Americas Duty Free & Travel Retailing Virtual Expo 2020

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DFA chief looks to a strong future p. 12  Top Brands International open to new opportunities p. 28  Small businesses during COVID-19 p. 44


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Letter from the Editor


and Recover


t’s safe to say that early 2020 hit the travel retail world like a hard sucker-punch: swift, shocking and painful. But as we in the industry are quick to remind ourselves, we are a resilient bunch; we might stagger but we are soon back on our feet. After an almost complete shutdown around the world, borders are now beginning to reopen and those in travel retail are starting to see the crack of dawn on the horizon. This new day is shining light on a landscape completely different from the one left behind, however, and navigating it will take innovation, creativity, a keen eye and a wide-ranging approach. The good news is, we in TR have creative innovators in our ranks who will not only help us get through, but make us stronger on the other side. As Portland Designs’ Ibrahim Ibrahim suggests in this issue, the pandemic has served to highlight problems airport retail already faced. Finding ways through the current situation will also help resolve more systemic problems in future. Recovery is the word on everyone’s lips, and it’s no secret that it will be a long process, one with ups and downs. ACI’s Patrick Lucas says airport recovery will take years, but also reminds us that the long-term fundamentals – what has brought travel on a continued growth pattern – remain in place. For some, like MSC Cruise’s Adrian Pittaway, recovery has already begun. In this issue we learn about the comprehensive program that cruise line put in place in order to take to the seas once again. For others the world is still on pause, but they are not sitting on their hands; retailers and associations are working hard to persuade decision-makers to be proactive, from trying to convince the world’s governments to open borders with standard testing procedures to trying to get the UK government to reverse its irresponsible decision to cut tax-free sales. This October we will surely all miss the meetings and social events that come from being together in Cannes, but Martin Moodie and those at The Moodie Davitt Report have created a virtual expo that not only offers opportunity to learn and do business, but also offers future revenue. We are all learning to grow and adapt, from the brands, who have to redevelop ways for customers to test and taste, to retailers like DFA, who have taken this time to expand and redevelop their stores. Now is a time of both reflection and action. We at Americas Duty Free wish all our readers a successful, speedy and sustainable recovery, and we are sure the information on these pages will offer insight to help make that happen. Kindest Regards,

HIBAH NOOR Editor-in-Chief


OCTOBER 2020 · VOL 30 · NO 3 The Americas Duty Free & Travel Retailing magazine (ISSN 0962-0699) is published four times a year April, June, October and November by Global Marketing Company Ltd. 26 Pearl Street, Mississauga, Ontario L5M 1X2 Canada. It is distributed throughout Central America, South America, the United States, Canada, U.S. Virgin Islands, U.S. Pacific islands, and the islands in the Caribbean. The views expressed in this magazine do not necessarily reflect the views and opinions of the publisher or the editor. October 2020, Vol 30. No. 3. Printed in Canada. All rights reserved. Nothing may be reprinted in whole or in part without written permission from the publisher. © 2020 Global Marketing Company Ltd. .

THE AMERICAS DUTY FREE & TRAVEL RETAILING 26 Pearl Street Mississauga, Ontario L5M 1X2 Canada Tel: 1 905 821 3344; Fax: 1 905 821 2777 PUBLISHER Aijaz Khan EDITORIAL DEPARTMENT EDITOR-IN-CHIEF Hibah Noor DEPUTY EDITOR Laura Shirk SENIOR EDITOR Mary Jane Pittilla SENIOR WRITER Rebecca Byrne ART DIRECTOR Jessica Hearn CONTRIBUTORS Jas Ryat


The best shopping destination Dufry keeps evolving to sustain its position as the world’s leading travel retail expert. We are now bigger than ever, more global, and more strategic. We go above and beyond, offering a large variety of brands and an unparalleled understanding of our customers. And all‌ in the best airports, in 65 countries, and at over 2,300 stores on five continents.

Letter from the Editor


y recuperarse


e puede decir con toda seguridad que los primeros meses del 2020 afectaron el sector minorista de viajes como un golpe inesperado: rápido, estremecedor y doloroso. Pero como nos resulta fácil de recordarnos en nuestro giro, somos resilientes. Podemos tambalearnos, pero enseguida nos recuperamos. Después de un cierre casi completo en todo el mundo, las fronteras están comenzando a reabrirse, y el sector minorista de viajes está comenzando a ver señales del amanecer en el horizonte. Este nuevo día está iluminando un paisaje totalmente diferente del que quedó atrás. Sin embargo, para transitar por el mismo necesitaremos innovación, creatividad, ojo avizor y una estrategia de largo alcance. La buena noticia es que quienes trabajamos en el sector contamos con innovadores creativos que no solo nos ayudarán a salir adelante, sino también nos harán más fuertes al otro lado. Como sugiere en este número Ibrahim Ibrahim, de Portland Designs, la pandemia ha servido para destacar problemas que ya ha enfrentado el campo minorista de aeropuertos. Buscar maneras de resolver la actual situación también ayudará a solucionar más problemas sistémicos en el futuro. La recuperación es la palabra que todos usamos, y no es un secreto que será un proceso largo, con altas y bajas. Patrick Lucas, de ACI, afirma que la recuperación aeroportuaria demorará años, pero también nos recuerda que los elementos fundamentales a largo plazo– que han llevado a los viajes a un patrón de crecimiento continuo– siguen presentes.

Para algunos como Adrian Pittaway de MSC Cruise, la recuperación ya comenzó. En este número conoceremos detalles del programa integral que ha puesto en marcha la compañía para volver a navegar nuevamente. Por su parte, para otros el mundo sigue detenido, pero, a pesar de ello, no están cruzados de brazos. Los minoristas y las asociaciones están esforzándose para convencer a los gobiernos de que deben ser proactivos, desde tratar de convencer a los gobiernos mundiales a abrir fronteras con procedimientos convencionales de detección, a tratar de que las autoridades británicas reviertan su irresponsable decisión de recortar las ventas libres. Este mes de octubre, echaremos de menos seguramente las reuniones y eventos sociales resultantes de estar juntos en Cannes, pero Martin Moodie y el equipo de The Moodie Davitt Report han creado una exposición virtual que no solo da la oportunidad de aprender y hacer negocios, sino que también ofrecen ingresos futuros. Todos estamos aprendiendo a crecer y a adaptarnos, desde las marcas, que deben reformular maneras de que los clientes prueben y degusten; hasta minoristas como DFA, que ha empleado este tiempo para ampliarse y remodelar sus tiendas. Este es un momento de reflexión y acción. El equipo editorial de Americas Duty Free les desea a todos nuestros lectores una recuperación exitosa, expedita y sostenible, y estamos seguros de que la información contenida en estas paginas les brindará conocimientos para ayudarlos a que eso ocurra.

Un cordial saludo,

HIBAH NOOR Editora Jefe





Lead Stories 12 Duty Free Americas

22 Tax Free World Association

DFA chief looks to a strong future Business expansion and investment are the order of the day for Duty Free Americas, President Leon Falic tells Americas Duty Free

Impact and opportunity: TFWA executive speaks out on crisis COVID-19 has severely impacted industry association TFWA, but the crisis will also be an opportunity for change, according to Managing Director John Rimmer

16 Cruise Industry Update

26 Essence Corp

18 Portland Design

28 Top Brands International Update

Route to Recovery: cruise success After six months of a standstill for the cruise industry, which was the worst hit of any tourism-associated industry, MSC managed to restart, with over a month of sailing now under its belt.

Talks Opportunities

The data business Portland Design’s Managing Director Ibrahim Ibrahim talks about the huge opportunities ahead for all stakeholders if we change the way we think about the airport commercial space

Light at the end of the tunnel Buoyed by sales in the Caribbean and on the Mexican and South American border, Essence Corp is looking forward to a gradual return to travel in the region

Eyes open to opportunity In a candid interview, Top Brands International President Danny Yohoros reflects on a difficult six months and looks ahead to the opportunities the pandemic might afford


18 10


Features UK gov’t end tax-free sales at airports 3 2 Route to Recovery, air travel 36 Mavala shows its true colors 40

Small businesses during COVID19 44 E. Gluck unveils new collection 48 MONARQ expands portfolio 52






ufry AG (Dufry) and Alibaba Group have announced that they have agreed to form a strategic Joint Venture in China, to partner in the Chinese travel retail markets. This Joint Venture, which will be owned 51% by Alibaba and 49% by Dufry, will bring Alibaba’s established network and digital capabilities to Dufry, whereas Dufry will contribute its existing travel retail business in China and support the joint venture with its supply chain and operational skills. Alibaba Group is also investing with Dufry, with a target ownership of up to 9.99% of the post-offering share capital, and will participate in its ordinary capital increase, which is subject to approval of Dufry’s shareholders at its upcoming EGM on 6 October 2020. Dufry began operating travel retail businesses in China in 2008; this partnership will help build on that history and is also in line with Dufry’s growth strategy, which focuses on Asian markets. The company is also seeking to expand its digital offerings including store and staff digitalization, pre- and post-travel online services, digital customer engagement and online presence inside and outside of the airport, as well as data analytics and digitalization of operations.

Share issuance

Dufry has already secured a commitment from Advent International Corporation or its affiliates ("Advent International") to purchase shares at CHF 28.50 per share up to a maximum investment amount of CHF 415 million (to be automatically increased by an amount equal to 20% of any amount by which the gross proceeds from the offering exceed CHF 500 million, up to a maximum investment amount of CHF 455 million).


Given the commitment from Alibaba, Dufry is proposing the issuance of up to 25 million fully paid-in registered shares, which result in gross proceeds of approximately CHF 700 million. This will be used to finance the previously announced acquisition of the remaining equity interest in Hudson Ltd. It also may fund the setup and operations of the joint venture, and will likely also be used to pursue growth opportunities in China and to accelerate Dufry’s digital transformation. The shares will be first offered to existing shareholders, subject to legal limitations. The rights will not be tradable, but are transferable. Shares not taken by existing shareholders will be offered first to Advent International and second to Alibaba Group. Any Rump Shares not purchased by Advent International or Alibaba Group will be offered to the market by way of a public offering in Switzerland and private placements in certain jurisdictions outside Switzerland in compliance with applicable securities laws. Julian Diaz, Dufry Group CEO, commented: “We highly value this partnership with Alibaba Group to form a strategic Joint Venture to explore growth opportunities and develop the travel retail business in China. We expect this collaboration to drive growth in Asia and with Chinese customers worldwide with the support of new digital technologies. Alibaba Group is a leader in digital commerce with an ecosystem of more than 800 million consumers in China. Dufry holds a leading position in travel retail globally and brings in its strong operational expertise in 65 countries and over 2,500 shops. By fostering existing and new business models in offline and online travel retail, we are convinced the Joint Venture will capitalize on growth opportunities and will support Dufry to become the leading digital travel retail company worldwide.”

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Duty Free Americas Update

DFA chief looks to a strong future

The Falic brothers, from left, Jerome, Leon and Simon at the US embassy opening in Jerusalem last year

Business expansion and investment are the order of the day for Duty Free Americas, President Leon Falic tells Americas Duty Free by HIBAH NOOR

Falic brothers (from left) Leon, Simon and Jerome at their 6th Annual Duty Free Americas Golf Tournament took place at the Trump National Doral Country Club in Miami, Florida, on February 6



uty Free Americas (DFA) has entered the cruise line business with a new ship chandling operation called UETA Ship Supply. “We’re going to be expanding in that business as much as we can, putting in bids, looking at different opportunities,” Leon Falic, President of Duty Free Americas, tells Americas Duty Free. The Miami-based company entered the cruise sector three months ago as part of a diversification strategy. Mark Fine has been appointed to head the business, which will supply product to the ship stores and offer enhanced services. “We’re based out of Miami and we feel that it’s not like a big change for us,” explains Falic. “We thought about it for a while, but it hasn’t been something we’ve elaborated on. We’re in every type of business: the border business, the distribution business, the duty free side, the travel retail side, we have some of our own brands, we have e-commerce, so we thought that one of the businesses we haven’t been in is the cruise business. We felt it was an opportunity to participate and there are a lot of other players as well. We’ll try to see what we can do there.” In a further development, DFA has been extending its operation in different areas. In past months, the company has opened a few stores on the borders, and also took the opportunity offered by the pandemic pause to improve some of its stores. The company’s e-commerce business has been “very strong” because of the new retail dynamic triggered by the crisis. Elsewhere, it is continuing to invest in its operations. “Some of our businesses are suffering and some are benefiting. Obviously more are suffering than benefiting but we never stop [investing],” says Falic.

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Duty Free Americas Update

Ahead of the game

Another bright spot in the business is Macau, which Falic describes as performing very strongly. “We have great brands there. People feel safe. Asia’s ahead of the game right now.” Turning to the airport duty free store sector, Falic believes that the crisis will result in a change to the often-criticized concession model, with more emphasis on revenue as a percentage of sales rather than minimum annual guarantees. “I think the concession model will continue but it will have to be a little different. A lot will depend on the percentage of sales more than the minimum annual guarantee. This [pandemic] was completely unexpected. Panda Duty Free in Uruguay’s Rio Nobody had in their contract anything to Branco zone is DFA’s largest store, do with this. We had a lot of provisions, measuring 10,500 square meters on the opposite side of the Brazilian border but nothing like this. It doesn’t have to be a low percentage of sales, but it has got to be a percentage.” On the supply side, Falic believes that Expanded selection the suppliers will want to work with whoever it is that will pay Among the divisions that have benefited is the border business, because many people are going on road trips, them. “We feel lucky that we can do that. We’re injecting a lot Falic reports. “If you look at any destination with national of cash into our business. To us, those suppliers are our most parks, they are all full; the US and Brazilian borders are important partners and our consumers.” packed. Since those stores are open, we’ll be able to capture Falic thinks that the pandemic has made everybody in the that business. The borders have been a pleasant surprise. industry closer. “The positive side of it is that we’re all going to We’ve been very well invested in that business for a long time get better at what we do, we’re all going to work together, and and it’s helped us maage through the crisis. It’s been very we’re all going to hopefully come out of this stronger than when important to us.” we went in.” DFA has border businesses in the US, in Venezuela on the While DFA’s e-commerce business has been performing very Colombian border, and on the Panama/Costa Rica border, as well, Falic doesn’t see online services such as click-and-collect well as in Uruguay. In addition, a new business on the Brazilian replacing physical duty free stores. “When people go to an airside of the Uruguayan border has not yet opened. port, I don’t think that they would shop everything online before. DFA has strengthened the stores’ inventory with a bigger Going through an airport, the shopping experience is imporselection. At the same time, the operator is ensuring that the tant. There is something about being at the airport, being in a consumer feels safe while shopping and that the correct health mall, finding new items. I don’t think the whole business will go protocols are in place in terms of store cleaning, alcoholic gel online; I think part of the business will go online for an educated provision, and social distancing. consumer and those who know exactly what they want, but duty free shops will still be a big part of the business.”

In 2019, DFA opened an airside convenience store with its partner WHSmith in São Paulo Guarulhos Airport


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Cruise Industry

Route to Recovery: cruise success After six months of a standstill for the cruise industry, which was the worst hit of any tourism-associated industry, MSC managed to restart, with over a month of sailing now under its belt. The cruise line is convinced its new protocols will keep passengers and crew safe, and they’ve convinced governments as well



hile all in the travel and tourism sector have been hard hit this year, possibly none to the same degree as the cruise industry. Indeed, one of the first “nations” to be hard hit was a cruise ship as opposed to a country. Before long, all the world’s cruises were completely halted, with the global cruise industry shut down for about six months. During this time ships were often left stranded at sea, unable to dock and working tirelessly just to get their staff home safely. As with the air travel industry, the cruise industry is experiencing a massive cash burn. It is essential for its survival that it build its own road, said the Route to Recovery’s special guest Adrian Pittaway, Head of Retail, MSC Cruises. This cruise line has the distinction of being the first major cruise company to have operations running again, and the way they did it can provide a lesson for any industry whose business comes from in-person, face-to-face dealings with customers.

The essential protocol

To get to the point of allowing the first cruise ship out of port with passengers, MSC developed a comprehensive health and safety protocol. Pittaway stated that the company looked at every protocol put forward by governments and health organizations and not only implemented them, but went even further. At that point the company had to not just satisfy itself but also persuade governments that its safety procedures would result in an environment where the virus could not spread. Once MSC got the ok from Greece, Italy and Malta, it was able to set sail. MSC’s flagship, the Grandiosa, was able to restart 7-day cruises from its home port, Genoa, on August 16. It has now operated for over a month with excellent feedback from guests. The second ship, the Magnifica, will resume operations on October 19th for 10-day cruises. Pittaway expressed his hope that these protocols would be adopted by other cruise lines, enabling the industry as a whole to restart. In the US there remains a no-sail order that currently goes until the end of October, so US-based cruises are still not in a position to restart. The same is true in the rest of the world. In the Mediterranean, however, other cruise lines have followed MSC, and the hope is that this can soon continue elsewhere.

The core principles

As a foundation for creating a successful protocol, the cruise line addresses three core principles. 1. Reduce risk of suspect cases 2. Mitigate transmission when guests are onboard 3. P revent any situation wherein a guest might get sick after leaving the ship


The program the company developed to address these principles works across the entire system, from booking to embarkation throughout the onboard experience until guests go home.

The 6-step restart protocol

To ensure that these three core principles are adhered to, MSC has created a 6-Step Restart Protocol, as follows: 1. E very guest is tested before coming on board. In higher risk areas a second test is required. 2. E ach member of the crew is tested before they embark. Members also must go through a period of quarantine before they join the rest of the crew. All are temperature tested each day, and they are given regular COVID-19 tests. 3. R educe the risk of transmission by social distancing. The occupancy level of the ship has been reduced to 70%. In places where guests congregate, such as theaters and decks, social distancing is required. Guests are also required to wear masks when transiting around the ship and in shops, and special care is taken in areas such as elevators and stairways. 4. E levate the already well-cleaned environments to an even higher level of cleanliness. This means the doubling down of cleaning touchpoints, along with fumigating and sanitizing whenever possible. 5. E nhanced medical facilities. This enhancement includes having on-board testing facilities and investing in more personnel training and improved command systems. 6. O ngoing health monitoring and a contingency plan. This includes partnership plans with every port of call and local authority, so the cruise line will not be stranded if a case should develop. Pittaway stated that this is “a simple and well-run system. These six steps are core. In theory you could apply them in any environment.” No matter the challenges, the line must guarantee the safety of the ship, its and passengers and crew.

The retail environment

The ship Grandiosa has seen an increase in spend per passenger. In part, this is because passengers are only allowed to disembark at ports-of-call in order to take part in MSC excursions and are not allowed to shop onshore. Be that as it may, an environment of comfort and security is necessary for passengers to be inclined to shop onboard, and so the cruise line has developed a system

MSC mitigates chances of any passenger carrying the virus from booking all the way to when they return home

of best practices for retail. Pittaway suggests that these can be shared across any retail environment. • The most important practice is to train the retail team. Every member of the retail crew took the DFWC training, which is free. The staff had a 100% success rate, and the training was extended to the entire MSC retail team. Pittaway calls this training “an important tool that is a great part of retail restart.” • N ew stock handling regimes and restrictions to make sure there is no weak link in bringing stock on board. All deliveries are sanitized, and everything coming into retail is quarantined for up to 72 hours to make sure it’s free of contamination before being stocked on shelves • C ommunicate new health and safety measures clearly and simply to guests, using symbology consistently across the entire ship. The same communication symbology is used from shops to restaurants to cabins to pool decks. This is a simple and easy way to communicate rules, what guests can and cannot do, without the need for extra contact. • D eliver a seamless journey for guests from cabin to shop floors. “The way we communicate to guests has changed a lot to reduce risk points – no flyers or leaflets, nothing to touch,” said Pittaway. • W ork together with suppliers and brand partners. They know the best way to deal with their products. “We want to thank them, because we’ve really made use of a lot of supplier expertise and partnerships to support our teams onboard. Our training and guidelines have followed the recommendations of our brand partners.” • U tilize contactless payment. “We make use of smart technology using the mobile phone and other various ways to reduce touch points.” • P rovide safety and sanitization for guests and crew. This means completing most tasks in a new and thoughtful way – wearing gloves, for example. Passengers can no longer spray

perfume themselves, but staff will provide a perfume test. Shoppers still must be able to sample, to try, in order to feel comfortable buying. “Guests can try on a garment in a fitting room, and afterwards staff will steam it and quarantine it. This ensures guests can still touch and feel products safely.” • Follow professional advice. The cruise line worked with Aspen Medical, who helped look at anything MSC might have missed when creating protocol, from the handling of pens to the touching of cushions or door handles. “Anything you might forget about, they provided specific advice.”

A new kind of evolution

With a world that has quickly become accustomed to working remotely, the cruise line brought this concept aboard, providing direct support for the retail team, to ensure that feedback info is learned and acted upon quickly. The shop floor now has direct contact with the buying team and the operations team. All stakeholders now learn about concerns and act upon them quickly using real-time feedback from guests. This has helped to create an evolving protocol. In this new environment, guests and crew all need to adapt, and the cruise line needs to make that path an easy one. “Guests are shopping differently. Guests and crew are purchasing in a new way; we need to continually learn and adapt. The cruise shopping model that has existed for many years is now evolving. “For guests, the service experience should be exact. It’s really important that if staff is wearing a mask, a shield, they still maintain eye contact and convey friendliness, warmth, welcome and personal contact, so guests feel comfortable and relaxed to shop,” said Pittaway. The biggest key to success is team engagement, he added. “You really have to focus on your team being your ambassadors, that they know exactly their responsibility,” he said. “They [need to be] communicated to and communicate back. Train them with the support of brand partners and ensure a fast-moving adaptive system is in place. Everything we can do to evolve quickly comes from the teams onboard. Across all the ships coming back in service, the core pillar of success is that the new set of rules is being lived and breathed by your teams.” THE AMERICAS DUTY FREE & TRAVEL RETAILING


Portland Design Talks Opportunities


Portland Design’s Managing Director Ibrahim Ibrahim

Portland Design’s Managing Director Ibrahim Ibrahim talks about the huge opportunities ahead for all stakeholders if we change the way we think about the airport commercial space



ortland Design, one of the world’s leading design agencies, specializes in place branding and retail strategy for shopping centers, mixed use developments, high streets and airports, defining and designing what the customer experience will be of that place. Managing Director Ibrahim Ibrahim believes that airports are very important places for brands and of course they are an important portal for a region or a country. His team works with all the Trinity stakeholders: airport investor, airport operator, the commercial partners – retail and F&B – and the brands. “We are different as an airport design business because our approach is driven by two things: consumers and place. More specifically the trends that drive consumer behavior and their missions and

journeys. And the experiences that imbue an airport with a truly authentic ‘spirit of place’,” he tells Americas Duty Free. The company’s mantra is “people and places, not buildings and spaces”. He explains: “This is really important in the airports. Most airport design is driven by aviation planning and architecture. In parallel it must be driven by an understanding of the customer, the experience proposition, and how this will shape the masterplan and design of the terminal. We think a lot about what we call the ‘transumer’ – the traveling consumer – and what’s different about the transumer and their behavior. We use that understanding to create a compelling experience that connect with customers.” Ibrahim firmly believes that the challenges faced by the airport world because

of COVID-19 were already present before the pandemic. “Retail sales were not keeping up with passenger growth well before COVID. The reason is that people find it boring, it’s straight out of 90s shopping centers. All COVID has done is identify, accelerate and expose that. I don’t think the issues are new, they’ve just been magnified.”

The post-pandemic legacy

He notes that some of the issues and challenges of COVID-19 are short term and some are systemic. One of these legacies will be a move to zero touch, including digital payment. Another future consideration will be “design for distance”. “This is a new paradigm in the design world. We’ve thought about design for sustainability and experi-

As physical stores are being used less and less for transactions and behave more like media brands, the revenue and rent business model will change.”


Portland Design Talks Opportunities

If we accept a new way of thinking about the commercial zones as moments of experiences in stage settings, massive opportunities open up for new brands and operators at the airport.”

ence; now, as well as all that, we have to think about design for distance. COVID is going to lead to the growth of what we call the ‘by appointment’ economy. One thing COVID is doing is mainstreaming luxury, so what used to be a premium service is will now mainstream.” Because there will be fewer customers, airports will have to try harder. “We’re going to have to stop taking our customers for granted. We have to stop saying that we have a captive audience. May be captive physically, but are they captive emotionally? Is their attention captive?” With fewer customers, we will need to increase the spend per customer. Ibrahim believes that this is not going to happen just with deals and discounts but with “fantastic” customer service and constant “newness.” Ibrahim stresses that retail has always and will always be about four things: recruitment, transaction, fulfillment and retention. Interestingly, he notes that transaction and fulfillment are moving steadily outside of the physical space, as shops are being used less and less for transactions. “Therefore the physical space will increasingly behave more like a media brand to recruit customers. That changes the paradigm. It changes the design, masterplan and revenue and rent model.”

Wowing the consumer

Retail environments must now be “serendipitous”. “Customers need to feel that they’ve had a happy coincidence. They didn’t plan this but they’re wowed.” Ibrahim argues that if operators use their store space as a media platform to recruit customers, the challenge will be, how does the landlord demonstrate to the tenant the value of having physical space and how do we measure the impact? How do we capture the data that shows us the impact that the media platform has on our brand, on social media engagement, media impressions and downstream online sales? “If 10,000 people visit a store and 1,000 of them decide to follow the brand on Instagram because of what they’ve seen at the store or event, that is valuable. They’ve managed that because they’ve taken a space, delivered a compelling experience in an airport that has a fantastic passenger profile.” The airport has got to determine the value of that space beyond turnover and size and translate the data that into rent – and that won’t be easy, he admits. “Increasingly stores will need to be designed like a stage, like an open, programmable stage set. Maybe I will sit 20 meters away and photograph it and


share it. Maybe I’ll see something and go straight on Amazon and buy it. So footfall is not a measure, turnover is not a measure, it’s engagement. The engagement can be from 20 meters away, can be digital or virtual, can be many things. The challenge will be how do we measure it.” Because there will be fewer passengers, passenger engagement and spend per passenger will have to be maximized, and that will lead to new experiences, he says. Hyper-personalization and hyper-convenience will also be required. “Strip out complexity, create intuitive experience. Simplicity will be demand in future from every consumer,” he says. Looking to the future, there will be a shift away from stores as channels of distribution to moments of experience. Ibrahim concludes on a high note. “Travel retail is here to stay; if we accept this new way of thinking about the commercial zones, if we accept that these will increasingly be media platforms, if we accept that we are talking about in stage settings and programmable experiences, that opens opportunities for new brands and operators to see the airport as a channel for them. I’m talking about pure players, entertainment brands, culture brands, broadcast brands, publishing brands, and many others.”

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Tax Free World Association

I M PA C T AND O P P O R T U N I T Y: TFWA executive speaks out on crisis

COVID-19 has severely impacted industry association TFWA, but the crisis will also be an opportunity for change, according to Managing Director John Rimmer by HIBAH NOOR


FWA Managing Director John Rimmer has spoken out about the devastating impact of COVID-19 on the trade association and the wider industry but says TFWA will survive the current crisis. TFWA was forced to cancel this year’s leading industry events TFWA Asia Pacific and TFWA World Exhibition because of the pandemic, severely hitting the revenues of the not-for-profit organization. “Obviously it’s been an extremely difficult period for us, as it has been for every company involved in duty free and travel retail,” Rimmer told Americas Duty Free. “It’s important to acknowledge the cost of this crisis, not just in terms of industry and business but the human cost, which has been enormous, across the world, in terms of people losing their lives and also losing their jobs and livelihoods. We’ve also seen that happen in our industry, so I have a huge amount of sympathy


John Rimmer, Managing Director, Tax Free World Association

Tax Free World Association

for everybody that’s been affected. It’s been a really disruptive, uncertain and anxious time and it continues to be so. “For us, it’s been an extremely disruptive year in the sense that we’ve been obviously forced to cancel the major events that we were scheduled to run this year. Also our partners, for example at MEADFA, have also postponed the conference that we were involved in helping them organize. So, it’s been a case of managing the repercussions of the cancellations of our events.” Now, he said, TFWA is beginning to “reboot” the business for next year, looking ahead at the events and seeing what changes are needed and how the association will need to adapt. “The situation has been difficult for everyone, especially the companies prevented from doing business in our market. We hope very much to play a role in helping them to rebuild towards the end of this year and early next.” The cancellation of the Singapore and Cannes shows has had a “significant” financial impact on TFWA, as the major part of its revenues is generated by these two exhibitions, but the association is confident to be able to rebound next year. “I wouldn’t underestimate the impact that the cancellations have had in a financial sense. However, I would say we’ve managed the association on a pretty prudent basis in recent years and I think that given the fact we’re a not-for-profit organization, we’ve always been quite careful in the way that we’re run. All the credit goes to the people before me. I’ve only been in the role for three years or so, so the credit goes to my predecessors and the various boards and management committees at TFWA down the years who have always realized that we run this business on behalf of our members and as such we need to be prudent with the money that we spend and how we do it. “We have solid financial reserves that will help us to get through this. Having said that, it’s in our interest and everybody’s interest that the situation returns to something like normality sooner rather than later, because too many years like this one would have a very severe impact indeed.”

Demand for industry events

Despite the uncertain situation, TFWA will stage a program of events next year, and Rimmer stressed that trade shows have a role to play in the post-pandemic recovery: “It’s incumbent on us to adapt. We’re working hard behind the scenes on that at the moment and hopefully next year we’ll be able to rebound with a program of events. There is a need and a demand for events to play a role in the rebound.” TFWA has already started planning for the TFWA Asia Pacific show, working closely with its partners in Singapore with regard to health and safety and other measures. It is working on ways to diversify the event to include virtual components, but Rimmer did not give further details. “The situation is changing on a very frequent basis and we are forced to monitor it daily. We’re keeping our ears to the ground and monitoring the situation and when the time is right, we’ll be launching the full machine.”


Positive feedback on China Reborn

In December, TFWA will host its China Reborn virtual event, focused on a market that is going to lead the recovery, as has already been seen on the resort island of Hainan, where sales have given the industry a reason for optimism. The three-day event, held from December 1 to 3, will include a series of webinars centered on content such as new developments in the market, the latest travel data, and the bigger picture in terms of China’s role in the global recovery, the regional recovery, and its role with its neighbors. By registering, companies will have access to TFWA’s ONE2ONE meeting platform. Attendees will also take part in online meetings with decision-makers in the market, such as retailers, airports, brands and various other companies. “Response has been really positive and we’ll be announcing very shortly a couple of major partnerships with regard to companies that are getting onboard with it. We were confident there was a demand for that kind of event, given the important role China is playing right now,” said Rimmer. For TFWA members, retailers and airports there will be no fee to register. If non-members or other trade companies want to take part in ONE2ONE, they will be required to become a sponsor. Webinars are free of charge for everyone. Full details will be released soon and the registration will open in October.

Environmental concerns

Looking ahead to the recovery timeline, Rimmer believes the most credible forecasts are for a recovery to 2019 traffic levels in 2023 and an upward curve being seen from 2024. He thinks the crisis will be an opportunity to operate differently. “Trends were happening before the pandemic and will be accelerated by the crisis, for example the impact we’re having on the planet. COVID has given people a greater sense of the fragility of our existence and the fact we have to take better care of ourselves and our environment. Those concerns will continue. We have to make sure our industry plays a role in the solutions to those problems.” The crisis is also showing that digital needs to be a central thread in what the industry does and how to market to consumers. “Nobody will be looking back at this year with any fondness, but maybe we could look back on it as a year when certain good things began to happen,” he said. Rimmer is confident the travel industry will survive, as people’s desire to travel remains strong. “Look at the phenomenon in Hainan. That shows how keen the Chinese are to travel, and once things improve, the confidence is there and routes open up again, people will travel. What we have to do as an industry is to make sure we’re giving people the products they want, the variety they want and the prices they want and that we’re giving them a choice of different ways of purchasing them. We also have to make sure we’re giving them the experience that they want, whether that’s an online experience or whether it’s an in-store experience. We need to be ready for people when they come back, because they will come back, I’m sure of that.”

Essence Corp

Light at the end of the tunnel

Essence started 2020 strongly with a good first-quarter performance, which has helped the company weather the storm that was to come. However, the beginning of next year will be tough

Buoyed by sales in the Caribbean and on the Mexican and South American border, Essence Corp is looking forward to a gradual return to travel in the region by HIBAH NOOR


ssence Corp, the Miami-based beauty distributor, is seeing its business pick up in the Caribbean and the Mexican and South American border stores as it waits for airports to reopen fully across the region. Antoine Bona, Vice President Sales at the family-owned company, says Essence Corp has focused on locals in the Caribbean, as some of its customers’ stores didn’t close during the height of the COVID-19 outbreak in April or May, or those that closed had a click-and-collect system, or a pickup at the door system. Additionally, some stores it supplies along the border of the US and Mexico did not close. He notes that a number of border shops in South America are similar to domestic stores as they cater to people who live up to 500 kilometers away from the border. Because of high import duties locally, it’s always been attractive for them to travel to these duty free stores in order to buy essential goods such as food, liquor or beauty products. Essence is tracking the airport open-

ings so the company can get its beauty advisors back in the stores, ensuring they have the right protective materials such as masks, hand sanitizers and gloves. While the airport closures have been challenging, the company has been pushing its digital efforts. “Digital has grown – it’s always been a focus – but it’s grown tremendously while people have stayed home and stayed connected. We’ve done Instagram Lives, Instagram takeovers with our retailers, and Zoom trainings, and a lot of promotion digitally, so there’s been a shift of investments from in-store that have been done online in order to drive sales.” Essence started 2020 strongly with a good first-quarter performance, which has helped the company weather the storm that was to come. However, the beginning of next year will be tough, he predicts. “As we go towards the end of the year we’re starting to see some more light at the end of the tunnel on when travel can resume throughout the region, especially with talk of a vaccine launched before the


election at the end of the year. It will definitely be a slow recovery next year, easily going into the second semester.” Bona has observed border sales recovering in parts of Mexico, where Essence supplies department stores in Baja California and the state of Juarez. Due to the closure of the US border, sales are driven by Mexicans purchasing locally and not in the US. However, when the department stores were closed April and May, he saw sales spike in the US border stores along Mexico. Even with the department stores closed in Mexico for two months, trends were only -20% versus last year once they reopened mid-July. Essence has been successful this year in opening the first Brazilian border accounts, following the government’s authorization for 33 cities to host duty free stores within Brazil. The team has made several visits to the border, with the last one right before the shutdown in mid-March. There is an estimated population of 15 million including nearby cities, according to Bona. Essence has a dedicated Account Supervisor based in

“Digital has grown – it’s always been a focus – but it’s grown tremendously while people have stayed home and stayed connected. We’ve done Instagram Lives, Instagram takeovers with our retailers, and Zoom trainings, and a lot of promotion digitally, so there’s been a shift of investments from in-store that have been done online in order to drive sales.” ANTOINE BONA, VICE PRESIDENT SALES, ESSENCE CORP.

Sao Paulo to manage the Brazilian border business. The company has opened the following accounts: Dufry and Duty Free Americas in Uruguiana as well as the independent operators New York Free Shop, BAH Free Shop and Central Free Shop. Additionally, it shipped an opening order in August to Caturra Free Shop in Porto Xavier. In September, it will be shipping out opening orders to Sky Free Shop, Liberty Duty Free, and Cell Shop Duty Free in Foz do Iguacu and Paris Free Shop in Bonfim. Longer term, Bona believes there will be a gradual return to travel and he remains optimistic about the travel retail channel. “Long term, our outlook remains very positive. For me, travel retail is here to stay. Travel retail will be resilient in our region, because connectivity is something that is needed; getting to know new countries and cultures is something that’s desired. Visiting family abroad is something that you will always desire. As long as you have beautiful stores, with a great assortment, some type of saving versus domestic, and impulse [sales], you’re going to drive sales at airports. It’s a matter of time and weathering the storm. “We believe we’ve weathered the storm this summer, and as we start crawling towards the end of the year, we start to be optimistic as we see border restrictions possibly lifted in Latin America. For instance, we expect the flights to resume in Argentina at the end of October. They’ve already started the humanitarian flights at the beginning of this month [September] but that’s a start.” In Latin America, he noted that the majority of the airports are open, even at a humanitarian level, which wasn’t always the case. There are expectations that at the

end of September, some border restrictions will be lifted, and flights will resume. Turning to the brands, Essence has maintained its product portfolio through the crisis, and Bona believes the pandemic will cement its relationships with the brands. “We believe this crisis only makes us closer to the brands. We are collaborating and communicating more with them. At the same time, I think it’s in their benefit to work with a distributor to eliminate the financial risk that could exists in the territory. We believe it only solidifies our relationships with the brands as we carry inventory, we pay our bills on time, execute with our customers, and we believe that strengthens our relationships with the brands.” As for the retailers, Bona has observed that they are looking to reduce their inventory, focusing on best-sellers, good novelties, and promotional items to drive sales. He noted that retailers are getting stronger digitally. More click-and-collect services are being implemented throughout the region, and a lot more promotions are being done online, as they start to rebuild their customer base. Despite the pandemic, Bona remains sanguine. “For us, we’re definitely in a better place than we were in April or

May, where we saw no end to this. Now there’s very confident talks regarding vaccines, we start seeing some airports opening, stores opening, we start seeing some better trends along the borders. We’re quite optimistic that passenger traffic will resume as soon as these restrictions are lifted and safety measures are implemented at the airports. And then the vaccine is the cherry on the top, because once you have the vaccine, then there’s no stopping the rebuild to the passenger traffic.” Bona also emphasized the diversity of the region’s travel retail channels, which has helped the company. “We’re lucky in our territory that we’re not only dependent on airports or cruise ships. Borders have always been a strong part of the business throughout the Americas, there’s high import duties in Latam local markets, which is unfortunate for them, but that helps drive sales along the borders and that’s why there’s such a strong presence on the borders. “We’ve always had strong customers in the region with very nice stores in those regions with large assortments and great category management. They’re successful. We’re lucky to have our distribution channels diversified like that in the Americas and it’s really helping us out.” THE AMERICAS DUTY FREE & TRAVEL RETAILING


Top Brands International Update

These artistic renderings give an idea of what the look will be for Top Brand’s Luryx Duty Free story at the Silvio Pettirossi International Airport in Asunción





fter six months of strict lockdown in Panama, Top Brands International President Danny Yohoros is gradually seeing light at the end of the dark tunnel caused by the COVID-19 pandemic. By his own admission – and like many others in the travel retail industry – life has been tough for the operator, which has a presence across the Americas and the Caribbean, in Panama, the United States, Belize, El Salvador, Costa Rica, Colombia, Chile, Paraguay, Bahamas, Cuba, St. Thomas, Tortola, French Guiana and Uruguay, employing more than 1,000 people worldwide. “It was an unpredictable year and something that nobody would imagine in the whole world,” he tells Americas Duty Free. “We had been growing outstanding numbers and we expected 2020 to be a record year. We never imagined that in the third month of the year, all of our operations would have been shut down. This has been the biggest challenge I have ever encountered, but thank God we are seeing the light at the end of the tunnel. It’s the most challenging six months I have ever had, [working on] how to maintain operations, and making sure our staff were well protected, but at the same time understanding


Top Brands International Update

that even though the stores were closed, we needed to give them support in many ways, not only financially. We managed to do so; finance-wise, we were very solid, so it gave us a good timeline to get through this situation.” While the company’s sales figures for 2020 are not on target due to the crisis, operations are starting to reopen in the different countries, and – outside of airports which has been the most affected – Yohoros has seen a good recovery in terms of border stores in South America. “People feel more comfortable and they have come back, he says. “Not in the proportion we used to have before, but it’s giving us a good benchmark for the recovery that could come. We see that in Latin America, there will be a lot of unemployment, a lot of restructuring of companies, and of course this will affect consumption in the region. So we will have to be even more creative than before on how to address our customers and deal more directly with them in order to achieve similar numbers to what we used to have.”

Investment in Paraguay

In January 2020, the business landscape was very different. Top Brands International had just won a 10-year contract at Paraguay’s main airport in a bid that strengthened the company’s presence in South America. The win at Silvio Pettirossi International Airport in Asuncion came just months after Top Brands

acquired Neutral Duty Free, the largest duty free chain in Uruguay. Top Brands had started renovating its store at Silvio Pettirossi International Airport before the pandemic but put the work on hold because of the crisis. In September, the company restarted construction and expects to have the store open by the first quarter of 2021. “We will be a year delayed, but we’re doing it slowly and properly,” says Yohoros, who confirmed the company’s US$5 million investment in the project. The Departures shop will span over 1,000 square meters. “It’s going to be a massive store,” he enthuses, noting that Top Brands is the only operator at the airport. The delayed project meant that many areas of the store could be redesigned, including using different display units and furniture, allowing the customer to do more self-service. “We have a very good architect [Argentine architect Monica Ariaudo] with a lot of experience who has designed the store. We signed a very long contract. The first few years are going to be very challenging but we’re in it for the long term.”

New loyalty program

With its acquisition of Uruguayan operator Neutral, which happened in July last year, Top Brands took over the stores on the border with Brazil. The company spent nine months restructuring the operator, but just six months after opening


with a new back office and an expanded product assortment, it was forced to close the stores. “Back in February, we were excited because we were already in line with sales projections, so we were doing better than expected. But then COVID-19 happened. We got a double hit and had to close after six months. It was tough because we had to make many changes and do a lot of restructuring. It’s still a complicated situation with recovery and we depend on this. Almost a year later, we don’t know what will happen in Brazil.” The Neutral stores currently have limited opening times of three or four days a week, because the borders are still closed. On a positive note, Top Brands is set to introduce a loyalty program in its different locations. During the lockdown period, the IT department continued working to prepare all its operations for the new software implementation. Yohoros is confident Top Brands will overcome this crisis, but he acknowledges that there will be challenges for other companies, which could bring opportunities for future expansion. “We are looking for opportunities – and they have to be greater opportunities than usual – as we are in this for the long run, and this is the time.” For future expansion, the company is continuing to focus on Latin America and the Caribbean, and in Miami, where it has operations. “Right now we’re making what we have stronger, but we have our eyes open.”

UK Aviation Industry

With the decision to end VAT-free sales at UK airports, the government shows its ignorance of the importance of non-aeronautical revenue for the life of the air industry, which in turn is essential for the economy at large

Show of ignorance


n a move “out of touch with international standards,” on September 11 the UK government shocked the aviation industry by announcing that tax-free sales would cease at UK airports from January, 2021. For an industry already on life support with the current global pandemic and resultant virtual shutdown of the skies, this announcement was akin to a doctor randomly announcing he would shut off the patient’s oxygen supply. This decision will result in the loss of 19,400 jobs nationally and cost the UK economy £2.1billion in GDP, according to a York Aviation economic impact assessment. The unexpected move also negates the benefits of the Treasury decision to extend duty free sales on alcohol and tobacco for travellers to the EU post-Brexit.

Lack of understanding

While this decision will result in some obvious consequences such as increased airport prices for those traveling abroad, the government has shown its apparent lack of understanding for the financial structure of airports, and the importance of duty free shopping for the airport industry’s viability. As a press release from the UK Travel Retail Forum (UKTRF) stated, “industry has warned [that this decision] will undermine UK aviation competitiveness, with EU member airports gaining an overnight advantage over their UK counterparts, and could force smaller UK airports who rely on passenger retail out of operation altogether.”

The UK government puts many thousands of jobs at risk and delivers a massive blow to an already embattled industry with its shocking decision to end tax-free sales at airports by WENDY MORLEY

The government appears to have illadvisedly made this decision on the basis that it will earn in taxes what otherwise it would not, but York Aviation research shows that instead it will result in a significant reduction in inbound tourism, traffic and sales. In addition, this decision could be the final nail in the coffin of the country’s smaller airports, for which nonaeronautical revenue is lifeblood.

Opposite direction

The UKTRF, which has consistently advocated for an increased VAT-free system that would offer significant economic contributions to the nation, has urged the Government to urgently review its decision. The association has calculated that the current decision would have the exact opposite effect from what the government obviously believes, arguing that an increase rather than elimination of VATfree system would add an extra £1.1 billion in Gross Value Add (GVA) and support more than 10,000 new jobs, most of them outside London.

Stakeholders unite

Individuals who understand the coming negative impact of this decision have united to urge the government to reconsider. These include Sir Roger Gale MP (Cons), President of the General Aviation All Party Parliamentary Group, Tory Stalwart (MP for 38 years) and MP for North Thanet; Angus MacNeil MP (SNP), Chair of the International Trade Select Committee and Member of Parliament for Na h-Eileanan an Iar; Henry


Smith, MP for Crawley and Chair of the Future of Aviation Group; and Chair, UKTRF, Francois Bourienne. Bourienne stated: “This decision puts the UK out of step with travel retail systems around the world, completely disincentivises tourists to visit the UK and British passengers making purchases as they go on vacation abroad, and puts UK airports and travel retail at a substantial disadvantage against their European counterparts after Brexit. This will lead to significant additional job losses in the travel industry. “It may well be the best gift the UK could have given the EU as well as a massive blow for UK plc, and we are dismayed at the lack of industry consultation before this decision was reached. “In the more immediate term, this announcement deals a hammer blow to an industry already struggling with the devastating impact of the COVID-19 outbreak. Retailer and airport revenue will suffer, but most regrettably thousands more jobs and livelihoods will be wiped out in regions across the UK supported by the sector. “While we are grateful for the Government’s move to extend duty free sales to passengers travelling from the UK to the EU, we are extremely concerned that ministers have not fully appreciated the impact this decision will have on the wider travel retail and aviation sectors. “We urge the Government to immediately review its decision and act swiftly to ensure jobs, businesses and Britain’s place as a premier travel hub are not lost.”

Latin Americas Update


TIMES Secretary General of ASUTIL José Luis Donagaray sees some positive signs in LATAM, but he stresses that the circumstances change from day to day

Secretary General of ASUTIL José Luis Donagaray



atin America has been hard hit by COVID-19, with Brazil, Argentina, Colombia, Peru and Mexico containing some of the most cases by country in the world. Land borders remain closed in South America, and although all major airports are open, there is virtually no international traffic. While Secretary General of ASUTIL José Luis Donagaray says they are “beginning to see the light at the end of the tunnel,” he adds: “but we are very worried about what’s happening in Europe.” He is referring to the second wave.

Standard protocols difficult to achieve

During a recent webinar held by the Duty Free World Council (DFWC), ASUTIL President Gustavo Badell stated that ASUTIL is working on harmonizing protocol between countries. When asked about the possibilities of testing to replace shutdown or quarantine or even a unified protocol, however, Donagaray says that discussing any standard with governments is difficult. The real barrier to establishing a foothold is the lack of clarity and unity not just from country to country but even from day to day. In the Caribbean, for example, he says: “Bahamas was closed and now it’s open. Aruba and Curacao are

open, Costa Rica now closed. Tomorrow they are open, Tuesday they’re closed.” Even limiting the discussions to South America, he says: “Some countries like Ecuador you can go with a negative PCR – no quarantine. Here in Uruguay if you come from Europe you have negative PCR and do a seven-day quarantine and get out. But this changes every day. Governments are open to discuss measures, but it’s difficult to sit and negotiate because none of us know what’s happening. We don’t know how it’s going to evolve or when or how it’s going to end. “Look what happened in Europe. They opened everything and now it’s a mess. So it’s very difficult to talk with governments because they say, ‘You came to me one month ago and said this, and now you’re saying this.’”

Some positive signs

As Donagary implied, despite the dark times there are a few shining lights in LATAM. Brazil’s domestic market is doing relatively well, he says, though emphasizing the word “relatively.” He says Mexico, which is one of the few countries in the world with open borders, is doing well with US and European tourists. And, although sales in border stores in South America have dropped dramatically, there


is a border zone where people can shop if they go for that purpose, and they do. During President Badell’s talk in the DFWC webinar, meanwhile, he stated that there is some positive news. On the airline side we see growth,” he stated. “Peru, maybe the most important hub in the region, is increasing from 90 flights in August to 500 flights in December.” Donagaray confirms that Argentina, Brazil and Uruguay are also opening up many international flights in October.

Border conference

ASUTIL has announced that it will be holding a virtual event for borders in November, on the 25 and 26. While the event is not fully scheduled yet, there will be a conference and networking time — something ASUTIL is renowned for, offering invaluable information through well-informed speakers and truly facilitating business. Additionally, ASUTIL and IAADFS have already announced that next year’s Summit of the Americas will be a virtual event. As for the future, the virus, a vaccine and passengers’ willingness to travel are the dictating factors. The times are “absolutely complicated, absolutely crazy with this COVID-19, but things are starting to work better,” says Donagaray.

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COVID Update

R O U T E T O R E C O V E R Y,

air travel

After years of steady and consistent growth, the air travel ecosystem has seen a near-knockout blow by the pandemic and the world’s resultant closed borders. At the heart of that ecosystem is the airport. Patrick Lucas, Director of Economics for ACI, discusses the current trajectory and what can be done to restart the industry



ecently, the Duty Free World Council (DFWC) held a webinar that was exceptionally comprehensive in its scope. Speakers included Patrick Lucas, Director of Economics, ACI World, who discussed the current and prospective state of air travel.

It’s difficult to picture a worse scenario than what we have seen this year for the air travel industry. We may all be getting tired of hearing the word “unprecedented,” but this word is truly accurate. Last year, 2019, was a banner year, with record passenger numbers and load, and January began on a positive note, but that

was soon to change as it became apparent that the COVID-19 virus was spreading around the world and borders began to close in March. By April there was very close to 100% contraction, with nearly all borders completely closed. “Hopefully the darkest days are behind us,” said Lucas. While there has been a slight uptick, 2020 as whole will show declines of about 60% compared to the projected baseline.

Borders begin to open

The aviation slowdown after 9/11 and after the economic crisis of 2008-2009 look like potholes compared to 2020. It will take up to 20 years to get back to the original trend

As of September 17, when Lucas spoke, 115 destinations, or 53%, had eased travel restrictions that had been put in place because of COVID-19. That being said, 93 destinations, or 43%, still had borders completely closed. Year on year, global PAX in April was 94.4% lower than in 2019, with the decline in Q2 standing at 89.6%. By Q3 that number had improved to a decline of 68.9% — severe to be sure, but at least heading in the right direction. Despite the fact that flights have been canceled, routes have been cut and planes have been grounded, the load factor reached record lows this year after record highs last year. For July, the international PLF was 46%, down 39 points from last year’s high of 86%. Lucas compared the situation in 2020 to that of post-2001, and the global economic crisis of 2008/2009 though he expresses that the drop in growth trajectory at those times looked like a “pothole” as opposed to the cliff of 2020. In 2001 recovery came within two years.

Returning to previous numbers After a record-breaking year for good passenger loads in 2019, 2020 was record breaking in the opposite direction, despite grounded airplanes and canceled flights


There are two different ways to look at recovery. One is, when will numbers

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COVID Update

return to pre-pandemic levels and the other is, when will we return to the growth trajectory we had been on, meeting up with the originally forecast numbers. If certain conditions are met, Lucas states that the majority of the world will see a return to pre-pandemic figures in about 2023 for domestic traffic, and 2024/2025 for international traffic. But some conditions must be met for this to occur. These conditions are: • The development of a vaccine and effective supply chains to deploy it • Stable economic conditions (income, prices and consumer behavior) • Removal of quarantine measures and travel restrictions A number of factors can affect this timeline, including second and subsequent waves of infection, economic uncertainty leading to a prolonged recession, and consumers’ feelings of safety.

The aviation ecosystem very much linked to UN development goals. If we don't get back on track these goals are at risk because of the multiplication effect.

What the industry can do

Lucas discussed current stumbling blocks and what we as an industry can use as “managerial levers” to help accelerate recovery. The most important decision governments need to make to help aid in the recovery is to get rid of border closures and quarantine measures. And these decisions and their associated guidelines need to be made en masse. “Quarantine measures have completely stalled the industry when this could be replaced with robust testing program,” said Lucas. Additionally, “Despite solid international guidance, travel restrictions remain largely uncoordinated from one jurisdiction to next, making air travel challenging and problematic — international travel in particular.” An integral part of achieving the goal of ending border closures and quarantine measures is to create an environment of safety and security within all airports. This will help governments to feel opening up is the right decision and will also help with consumer confidence. To create an environment where governments will work in agreement, all stakeholders in the aviation industry must be aligned. Airports and airport retailers need to ensure strict health guidelines are being consistently followed. Airports can take part in ACI’s Airport Health Accreditation program, which

The long-term fundamentals still apply. The countries in the world with the largest populations have yet to reach their peak in terms of number of working-age citizens

is an audit process to ensure sanitation procedures are being followed. Lucas says we need to create contactless environments. “This move existed before the pandemic but is now accelerating. Communication, proper signage and proper contactless protocols must be in place.”

Communicate importance of all

We need to establish the importance of all members of the aviation ecosystem with our respective governments. “The aviation ecosystem is very much linked to UN development goals,” said Lucas. “If we don’t get back on track these goals are at risk because of multiplication effect.” The costs born by airports are mainly fixed. Even the variable costs are only somewhat variable, and passengers are necessary for all contributors, retail or otherwise, to recover. Another area ACI would like to focus on to help aid recovery, and according to Lucas a policy brief will be sent out on this matter in a couple of weeks, is the removal of international passenger taxes, which amount to US$90 billion each year.


“Removal of these taxes could potentially give huge benefits – direct, indirect, induced and catalytic – aviation, tourism, contribution to wealth; the benefits are basically doubled,” said Lucas.

Long-term fundamentals

Lucas does want to remind us that despite the dire situation we are currently in and the unpredictability of recovery, the longterm fundamentals still apply. “Before the crisis, aviation’s center of gravity has continued to shift eastward toward Asia. Eighty percent of the global population resides in emerging markets, and a lot of these markets have a growing middle class and a rise in propensity to travel by air.” This creates a feedback loop as these people travel to other markets. Asia, Latin America, Africa and India are all massive potential markets that are peaking or have yet to peak in terms of working age populations. This is a massive pool of purchasing power. India’s working population will not peak until 2040. So while it may take 20 years to get back to the growth trajectory the industry had been on, we will arrive there.

The Duty Free Industry’s




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MAPPING THE ROUTE TO RECOVERY Olivier Ponti, Vice President Insights at travel data specialist ForwardKeys, illustrates the roadmap to a global recovery by JAS RYAT

Olivier Ponti, Vice President Insights at ForwardKeys, explains that the situation the travel retail industry is in can still be described as "nightmarish"


ax Free World Association hosted its first webinar in early May to provide a platform for industry expert speakers to help paint a picture of what the future of the industry might look like. At the time, travel analytics company ForwardKeys shared some grim information on the situation. Americas Duty Free touched base with Olivier Ponti, Vice President Insights at ForwardKeys, to see if this was still the case four months later. In May, ForwardKeys predicted it would take the travel industry approximately three years to return to 2019 levels as a result of the blows it has sustained by the pandemic. However, Ponti now indicates that recovery will not be a homogenous process. Some regions will experience rapid recovery, while others a slower one. “Some segments will recover

faster than others and it is possible that some parts of the business will never recover from the current crisis. So when we said two to three years, I think for some regions, yes that will be true. For some regions and sub-segments it may take much longer than that. I think that domestic travel is going to recover first,” explains Ponti. Most recently, ForwardKeys has predicted that one of the largest tourism sectors to fully recover as early as September will be domestic travel in China. Domestic travel hit rock bottom in February, and it is slowly returning to its 2019 levels. Chinese airlines have become very aggressive with pricing and will likely continue to get people back in the air. “The Chinese domestic market will be back on track. That is a good example of domestic travel being back on track. We


have also seen some parts of the world like Europe being reactivated,” explains Ponti. The beginning of June was ushered in with the reopening of many of these destinations and a willingness to travel from the moment many Southern European countries eased restrictions. He continues: “People started searching for flights to places like Greece, Portugal or Spain and started booking as well. So what travelers needed was clarity regarding a reopening date. It’s a rebound and it’s a reactivation. It’s not a recovery because we still are far away from 2019 levels.”

Cementing consumer confidence

Consumer confidence is a crucial piece of the travel journey that needs to be restored to ensure recovery. Ponti reveals that consumer confidence has been shat-

country borders, and will instead implement a more targeted approach. This may include closing specific neighborhoods within certain countries or destinations instead of closing the entire country. “I don’t expect the industry to go back to a complete standstill,” he says. “We will see people flying but there will be a constant readjustment of who is allowed to fly, willing to fly, and to which destination.”

Monitoring the future

Ponti describes future travel as being very fluid as the world adapts to the new reality

tered during the last few months with people not feeling safe about getting on a plane, being in an airport, and not being properly informed about the situation regarding the pandemic in a given destination. This, combined with airline behavior, has shaken the foundation of trust for travelers. When the pandemic initially unfolded, airlines displayed unconventional behavior when it came to a laundry list of items including: canceling flights at the very last minute; providing refunds; and announcing the reopening of routes when they were not reopened. Ponti explains that this resulted in lead times for bookings becoming incredibly short, showing that there is no planning ahead at this time and there is no confidence in the future. Ponti says that when it comes to the US, there have been signs of reactivations for domestic travel. “June was a month where we could see an increasing number of bookings. Unfortunately, by the end of June, with the number of cases being on the rise again, we could first see a plateau and then a decrease in the number of bookings being made. Since then it has progressively recovered, but we are still far away from last year’s levels. If we look at the week commencing August 10 for the US, we are at 36% of 2019 levels when it comes to domestic travel.” Once again underscoring that this is a reactivation of the US market and not a recovery.

“That is something that is quite worrying. We can see a slowing of bookings as we are showing quite a similar pattern prior to the first wave, so it looks like we are clearly going towards a second wave and the situation will be tough for the entire industry. That said, I think the industry has learned from the first wave. New protocols have been put in place, the communication is better regarding what an airport experience looks like in terms of COVID-19, how to protect yourself as a traveler and how to protect others,” says Ponti. Airlines are also scheduling flights based on pandemic scheduling and have adjusted their operations and communication with clients to run more efficiently. The key takeaway now is that airlines are prepared for the second wave. Ponti also highlights that countries will not need to use blanket measures such as massive confinements or closing

ForwardKeys recently introduced the PowerBI Global Recovery Dashboard, a travel analytics tool that monitors data as travel restrictions change or develop. Heading into the fall of 2020, travelers are searching for destinations such as the US, Spain and Thailand. However, there is a difference between searches and actual bookings. Traditionally at this time of year, people are searching for their Christmas holidays. Visits to friends and relatives (VFR) is a segment that continues to be more resilient than others. VFR is still fueling bookings during the 2020 Christmas period, but Ponti underscores that the situation can quickly change and those bookings may convert to cancelations. Ponti reveals that reassurance for travelers in the future will strengthen consumer confidence and work as a great strategy to move forward. “The best thing is probably to have the pandemic under control, and to be efficient in the approach to preventing the virus spreading and negatively impacting the image of the destination and turning it into a destination perceived as unsafe for travelers.”

Riding the second wave

As countries start to show signs of stabilization, experts warn of the inevitable return of the second wave. Ponti reveals there has been a slowing number of bookings being made.

The Global Recovery Dashboard can be used by analysts, marketers and hoteliers to explore the recovery of the travel and tourism market THE AMERICAS DUTY FREE & TRAVEL RETAILING


Small Business


Arnaud Ryser, Business Development Manager, Duty Free Dynamics

talk Franco Gabriele, President, ALFA Brands



Patrick Nilson, President, Haleybrooke International

Americas Duty Free: How has COVID-19 affected your business? Arnaud Ryser, Business Development Manager, Duty Free Dynamics: Although the pandemic caught us completely off-guard, we never had to go into a full lockdown. We quickly adapted to a work-at-home mode by means of various methods of communication, like VoIP, cloud servers and video conference systems. After a couple of months of hardly any activity, some of our partner operators started to gradually resume operations, primarily in Caribbean mainland stores and South American border shops, so we were able to partially continue our business without being so critically affected. Even before this crisis, we had anticipated a growing consumer tendency for online shopping, so one of the changes in the way we are now doing business is responding to this trend by supporting our retail operators with our know-how in all aspects of e-commerce. Patrick Nilson, President, Haleybrooke International: The biggest change is the lack of face-to-face meetings with our customers, either at trade shows which have been canceled or visiting our customers at their office. Many buyers are working from home and some of our customers are not allowing anyone outside of their company to visit their offices due to COVID-19, for the obvious reasons.

Small Business

To generalize, many of our customers are sitting on a lot of inventory so new orders are minimal, but we are very thankful for every purchase order that does come in. Almost every buyer is saying “no new listings in 2020”, so we are working hard getting ready for 2021 when they will start to replenish their inventory when business comes back to normal.

nesses are able to move and adjust at a faster pace. However, the question remains, to what? Larger businesses, particularly those that operate predominantly in domestic markets which are not suffering as much as duty free and travel retail, may have more robust resources to sustain the duty free and travel retail operation for a longer term.

Franco Gabriele, President, ALFA Brands: COVID-19, more than affecting and changing how we do business, it has de facto eliminated a great share of the business, predominantly in North America, at least for us.

ADF: Have you pursued assistance from policy makers or duty free associations? Patrick Nilson: Yes. The Frontier Duty Free Association (FDFA) has been very active and in August had a Zoom meeting for suppliers to the duty free channel in Canada where they presented their Duty Free Stimulus Plan, which was very informative. I appreciate that the FDFA reached out to suppliers to participate in the Zoom meeting. They outlined an aggressive campaign, including for support from the Canadian government for interest-free loans, rent relief for operators, the Visitor Rebate Program, among others. The International Association of Airport Duty Free Stores (IAADFS) has also been keeping its members updated on their efforts including the recent IAADFS-Airport Restaurant and Retail Association-Airport Minority Advisory Council-American Car Rental Association-National Parking Association Joint Concessions Relief Letter that was sent to the US House and Senate leaders. They have also been helpful in keeping the members in the US up-to-date on the CARES Act (Coronavirus Aid, Relief and Economic Security Act) and the Paycheck Protection Program which I have been able to participate in, which has been a big help.

ADF: What have you implemented or changed in your business to navigate your way through the pandemic? Arnaud Ryser: Due to the pandemic, but also as part of our vision to the future, Duty Free Dynamics (DFD) has redefined its business strategy by focusing on a 100% digitally-based business model by year 2025. In view of this, DFD’s team is becoming a task force of sorts, now also charged with assisting our client operators in the implementation of this digital transformation. Patrick Nilson: Even though we know that our customers are not putting in many new products at this time, we do communicate all of our new products and line extensions to the buyers in order to start the process of a new listing. In this way we can start the negotiations now, which can shorten the timeline once business comes back when people are traveling again. Franco Gabriele: We have been focusing on the GNC vitamins and supplements, as well as the medical/sanitary accessories selection, with our supplier developing the CLOUDZ line. Staying in touch and communicating with our customers and suppliers must be done remotely, and it does not look like there will be meetings in person in the near future. ADF: Does a small or medium-sized business have more advantages at times like this? Arnaud Ryser: As they say, crisis sometimes generates positive changes, but these are very difficult times for most businesses, big or small. We have the advantage of being a young, flexible and dynamic group of professionals, uniquely capable of adapting to unforeseen changes quickly, effectively and backed by solid resources. The team stands by our company’s name: we are dynamic and we do innovate, creating new opportunities.

Franco Gabriele: The associations appear to work diligently lobbying governments in assisting with rent reductions/delays, staff wages assistance and other similar requests, which should greatly help our customers. But for suppliers large and small, normality has to resume, for people to travel freely, benefiting retail and consequently suppliers as well; until then, the supply side sales will shrink significantly. ADF: What has been your take-away/lesson going forward? Arnaud Ryser: We must continue to be alert and anticipate any possible scenario that today’s challenges might bring about, affecting our business one way or another. So far, our expertise in analyzing trends and visualizing opportunities has been key to our growth and success.

Patrick Nilson: Having worked for a large liquor company prior to starting Haleybrooke International to represent wines and spirits in the duty free channel, I can say that smaller and medium-sized businesses can act quicker in many instances. But realistically the bigger companies are going to have a big advantage in getting to the duty free operators, including the use of Zoom meetings during COVID-19, and understandably, since they have the most listings and promotional activity so they are going to get the most attention. Fortunately, we have good relations with our customers so we do have ongoing conversations that will pay off in the long run.

Patrick Nilson: We have had many natural disasters, political issues and medical problems like bird flu that have caused problems for the travel retail industry, but nothing like COVID19, which brought the duty free business to a near halt. For a company like ours, which is basically 100% in the travel retail sector, we need to be aware that we can be out of business for an extended period of time with little income coming in, but unfortunately there are some things that we cannot control. The lesson for me is that while we have increased our business year after year, there isn’t a guarantee that there will not be interruptions in the future and we will need to make sure that we are in a position to wait out disasters of any type.

Franco Gabriele: Under the present circumstances, small busi-

Franco Gabriele: Stay healthy, stay nimble and stay relevant.


Patrick Nilson, +1(772) 213-8676 Roger Thompson, +1(203) 322-9691 Patricia Kenny, +1(845) 544-2319

E. Gluck

Style &

sustainability A collection of earth-friendly, solarpowered watches, Considered aligns with today’s increased sense of social responsibility and mindful consumption

Uniquely positioned for great success in the international travel category, E. Gluck is partnering with TRMarketplace to convey the message of Considered to a broader audience


ith more than 40 years in the fashion watch world, Anne Klein has established worldwide brand recognition. Considering its remarkable ability to distribute thousands of quality, stylish and innovative watches every day, E. Gluck Corporation (EGC) is a valued partner of the brand. In line with E. Gluck’s expansion initiative, Anne Klein’s Considered collection offers a fresh line of products that will help lead to new business opportunities for the distributor. Described as a line of earth-friendly, solar-powered watches, this range brings together style and sustainability at an accessible price point. Uniquely positioned for great success in the international travel retail category, this collection will undoubtedly grow its audience and reach. “We believe partnering with TRMarketplace will provide us with a simple and understandable way to convey our message of focusing on the environment in a thoughtful way to the broader audience that we’re trying to attract within

duty free and travel retail,” comments Rob Robertaccio, Vice President of Global & Travel Retail Sales, E. Gluck Corporation. Launched on Earth Day 2020, Considered by Anne Klein aligns with today’s increased sense of social responsibility and mindful consumption around the globe. Featuring vegan straps made from apple peels, pineapple and cork, and cellulose acetate bands made from wood fibers and natural cotton, this collection reduces pollution and contribution to landfills. As a result of the sourcing of natural materials and the researching, developing and implementing of innovative techniques, Anne Klein demonstrates we don’t need to sacrifice style or durability to support sustainability. “Today, more than ever, we believe design is about more than simply meeting women’s fashion needs. It’s about taking a thoughtful approach to thinking about tomorrow as much as today, and minimizing our environmental footprint. All of the movements in this collection are solar powered, which means they will never require a battery change, thereby


reducing harmful waste,” says Chani Labowitz, Creative Director, E. Gluck Corporation.

Committing to considering

The goal of this collection is to show partners and consumers alike the brand is committed to prioritizing sustainability and remaining environmentally conscious. With this goal in place, the marketing strategies of Considered and its campaign evolved organically. Robertaccio describes the approach to displaying this line as equally important to other aspects of the campaign. He notes the company transformed the coloration and materials of its gift box to those more in line with the overall message of Considered. Additionally, the brand developed hang tags to present the recycled materials and important elements used for each watch in its effort to “consider” the environment. Considered is available within airport and cruise ship travel retail and in better department stores, specialty stores and online. Expansion markets of

E. Gluck

interest include Europe, Korea, China and the Middle East. This line has been launched globally via E. Gluck’s network of distributors. As a result of COVID19, some of its partners had to delay the date or change the model of their launch. As an example, India’s largest and most trusted watch brand and EGC’s partner, Titan, executed a creative approach and launched this collection on Instagram Live for World Nature Conservation Day. Hosted by Dia Mirza, United Nations Environment Program (UNEP) National Goodwill Ambassador, the event featured Suparna Mitra, Chief Executive Officer of Titan. Centering on the strategic and deliberate title of this range, the team has gone to great lengths to ensure Considered has been clearly and genuinely explained in its entirety to the customer. This line has experienced a positive public response, in part because the company framed the product in an appealing and forwardthinking way.

Featuring vegan straps and cellulose acetate bands, this collection proves the women’s fashion world doesn’t need to sacrifice style, quality or durability to support sustainability

Supporting a solar movement

The current global state of the travel industry has reinforced E. Gluck’s belief that developing long-lasting business relationships establishes EGC as a reliable watch industry partner. During this trying time, the team has validated this mission by touching base and staying connected with its retail and wholesale partners and showing them that “we’re all in this together.” Due to the pause in retail sales caused by the pandemic, E. Gluck has determined a new sense of productivity and business direction. The distributor has used this time to analyze pre-COVID strategies and sales, offering recommendations to re-emerge in a stronger way that will enable it to make up for lost business. As the situation continues to change day to day, the company is adapting its efforts accordingly. Looking to improve on both a personal and product level, E. Gluck will continue to promote sustainability and reduce environmental harm by applying recycled materials in shipping and expanding solar movements to other associated brands. Top of mind for both Anne Klein and E. Gluck, the message of Considered has created a platform to think about the environment across their businesses and served as a guide in decision-making.



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MONARQ Group expands portfolio and online presence Signing Código 1530 Tequila and Villa Sandi and partnering with Fluère Drinks to introduce nonalcoholic spirits, the brand building company aims to identify consumer needs and market opportunities by LAURA SHIRK


s a leading independent regional, import distribution and marketing group of premium beverages, MONARQ Group is present among the domestic and duty free markets of Latin America & the Caribbean and the duty free channel of the USA. Following the monitoring and analyzing of the latest trends in the tequila category, specifically its leading export market (the USA), MONARQ Group recently added Código 1530 Tequila to its brand portfolio. With consumers continuing to trade up to higher quality products, this brand is well positioned in the ultra-premium segment of the market. Offering a unique proposition of natural pink tequila, Código 1530 Tequila Rosa, according to Robert de Monchy, Owner and CEO of MONARQ Group, the innovative nature of this name matches the DNA of the company. In addition to signing Código 1530 Tequila, the group added Villa Sandi, the iconic premium prosecco, to its offering earlier this year. This range features La Gioiosa, the leader in Italy in the prosecco category. As a brand-building company focused on identifying consumer needs and market opportunities, MONARQ Group has recognized that the millennial drinker

With consumers continuing to trade up to higher quality brands and products, Código 1530 Tequila is well positioned in the ultra-premium segment of the market

is becoming more conscious of health and wellness. Consequently, the group partnered with Fluère Drinks to introduce non-alcoholic spirits. As an existing trend, it’s believed that developing and maintaining a healthy lifestyle has contributed to the significant growth of the ready-todrink (RTD) category. Along with the rise of the mixing and cocktail culture, appeal of convenience and greater selection of RTDs, the impact of health consciousness (and the so-called quarantine 15) has led to its growth. “The COVID-19 global pandemic accelerated this trend. During the pandemic, off-trade focused products are performing better than others because in most markets this channel has remained open. Seagram’s Escapes is currently our strongest performing RTD brand; sales are way ahead of last year, which is very impressive. Rosé Spritz recently launched a new product and we are currently introducing the highly awarded range of Greenall’s G&T RTDs to our distribution network,” says de Monchy. As the digital world continues to evolve, digital and social channels are becoming increasingly more important to the future growth of the food and beverage industry. With this in mind, the company has developed strong relationships with the leaders of e-commerce in Latin America including Amazon and Rappi. “With the rise of e-commerce, we must make sure that our brands are not only on the right spot on the shelf in the off-trade [market], but also on the digital shelf. Wherever there is a successful e-commerce platform in our region, MONARQ Group’s portfolio will be available online


and supported through attractive marketing campaigns,” adds de Monchy. With ongoing travel restrictions, MONARQ Group recognizes that company support provided to its distributors through online tools will continue to directly relate to the success of its network. As stated by Nicoline van Woerkum, International Marketing Manager of MONARQ Group, with the launch of its new website, the development of MONARQ Social Club via Instagram and the sharing of its e-newsletters, the group’s online presence has expanded over the last year. “We are looking forward to analyzing the results of the upcoming Virtual Expo, in which we will participate and meet with our current and potential distributors. We keep improving our online tools to provide the highest level of service to our suppliers and distributors, so keep an eye on our pages,” notes van Woerkum. Along with highlighting its brand portfolio and online presence, MONARQ Group would like to take this opportunity to welcome Rebeca Huerta to the team as Digital Marketing Specialist at its headquarters in the Netherlands. An MBA graduate with seven years of experience in the food and beverage industry in multinational companies such as FEMSA MX and Heineken NL, Rebeca will strengthen the marketing department in the creation of digital campaigns for its brands in the region. In collaboration with the company’s distributors, Rebeca works with a regional network of influencers and pursues the right partnerships for MONARQ Group’s brands in each market.

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