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“The loss of the two core categories in Hong Kong will only raise our interest to further invest and grow in Asia“ |
Roberto Graziani President & CEO The Nuance Group |
INTERNATIONAL. The Nuance Group President and CEO Roberto Graziani has vowed to maintain the retailer’s ambitions in Asia following the disappointment of losing its two core category concessions at Hong Kong International Airport (HKIA).
As revealed by The Moodie Report, Nuance-Watson (HK) was unsuccessful in defending its airside general merchandise and perfumes & cosmetics concessions at HKIA, which were awarded to DFS.
In a clean sweep of all three contracts on offer, DFS also secured the liquor & tobacco concession, currently held by Sky Connection.
Reacting to the news, Graziani said: “I’m clearly extremely disappointed by the outcome of the core category tenders in Hong Kong.
“Our joint venture has delivered excellent performance in the last ten years and this has been recognised by all industry stakeholders. I also believe that our bids were commercially very innovative and financially competitive. We will try to understand, in the near future, the reasons that led Airport Authority to take this decision.
“The loss of the two core categories in Hong Kong will only raise our interest to further invest and grow in Asia, a region for which our commitment remains very strong and our expertise [remains] at the top of the industry – expertise that we really want to leverage on all our current and future businesses that are benefiting from Asian passengers.
“Let me take this opportunity to thank all the Nuance-Watson Hong Kong employees and management. Without their dedication and support we could not have reached and sustained the extraordinary results that have taken Nuance-Watson Hong Kong to the top of the travel retail industry in Asia.”
UPDATED STORY. Commenting on the results, Nuance-Watson (Asia) Regional Managing Director Alessandra Piovesana said: “The management and the staff of Nuance-Watson (HK) are naturally disappointed by the outcome of the core licenses tenders. Our determination to set the bar of performance higher and higher year after year and, fulfilling our commitments by good and bad times, have led us to predict a much different outcome.
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“The company remains highly versatile and sustains its success via maximising high space productivity, resourceful marketing, constant commercial innovations and truthful partnerships with both Airport Authority Hong Kong and brand vendors“ |
Alessandra Piovesana Regional Managing Director Nuance-Watson (Asia) |
“For all our performing years throughout our tenure at HKIA, we are thankful to our brand partners who strongly echoed all our achievements and validated our professionalism and operating efficiencies in travel retail, and publicly recognised Nuance-Watson (HK) as best in class in this major Asia hub. Their substantial support to us during the tender process is a clear note of trust and undivided partnership. We are equally appreciative to the travel retail press and the travel retail industry for their unfailing support.
“I, personally wish to thank my people for their contribution throughout the years. Together with my management, our objective has always been to establish our business into a long-term viable one. With a long-term perspective in mind, in spite of the frequent changing nature and uncertainties of tendering, our company continued to invest in major infrastructural enhancement projects to develop our airport in collaboration with the Airport Authority, explore new opportunities for our brands and vendors, and ultimately, always ensure “˜best of the best’ for the utmost satisfaction of our customers.”
Nuance-Watson (HK) has managed the two core licenses since the opening of HKIA in 1998, boasting a cumulative yearly average growth was +11% and over +21% in the past five years to reach retail sales of HK$1.1 billion and over HK$1.8 billion respectively in 2011. Over past 13 years, the General Merchandise and Perfumes & Cosmetics concessions earned respectively 53 and 19 international and local recognitions and awards.
Piovesana, who joined the company in 1999, continued: “Over the years, Nuance-Watson (HK) has demonstrated its remarkable capability to pioneer sound commercial approaches, uncover untapped potentials among established and upcoming beauty brands and concepts far ahead of other regional and global airports, satisfying customers’ rapidly changing wants and needs. Its category insights, expertise and continuous successful new launches ensured the “˜Temptation’ franchise remained the preferred retail partner for perfumes & cosmetics brands making their Asian airport debuts. Ultimately, our competitive ability to gain exclusivity, Asian targeted launches and vendors’ support ensured HKIA continued to enjoy a winning proposition.
“As for General Merchandise, we have and continued to be a longstanding resourceful provider of leading brands to the glamourous East Hall statement, recruiting, testing and growing 32 brands which have enriched the East Hall boutiques’ walkway since 1998. In constantly adapting brands on offer within its General Merchandise stores in line with our ever-changing portfolio of brand boutiques and specialties, Nuance-Watson (HK) optimised choices for customers. Its General Merchandise license prided itself to offer some 200 hard luxury and fashion and 80 confectionery, health and medicine brands, satisfying customers’ demand for variety and specific offers within a department store approach to airport retail.
“Lastly, we have collaborated with and supported Airport Authority Hong Kong (AAHK) in many ways, accommodating numerous changes, sustaining AAHK throughout their challenging times, embracing and holding up any of their new initiatives and developments and diligently lending support whenever required. In net, and modestly speaking, we have been, in the management of our core licenses, a performing and supporting operator. We are grateful, and, it has been a pleasure to be given the opportunity to contribute actively with AAHK to the growth and success of HKIA for the past 13 years.
“During the past 13 years at HKIA, Nuance-Watson (HK) has consistently delivered outstanding commercial results and profitability despite constant challenges, changes, competition and crises. The company remains highly versatile and sustains its success via maximising high space productivity, resourceful marketing, constant commercial innovations and truthful partnerships with both AAHK and brand vendors. Over the years, Nuance-Watson (HK) won fully 35 of the 68 tenders it has submitted. Such intensive participation underlines its boundless energy and commitment to grow and extend its support of HKIA at every opportunity. The company has also built up a proven track record of exceeding customers’ expectations with constant ingenuity and innovation in pioneering many market firsts and activities which found travellers’ recognition and industry awards.”
Despite the loss, Piovesana said the company remains committed in retaining and nurturing its remaining 16 licenses at HKIA.
“My gratitude goes to my dedicated team with whom we simply made the most of everything and enjoyed the process. Thank you to all the management at Nuance-Watson (HK), for your immense contribution. Judge your success by all you have been able to achieve in past 13 years – and be prepared to lose once in a while. It will further strengthen your self-mastery. I wish to thank my Board of Directors for their unfailing support, and guidance throughout these lengthy eight months of waiting, managing with little visibility and mitigating risks. I am grateful to all of you and now, it is time to rebuild.”
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COMMENT (REPRODUCED FROM THE MOODIE REPORT E-ZINE): Tender result stories are, inevitably, all about the winners, writes Martin Moodie. That is the cold reality of the blind auction system that underpins most travel retail contracts
But spare a thought for the unsuccessful bidders at HKIA, especially the incumbents. It will come as little consolation to them, but both Nuance-Watson (HK) and Sky Connection have done tremendous work in recent years across their respective concessions. Both have been there since the beginning and are synonymous with travel retailing at Hong Kong International Airport. Initially it will seem a very strange place without them.
Both have stood consistently for quality, innovation and the pioneering of new brands and new concepts. Both are led by intelligent, personable and highly competent executives (Nuance-Watson’s Alessandra Piovesana and Sky Connection’s Baker Salleh).
What other retail channel is underpinned by such a unforgiving process as the contract-driven, tenure-limited nature of airport concessions? You do your job, sometimes brilliantly, and yet it can all be taken away from you overnight by a higher cheque or a more persuasive argument. But all the players understand those are the rules of the game. Ultimately, you win some, you lose some.
After a rocky start when the new airport opened in 1998, Sky Connection (trading as Free Duty) settled down to become a much-admired retailer, one associated with some of the best ultra-premium liquor executions in the sector. The loss of the concession will be a bitter pill, though the pain is eased a little by the company’s recent successful retention of the key MTR railway duty free tender.
And what about Nuance-Watson (HK)? The company will probably have budgeted for losing one of its Hong Kong concessions, but not two. The double whammy wipes out much of the joint venture’s retail footprint at Hong Kong International (it retains electronics, some boutiques and a solid landside business). It’s a big blow all right and Nuance’s position in Asia has been significantly weakened.
Yet, perversely, this may be the prompt to make the company accelerate in the region, including acquisitions. With an expectant (and no doubt disappointed) new shareholder, private equity group PAI, Nuance is likely to go on the offensive. Retrenchment is not a palatable option. The company has the expertise, the backing and the global clout to remain a force in Asia. Its job starts now.
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