Duty Free Dynamics (DFD) describes itself as “an innovative developer of retail concepts” in travel retail. The company was created in 2015 to offer a new business model in the channel. Initially operating in Latin America and the Caribbean, DFD quickly extended its network to North America and now operates in the EMEA region, while also entering the Asia-Pacific market.
As reported, DFD is now the exclusive distribution partner for Playmobil in global travel retail, charged with expanding the German toy company’s presence in the channel. That new collaboration comes as DFD looks to refine its categories, concentrating on those with the greatest potential.
DFD CEO Martin Mairal considers the company’s strategy in travel retail, the importance of an entrepreneurial spirit and the challenges facing the industry.
Duty Free Dynamics was established in 2015 as “an answer to an existing need for a new business model in the travel retail industry”. The company started as a distributor, but in just nine years has developed considerably. Can you talk us through DFD’s mission in the channel and how that has changed?
DFD began after identifying an opportunity in the non-core categories of travel retail, realising they were either underutilised or not exploited at all. We also realised that our partners and brands needed more than just a traditional distributor; they needed a strategic partner capable of driving growth in the travel retail space.
Our mission has evolved into becoming a comprehensive solution provider. Today, we work closely with our partners to develop bespoke retail concepts, offering them end-to-end support, from brand education and marketing to supply chain logistics and tailored retail formats. As a result, we now play a crucial role in helping brands maximise their potential in the dynamic and competitive travel retail industry.
With offices in Panama, Barcelona, Miami, Dakar, Shanghai and Tokyo, what other expansion plans are in the pipeline? Is there a global strategy, and what locations are targeted and why?
Our expansion strategy is aligned with the evolving needs of both our brand partners and the travel retail market.
In 2023, we began operations in EMEA, which accounts for 35% of travel retail sales. We’re already developing projects with major operators such as Lagardère Travel Retail and Avolta and also serving independent retailers. Our current commercial and logistics platforms reflect our commitment to regions with high growth potential.
Looking ahead, we are targeting strategic locations in Asia and the Middle East for 2025, leveraging the existing platforms within our group. Our global strategy isn’t just about geographical expansion but also about creating strong regional hubs that allow us to be closer to our partners, enabling orders to be ready within five business days.
The DFD brand portfolio ranges from watches and toys to confectionery, footwear and more. Tell us about any specific category focus. Has the ‘gamble’ to highlight footwear in travel retail paid off?
DFD initially focused on developing the non-core category within travel retail. This required effort to convince brands and partners of the growth potential in this area. However, the results speak for themselves. Given that 51% of consumers make purchases for personal use, compared to 25% who buy as gifts, customers are increasingly interested in fashion & accessories categories and jewellery & watches, which have seen year-on-year growth.
For instance, when we first introduced footwear into travel retail, we knew it was a bold move, but we identified an untapped opportunity. The modern traveller is increasingly focused on comfort, and the rise of athleisure further supported our decision. Today, footwear has become a strong category, with brands like Skechers gaining significant traction in duty-free stores globally, despite initial resistance due to the challenge of managing size-based categories, given space constraints.
And DFD’s latest major brand partnership?
We are delighted to have been appointed as the exclusive global partner for Playmobil. The toy category is an expanding area within travel retail, and we were looking to grow it. What better way to do so than with a leading brand with 50 years of history and 95% brand recognition?
Additionally, data shows that the average spend by shoppers with children is significantly higher than for those without children. The average spend per item is also higher among shoppers with children.
This partnership comes as we refine our categories, concentrating on those with the greatest potential and phasing out less in-demand items.
Playmobil will have a dedicated exhibition space in DFD’s showroom at the TFWA 2024 Conference in Cannes, where retailers will discover the brand’s latest innovations and the full range of end-to-end solutions DFD provides.
Within travel retail how important is staff/brand ambassador training? And what is DFD doing to ensure that frontline staff are well educated about your brands?
Training is a cornerstone of our value-added proposition. We believe that well-educated frontline staff can make all the difference in driving sales and enhancing the traveller experience. The data backs this up, as 50% of shoppers interacted with sales staff during their last duty-free visit, and 73% of those shoppers were positively influenced by their advice.
To ensure the success of our brand partners, we’ve created a dedicated training department focused on providing tailored educational programmes for retail staff. These sessions cover not only product knowledge but also sales techniques and customer engagement strategies. This initiative not only boosts sales (even achieving double-digit growth in some points-of-sale) but also significantly increases the engagement and enthusiasm of staff. In just four months, this department has conducted 87 training sessions, training 775 salespeople.
Let’s also look at marketing and the role of strong PoS concepts. What are you doing to ensure DFD can offer its partners the right approach to suit today’s market/customers’ needs?
In-store marketing is a key sales driver, with over 70% of purchase decisions being made at the point-of-sale. In travel retail this is even more critical, as 41% of shoppers did not plan their purchases and 28% make impulse purchases.
Our team works closely with each brand to create customised display concepts that not only highlight the product but also engage consumers through interactive experiences. We offer personalisation options and live product demonstrations to make the point-of-sale a memorable touchpoint for consumers, all part of our 360-degree proposal for our partners.
We’ve seen significant success with customised exhibitions for brands like New Era, Guess and Faber Castell, which have achieved unprecedented sell-out figures and left a strong impact on consumers.
For instance, with Playmobil, we’ve already developed functional and attractive point-of-sale solutions that will delight both kids and adults alike. We’ll be showcasing a sample of this at our showroom during TFWA Cannes, and we can’t wait to welcome our partners there.
Do you consider yourself a hands-on CEO?
As I see it, one of the main characteristics companies should never lose as they grow is an agile, entrepreneurial spirit. I try to act that way at all times, whether in large projects or new developments. In that sense, the greatest challenge is to preserve that mindset, which keeps you in direct contact with all areas and much of the teams, but without falling into micro-management.
“One of the main challenges facing the duty-free and travel retail industry is that brands are seeking more than just distribution”
I travel monthly to our different offices, particularly to the Americas, where we already have an established business, to work closely with our teams in various regions. This ensures that we remain agile and responsive to market trends and partner needs.
I also make it a point to engage directly with our partners and clients, as I believe that a hands-on approach helps build stronger relationships, fosters trust and allows the business to evolve toward the future.
For example, in the year and a half that I’ve been in this position I have strengthened our sales teams, created the training department, streamlined our portfolio to focus on profitable brands and forged future growth plans through the implementation of retail concepts.
There is a definite focus on turn-key business models. Can you explain what this means?
Our turn-key business model is designed to simplify the process for our partners. We offer everything from monobrand stores to shop-in-shop formats and grab-and-go retail solutions. What makes this model so attractive is that our partners can entrust us with the entire retail operation, from product assortment to store set-up, marketing and even staff training.
Many of our partners are very strong in conventional categories but lack the specialised knowledge required for the categories we manage in the travel retail segment. That’s why we’ve made agreements with some of our brands to open mono-brand stores or stores with a curated selection of our brands. This full-service approach allows brands to seamlessly enter new markets without the burden of managing multiple operational details. It’s a win-win situation for both us and our partners.
How important is a proprietary supply chain system and how viable is that as DFD eyes further expansion?
Our proprietary supply chain system is one of our key differentiators. It allows us to consolidate shipments across multiple brands and categories, ensuring that our retail partners receive a diverse range of products in a single, streamlined delivery. This not only reduces logistics costs but also simplifies inventory management for our partners.
As we continue to expand globally, this system will remain critical in maintaining efficiency and flexibility in our operations. It enables us to scale quickly while ensuring that we continue to provide the high level of service that our partners have come to expect.
What do you consider the main challenges facing the duty-free/travel retail industry as we move towards 2025 and beyond? And how is DFD meeting those challenges?
One of the main challenges facing the duty-free and travel retail industry is that brands are seeking more than just distribution. They need strategic partners who can offer tailored solutions, streamline supply chains and provide valuable insights into consumer behaviour.
Additionally, retailers are demanding a higher level of flexibility and efficiency to keep up with changing market trends and traveller preferences.
We are meeting these challenges by offering a comprehensive, end-to-end service model that goes beyond distribution. We provide full retail solutions, from product assortment and category management to staff training and innovative PoS concepts. As seen in our first mono-brand stores and new openings planned in EMEA with Avolta in Africa and Lagardère Travel Retail.
Logistics are also key for us. Thanks to our proprietary commercial and logistical platforms around the world, our real-time inventory system and our investment in cutting-edge business tools, we can serve global clients no matter their location. Speed will shape the future of travel retail and data analysis will be crucial for decision-making in this dynamic segment. We’re already using it to optimise our brand portfolio, as travel retail’s cyclical nature means demand for specific brands fluctuates. ✈️
