UAE. Aer Rianta International (ARI) CEO Jack MacGowan has said that the company’s capture of one of the key duty free contracts at Abu Dhabi’s Midfield Terminal Building is testament to its “tailor-made, niche, customer-led approach” to the business.
He has also pledged that ARI will deliver one of the world’s great airport beauty businesses when the terminal opens in two years.
As we reported yesterday, Abu Dhabi Airports has awarded the two core duty free concessions at Abu Dhabi International Airport’s much-anticipated Midfield Terminal Building (MTB) to ARI and Lagardère Capital, the latter a partnership between French company Lagardère and Abu Dhabi Capital Group. ARI will manage the key space dedicated to perfumes, cosmetics, skincare, sunglasses and jewellery.
Speaking to The Moodie Report, MacGowan said: “We’re absolutely delighted. This is an opportunity for us to work with one of the best airports in the world.
“It speaks volumes for our updated retail strategy. Anyone can draw a pretty picture [in a tender bid] but what came across, we believe, was that the airport saw the link between the images we presented and the customer-led strategy that guided them. Every aspect of our submission was tailor-made to what the airport wanted and to optimise customer satisfaction and commercial returns.”
MacGowan noted that ARI set out about three years ago to become “a much more data-driven and customer-driven company. I hope that focus will lead us to more opportunities to show what we can do. It appears our bespoke, tailor-made, niche approach that is all about the customer is working for a number of airports today.”
MacGowan said the company has set itself high standards across the categories, not least in the vital P&C business – standards it is determined to deliver on in Abu Dhabi.
“Our strategy here is to create one of the world’s best beauty stores at an airport. It will be much more than a collection of brands, but rather a destination in itself,” he said.
“With fragrances we’ll have a fully immersive, multi-sensory shopping experience. That will be based on the very different roots of fragrance that apply in Abu Dhabi and the Middle East.
“In skincare we’ll invest a lot in the consultative processes and experiences. The brand mix will be tailored not just for today but will look to the future. Inspiration comes from some of the iconic sites from around the emirate, with hospitality central to it, offering places where the customer can relax, so that wellbeing and skincare really dovetail together.
“In sunglasses and in jewellery, we’ll reveal more later but it will partly be about the next generation of shopping in these categories.”
Asked how ARI had addressed Abu Dhabi Airports’ call for bidders to “tear up the rule book” for these bids, MacGowan said: “What we have done is very tailor-made and bespoke to the emirati culture. We aim for it to be far more local and with a stronger Sense of Place than the other major airports in the region. That will help Abu Dhabi Airport grow its customer satisfaction, and if we do our job in the part of the journey we control, to enable us to make more money too.”
He also hailed the strong support from his own team, the design team as well as brand owners.
“Our team did a superb job in putting this bid together and Robbie Gill and The Design Solution are a great partner on the design side.
“On supplier relations we have made big strides and that is partly down to our recent work at Dublin Terminal 1. To convince Chanel to come into Dublin T1 with Les Exclusifs, in a location that wasn’t such a great shop two years ago, was a big job. But because it has done so well commercially, and because we have done a great job with Tom Ford, Jo Malone and others, we can see the momentum building around P&C.
“For Abu Dhabi our supplier partners have bought in at a high level to the ‘sensational experiences’ idea, to the idea of great hospitality and to doing things differently here. And these brands see it as the right direction. We have committed to managing their brands in the way they would manage them, and that is why they are investing with us rather than with other partners.
“So I need to thank brands such as Chanel, Dior, Lauder and L’Oréal in particular – they all made a big difference to our submission and we’re delighted we could win.”
Having captured the ten-year contract in a fast-growing hub airport between east and west also offers ARI a major opportunity to become a reference point for the business, said MacGowan.
“This is such a huge business for us and it puts such a focus on P&C for ARI worldwide that we will have to really look to lead retailing of beauty in travel retail in the future.
“There are areas of P&C in which we have been planning to innovate and to test, and we’ll accelerate those now. One is haircare, another is the high-end premium segment and a third is the focus on younger consumers. We would have done these things anyway but now we have a great platform to take these areas forward. That will also be about doing things that won’t only work in 2018 but that will still be relevant in 2025.
“In my view we’ll be building up our investment in category management, on our work on beauty trends and it will also mean further thought on how we merchandise and sell these categories, right down to staff training.
“It’s not only about the new marketing techniques in-store, it’s asking how we get that consumer coming through Abu Dhabi to buy into the P&C category? We need to give them something new. So we will review what extra we must do for those consumers before we open the shop.”
MacGowan would not be drawn on the potential size of the new operation but noted that it “is a substantial business for us”. He also said it would require much work with suppliers to rethink the business model.
“There is an enormous change required in how we work with our suppliers in the Middle East but that is good. Most of them are happy with our partnership model, with how we work with their brands and with how we introduce new ideas. We find them open too. The whole area of digital for example will require us to spend a lot more time thinking through the business with them. How do you convert a category that is based on touch, taste, feel and smell into an online business model?
“On pricing we have work to do with suppliers in the region around the Dollar challenge and to balance the risk-sharing, although we don’t open for two years so that is not the most pressing issue today. It’s about redefining the model so that it works for us all.”
MacGowan said the contract was challenging but noted: “We wouldn’t be here if we didn’t think we could make money. Are the margins tight, is there risk and will it be tough? Absolutely. But we see it as a fantastic opportunity.
“And I’m sure that more benefit will come out of it than we know about or can imagine today. If you work hard at it, and make it the best it can be, then I believe there will be benefits in other airports in the Middle East and elsewhere.
“This is a huge step up for us in the Middle East. As well as putting us in front of the Abu Dhabi customers as the airport grows into a global transport hub, we’ll learn a lot about those consumers and that will help us in other parts of the region. It will help us and it will help our [regional] partners, without whom we couldn’t have come this far. We’ll learn a lot and we’ll be strong about reinvesting in the region. We won’t be the biggest but we will be the biggest multi-location retailer there, and we hope we can build on that status.”
MacGowan also reflected on the seismic year that 2015 has been for ARI, having secured new concessions at Auckland and now in Abu Dhabi, as well as the opening of its new Dublin T1 operations.
“This has been a great year for ARI. We have started well in Auckland but we still have a lot more opportunity and a lot more to learn. Both there and in Abu Dhabi there are big opportunities to show what we can do.”
To conclude, MacGowan said that despite the recent wave of travel retail mergers and acquisitions, there was still room for smaller players to make an impact.
“With all of the consolidation over the past 18 months we’ve heard a lot about there being a very different future ahead, with a race to the bottom based purely on rents and money.
“What this decision in Abu Dhabi shows is that some airports really understand that the differentiated, tailor-made offer designed for their customers can grow the overall pie. It shows that there is room in the industry not only for the big, low-cost operators but also for customer-centric, small, agile players that deliver tailor-made experiences. And that says to me that there is a long and bright future for ARI in this business.”
