at Miami South J; (Right) Elegance and ambition at the Rivera store in Uruguay | |
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The changing face of Uruguayan retail: (Left) The planned Bella Union outlet; (Right) The imposing new Rio Branco store | |
UPSCALE IN URUGUAY
DFA has invested in six stores in Uruguay which it will own and operate. They are in Chuy, Rio Branco, Rivera, Artigas, Bella Union and Acegua – all cities located on the country’s border with Brazil. The company has already invested more than U$10 million in acquiring key strategic locations.
Its master plan consists of upscaling the retail offer on the border. DFA is building new shops with average retail space of 2000sq m each. Each will feature integrated secure warehouses, parking, security and the “best and biggest retail assortment”, the company claimed.
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The shape of things to come – DFA is set to go upscale in Uruguay with a series of ambitious retail offers |
The first shop to open will be in Rivera next month. The company also has a central warehouse for the storage and distribution of goods for all six shops. This facility is located at the Libertad Free Zone, 50km west of the port of Montevideo.
Urioste said the level and style of investment in the Uruguayan stores would send out a strong message to the industry. “It shows that we believe in this industry and that we believe in a model that creates an upscale offer to the passenger.
“We believe that duty free, whether it is an airport shop, border shop, or a boat or a ferry, needs to be the lighthouse of luxury – that is the only way it will deliver the results that are possible.”
[The full interview will appear in the April edition of The Moodie Report Digital Print Edition].
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MORE STORIES ON DUTY FREE AMERICAS
Falic Group targets World Duty Free; “˜We’re very keen and committed’ – Leon Falic – 10/01/08
Duty Free Americas prepares to open stores on Uruguay-Brazil land border – 10/09/07
Enrique Urioste leaves InterBaires to join Duty Free Americas in key airports role – 03/09/07
