ASUTIL Report – Dufry
Dufry consolidates and aims to extend powerful footprint in Latin America
On the eve of the ASUTIL Conference, we speak to the major duty free powerhouse player in the region, Dufry, about trading trends and the outlook for the business. By Dermot Davitt.
Dufry President & CEO LATAM & Caribbean Enrique Urioste presents an upbeat assessment of the business on the eve of the ASUTIL Conference, pointing to a series of contract gains and extensions that cement the retailer’s position in the regional market.
Urioste says: “Examples include enlarging our Hudson operation at RioGaleão Airport, expanding the Dufry Shopping footprint at Salvador Bahia Airport, expanding our duty free and duty paid business at Recife International Airport, and opening a duty paid operation including Dufry Shopping and Hudson in Terminal 1 at São Paulo Guarulhos Airport. We just opened a brand new walkthrough store at the new Buenos Aires Ezeiza terminal in Argentina and another walkthrough departure store at Montego Bay in Jamaica. In addition, we have had very important developments in our Seaports Business Unit.”
Enrique Urioste: Positive outlook
The walk-through store at Santo Domingo International Airport with a strong spirits showcase (above and below)
He says that Dufry remains committed to growing organically alongside its partners, as it also identifies new growth opportunities in the region.
The gains noted above come amid a strong recent performance across Latin America & Caribbean.
Dufry made a strong start to the year with turnover in the region climbing +47.8% year-on-year to CHF376.3 million (US$416 million), with Argentina, Mexico and the Caribbean the best-performing markets. Encouraging, says Dufry, a further boost has come from the cruiseline market recovery.
Consumer purchasing habits are evolving, the company notes, with Urioste citing some highlights.
“We are seeing positive momentum for travel and travel retail with spend per passenger continuing to be higher than pre-pandemic. Exclusive products, novelties, limited editions and unique promotions continue to be sought after by customers and we work closely with our brand partners to ensure we continue to offer these.
“As a general trend, we are also seeing a strong level of interest in luxury and higher price-point products across all the core categories, showing that travellers are looking for moments of self-indulgence or special gifts for others.
“Destination merchandise and store concepts are a key area of investment where we are developing exclusive concepts that will showcase the culture and values of countries.
“In terms of other trends, the demand for healthy, relaxing, eco-sustainable and well-being products continues. We have responded by launching new product ranges in the beauty and food categories, as well as new retail concepts such as Mind.Body.Soul. which we have opened now in several locations globally, including Guarulhos International Airport in São Paulo.”
By territory and sales by nationality, Brazil is the retailer’s most critical market, and here too, the market is changing.
Urioste says: “Characteristically, Brazilians show a strong desire and willingness to travel, and they want to make the most of each part of their trip – including buying in our stores – with spend per passenger showing an increase in the large majority of our stores in the region.
Honouring the high-class wine offer and heritage of Chile at Santiago Airport
“The border stores channel was one of the most impacted during the Covid crisis as the land borders of Brazil were closed for a long period. We are undertaking significant development of our stores during the coming year and we expect to refurbish the Uruguaiana operation in the near future.
“The main challenge we have with Brazilians is the exchange rate, something we cannot control. Having said this, we are implementing a large number of initiatives with a customer-centric philosophy to create a better shopping experience, introducing new products, better savings and services, as well as special activations and events to surprise our customers.
“In the airport channel, our arrivals business is performing well, with travellers taking advantage of the various services we offer to make their shopping experience easier including Reserve & Collect, pre-payment and home delivery.
“Ultimately, when it comes to the travel experience, customers continue to seek great shopping experiences, exclusive products, novelties, and first-class customer service. Dufry, in partnership with its various stakeholders, is committed to maximising any relevant opportunities to deliver on these expectations, be it on cruise ships, in airports or train stations or border stores.”
Under Dufry’s ‘Destination 2027’ strategy, the company (now part of a wider ‘Travel Experience’ group with Autogrill) continues to invest in ramping up its digital activities.
Urioste says: “The digitalisation of our industry and the propensity of customers to use digital devices and applications is an ongoing certainty, which will definitely continue and increase in importance. Dufry therefore continues to develop an omnichannel approach aiming to increase our customer engagement through multiple touch-points, as well as by developing new online and digital services for them. These include interactive technologies within our stores to educate, inform and engage customers, as well as online services such as RED By Dufry and Reserve & Collect.
“The fact that we have a captive audience is, and remains, a huge advantage for the travel retail and travel F&B industry and this is something we need to further capitalise on going forward. We have the opportunity to combine online services with our existing physical shops and outlets, in which we will continue to engage and excite our customers with experiential and hybrid store environments, innovative campaigns and a wide range of sought-after brands across all the core categories.”
Across Latin America, challenges remain, from economic and currency uncertainty to the fact that some airlines have yet to build back their connectivity internationally. But overall, Urioste remains positive about the growth opportunity ahead.
“There are a significant number of routes that are still not operating at the pre-Covid capacity, or not operating at all. The demand for this exists and by conversations we had with airlines and airports this demand should be covered by 2024 or early 2025.
“The economic challenge is part of the LATAM reality. If one thing is true, it’s the resilience and recovery capacity of our region in general and our industry specifically.
“Dufry, like no other travel experience player, has the oldest and widest industry experience, operating duty free and duty paid all over LATAM and the Caribbean through different channels like airports, sea ports, cruises, downtown and border stores. We even operate Colombian Emeralds International, a jewellery company that designs and produces products sold through our stores. We know the market specifics, and the reaction to the different economic or political challenges and consumer behaviour.
“Knowing all of this and therefore knowing what to do, is what gives us the confidence to successfully operate in the region. Last-but-not least, the business combination with Autogrill opens new opportunities to serve our customers with new experiences and to provide our concession partners with a new set of services.”
Partner's message
The Moodie Davitt eZine
Issue 324 | 6 June 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