GERMANY. At last week’s annual press conference, Gebr. Heinemann management outlined key details of the company’s 2021 sales, and its ambitions for 2022. Alongside our key takeaways from that event (see The Moodie Davitt eZine at this link), we bring readers further details and commentary.
At the media event, Gebr. Heinemann Chief Commercial Officer Dr. Dirk Schneider offered insights across the key areas of strategy, purchasing, marketing and supply chain.
“We used 2021 for strategic clarity and developed promises [to the consumer] as part of our mission statement connected by a focus on people and turning their travel time into valuable time,” he said.
“We stand for spectacular assortments and unforgettable experiences; for being a valuable travel companion; for activating price advantages; for impressive employees and a sustainable impact on the travel market.”
Elaborating on the promise to travellers of ensuring a “sustainable and spectacular assortment,” Schneider said that “exclusive, rare, trendy and sustainable products” had helped update the mix. Among these was the launch of The Yamazaki 55 Year Old (sold for €488,000 through Unifree Duty Free at Istanbul Airport) and the Cohiba 50th anniversary humidor.
Rare and niche whiskies that will enter the stores this year include Bowmore 53 and 50 Year Old expressions, Glen Grant 60 Year Old, The Glenlivet 50 Year Old, and Midleton Very Rare 27 Year Old.
In beauty, a key element of the strategy is to include more niche brands, especially in fragrances, which account for 80% of category sales in retail today. “We will give more room to innovative concepts and brands in the niche area of fragrances,” Schneider said.
He also highlighted a strong focus on low and no alcohol items, as well as lower sugar items in confectionery.
In fashion & luxury, the retailer will open a new mono-brand boutique with Cartier at Istanbul Airport in August. “We are also adjusting our Luxury Square offer in Istanbul this year with trend-oriented luxury brands, for example responding to demand for sneakers,” said Schneider.
He also highlighted some high-profile campaigns that had taken place in 2021 despite lower traveller numbers; these included major launches and executions from Jack Daniels, Jägermeister and Paco Rabanne.
After Gebr. Heinemann streamlined the assortment by around 30% during the pandemic, Schneider also addressed how it was building the assortment back today, while leaving room for newness.
“This range management was a necessity but it was also thinking one step ahead, because now we need this freedom to fulfil our promise of a spectacular assortment. So it will be more sustainable, it will be more trendy, it will include more rare products, it will be more exclusive. And so we need that room in our mix on top of what we have already to fulfil this promise.”
Schneider said that the company planned to “trial a lot, test a lot” in the search for newness to excite the traveller. “This is an important strategic direction in which we are heading; it is the opposite of making travel retail a supermarket environment. And that is great news for travel retail industry.
“We have all looked at the industry and asked what is it about? Many brands have done the same and come to the conclusion that it must be special. And that has now triggered more activity and promotions.
“A lot of brands also looked at travel retail and their business units in a very critical way [during the pandemic]. It was not profitable last year, or maybe the year before, and for some brands travel retail as a business is quite small. But there is now a focus, and they are giving it more strategic clarity. And that is a driver behind the activities we are seeing. We appreciate that direction from brands, because it totally fits with our mission statement.”
CEO Max Heinemann added: “We want to create change in the market and that itself is a provocation to move forward. We want to ensure travel retail has mass appeal but is also special. We have to show each traveller that this is a fantastic place to be.”
Separately, the Heinemann & Me loyalty programme has now reached one million members – the scheme is now administered entirely via digital, which has helped extend reach, said Schneider.
Supply chain challenge
Addressing the impact of global supply chain challenges, Schneider said: “Thanks to our data and experience-driven, accurate demand planning, we built up stocks early and with foresight. This enabled us to get through the difficult phase relatively well. Still it has been a tough period given the global manufacturing and supply challenges. We expect the situation to ease in the second half of 2022.
“Until then, we will communicate bottlenecks transparently and try to meet the demand of travellers and distribution customers with alternative products. One thing is certain: this phenomenon is global. Products that we do not have access to are not available to anyone else in the market. But thanks to our close relationship with suppliers, we can assume that we will be supplied first as soon as products are available again.”
Automation in supply chain has also improved, said Schneider, with the addition of a new proprietary technology. “LogSeal, on which we have a Europe-wide patent, is our machine that fully seals the goods on the pallet after they have been wrapped. We are thus bringing the world’s first technical solution to the market that seals a load within the secure supply chain.”
Focus on sustainable impact
A key element of the updated Gebr. Heinemann mission statement is sustainable impact, which has been firmed up as a promise to travellers.
One example of the implementation of this strategy is the sustainable category concept for responsible shopping, which Gebr. Heinemann said it was the first travel retailer worldwide to develop. As a first step, a ‘future friendly’ seal identifies products with sustainable packaging and materials in the shop. That drive began online and at key German airports, with more to follow.
Schneider said: “It is the beginning of a longer journey. We are starting to do pioneering work together with our suppliers who are very supportive. Basically, we are setting a new standard for responsible shopping. Together we plan to redefine the concepts and to add more sustainability attributes to our ‘future friendly’ standards. We will continue this path and we will expand the product range, focusing on sustainable packaging and ingredients, giving customers the choice to make their contribution to a better world.”
A crucial company goal, Schneider noted, is to achieve ‘climate-positive’ supply chain by 2032.
“We want to go beyond carbon neutrality. We will be carbon dioxide-neutral in scope one and two for our own supply chain operations already by 2024. And including scope three, we are going to reduce those emissions by -25% by the same year.
“We will use alternative transports with our service providers, as our transport has the biggest impact here. And we continue to switch to green energy and implement energy efficiency measures as part of our transition to sustainable energy production. We already started to switch to green electricity last year. We plan our own solar system currently and we are analysing the measure of fossil-free heating in our own operations.”
He concluded with news of a new insights initiative that will allow improved planning and action by the retailer and its brand partners.
“We see volatile times as an opportunity to adapt and to future-proof the travel business. That’s why we have enter a new era of data-driven decisions. We have also launched a best-in-class cloud platform to use one of our greatest assets to its fullest potential: our data.
“We turn numbers into stories and data into insights, fast and global for all our brands and suppliers.
“The brand new platform is called ‘HeiSights’ combining Heinemann and insights. It links up to our ‘HeiCloud’, which is a collaboration platform for B2B customers already. With ‘HeiSights’ we will share with our partners best-in-class dashboards that are always accessible, up to date and easy to navigate.
“Sharing this knowledge will drive actions and faster growth initiatives. It means we can become faster, more transparent, more intelligent in our cooperation with brands and suppliers than ever before.”
