Gebr Heinemann: New concepts and key growth channels

While sales in Gebr Heinemann’s airports business fell sharply last year, and the channel’s contribution dipped from 78% in 2019 to 63% a year later, there was one unmistakeable highlight, in which the senior team takes great pride. That was the opening of its stores at Berlin Brandenburg Airport, which will set the tone for many of its airport operations to come. In the Heinemann Duty Free shops across 5,400sq m there, the company has installed a strong Sense of Place, with products and influences from the region. Management stressed that across all its operations in future, stores will better reflect their local city or region. COO Raoul Spanger said: “Our aim is to present ourselves differently at each location. The motivation is to highlight differences that are clearly visible to the customer. Every store must become a ‘just here’ place. It’s no longer about making our brand recognisable by looking the same everywhere, but by looking different everywhere.” In the company’s annual report, Sales Director Western Europe Tobias Bechinger emphasised the long-standing partnership between Gebr Heinemann and the Berlin airports: “We want to continue our track record from Tegel and Schönefeld, where we opened our shops in 1990 and 1995, at BER. We are convinced of the single airport concept in the capital city and it allows us to showcase Heinemann Duty Free in a single location. For us, it is a Heinemann brand location with great allure.” With far fewer travellers than in normal times, performance to date remains challenging, mir-roring business across the country, region and world. Spanger summarised the wider downturn by saying that “the machine was out of order and the shock was not easy to absorb”. After sales grew by +12% in January and February 2020 the business saw a -95% fall in March and April. Spanger also commented on the trajectory of recovery by major channel. “We had what I call ‘ramp-up 1.0’ in June/July last year, when our diversity helped us. The border shops helped us in a big way, as they did in ‘ramp-up 2.0’ in 2021.

“The future of travel retail is about a fascination for regions, surprise, collective experience and of course responsibility.”

– Raoul Spanger

“Immediately once the borders opened, we had absolutely strong traffic. The border shops also supported household spending and shopping for daily commodities. So people had a chance to catch up and bought more merchandise than they did in 2019. So that was quite a nice start. The border business helped us get out of this disastrous turnover situation. “When a border opens, take Czech Republic for example, what people do is they buy huge quantities within their allowance. There it was about 120% of what they used to buy so that was a surprise. The initial challenge was a logistical one, to get the merchandise in. So even as we brought stock levels down, the business in this area exploded. We are better prepared for when that happens again. But the border business doesn’t need big preparation, you are catering to people in their cars. So it has been a big positive.” Gebr Heinemann said it expects the border shop business to return to its original level “relatively quickly once the easing of travel restrictions takes effect”. The company’s operations in Bulgaria performed well compared to 2019, even growing by +8% year-on-year. In Romania, shops were temporarily closed and even once open access was limited, but business thrived at certain locations. These included Heinemann subsidiary Heinrig in Galati at the Moldavian border and in Giurgiu and Calafat at the Bulgarian border, which posted higher sales figures than in 2020. The shop in Constanta closed the year with figures similar to 2019, following its modernisation last year and extension to 750sq m. There was also a positive picture in the Czech Republic, as noted above, plus in Slovenia and Croatia, despite some closures. However, in Russia, Belarus and Georgia sales came to a halt due to border closures and lockdowns. Overall, border business sales reached around half of 2019 levels, a strong result given the closure of many frontiers during the year. In the ferry business, besides Scandinavian routes, which performed well last Summer, ferry shopping between the UK and France is also expected to recover quickly, with new duty free routes created in the English Channel by Brexit.

Gebr Heinemann said it continues to build cruise partnerships, securing additional contracts. The company will operate stores aboard several newly built ships that are planned for later this year and in 2022: the Odyssey of the Seas, the Icon of the Seas and the Wonder of the Seas from Royal Caribbean, the Mardi Gras from Carnival Cruise Line and the Enchanted Princess from Princess Cruises. Although there remains uncertainty about a return to sailing, the retailer said that interest among the loyal cruise community remains high. Additionally, it noted, in the next 18 to 24 months, fewer ports will be visited and more time will be spent on board – “a huge positive for onboard retail operations”. As noted, the airports business has been slower overall but the company is pressing ahead with plans to roll out its combined retail, convenience and F&B concept ‘Smartseller’ – a joint venture with casualfood – across small and medium-sized airports. This flexible concept will be deployed in more locations with stores in Münster/Osnabrück (where a pilot began in 2020, and completion comes in Summer 2021), Leipzig and Ljubljana. The concept will be adapted to each airport. In Ljubljana, for example, the brand will be named ‘all:yours’ when it opens in July. Under this concept, the airport company has one partner for airside retail and F&B. Smartseller Managing Director Karl Niendorf said: “This enhances efficiency, providing expertise for all areas and services from a single source alongside a modern experience for passengers that is geared to their needs and highly flexible. We are bringing an integrated shop design, IT landscape, cash register, and merchandise management system to the airport and combine the full-service approach with a rethink of airport retail.”