Gebr. Heinemann Talking Points III
Price pressures and trading up
Assessing how trends in consumer spending are developing, CFO Dr. Kai Deneke said: “From last Summer, with the strong leisure demand, spends per passenger were relatively high, above pre-crisis levels. We see that now levelling out as the passenger mix is normalising. But we do see still positive effects at the SPP level. For 2023, we are carefully optimistic that the capacity issues at airports and border controls are improving so that we will see further increases this coming summer.”
Co-CEO Spanger also highlighted that strengthening of spend per head, notably in core European markets as travel resumed. “Now we need to move as an industry towards the next step of trading up.
“We have learned after two years of not flying that people bought better quality. We strongly believe we have to step by step cut the lower part of our assortment where we may be comparable with supermarkets.
“We must represent a more premium environment and ensure our shops are different from other environments. If you are able to increase the price level and increase the upper end in particular, then real turnover development is possible. We need to ensure we can show an exclusive assortment at fair pricing – and eliminate the supermarket comparison.”
Spanger also noted that the mid-market segment was under pressure across categories.
Assessing the price-value equation: Heinemann Duty Free at Berlin Brandenburg T2
“We still run successful promotions aggressive price promotions in our industry as these are really about savings. Mid-market is difficult on price and also for brands. In this area many brands are having huge issues.
“The top brands worldwide are getting stronger and really are the bread and butter of our business in a positive sense. There is also a lot of regional merchandise coming in, which we need too, but where there is no price comparison to the local market, though those prices must be fair. But mid-priced, mid-range brands are under pressure for sure.
Co-CEO Max Heinemann explained that “active pricing” was really the key to the question of value and unlocking consumer spend.
“It is just not a simple formula, like taking a couple of percentage points off the domestic market and then you are done with it. It is more targeted to different customer segments coming through the airport, with the offer changing for each of those groups by season and understanding what room we have to underline the offers or exclusiveness for them. Then that is layered over with the experiences at each location.
“So you will see difference in approach. Price harmonisation is not our game in travel retail. But active price advantage is one of the promises we try to bring forward.”
Finding the key to unlocking spend: The Heinemann ‘Impulse Podium’ at Hamburg Airport
Partner's message
The Moodie Davitt eZine
Issue 323 | 5 May 2023
The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com