Gebr. Heinemann on overcoming crisis, creating change and exciting the consumer
At its annual press conference on 28 April, family-owned travel retailer and distributor Gebr. Heinemann talked about performance in 2021, targeting an ambitious 75% of 2019 sales in 2022, and about its updated vision and mission for the business. We present highlights and key takeaways from the event.
“Covid-19 has sharpened our instincts that nothing can be taken for granted anymore and we should always be prepared to deal flexibly with volatilities. At the same time, one thing is certain for us: whenever a meaningful opportunity for growth arises, we should also be able to seize it because it is one of our principles that we want to create change. We want to proactively develop the industry together with our partners. And we should also dare to take on this role quite clearly.” Max Heinemann’s reflections on the difficult past two years while looking positively to the future was one of many striking notes from Gebr. Heinemann’s annual press conference, which took place virtually on 28 April. Senior management outlined the key details of a second COVID-19-hit year in 2021, with turnover rising +31% to €2.1 billion, and a return to profitability (excluding the exchange rate effect). Some 75% of turnover came from retail, 20% from distribution and 4% from other services while Europe (including Germany) accounted for 84% of sales. By channel, airports represented 73% of the business with borders at 13%. Liquor, tobacco & confectionery took the largest share of sales by category at 52%, with P&C at 33% and fashion, accessories, watches & jewellery at 10%.
Speaking at the annual press conference were (second right) CEO Max Heinemann, (second left) COO Raoul Spanger, (right) Chief Commercial Officer Dr. Dirk Schneider and (left) Head of Corporate Communication Nina Semprecht
Riding the rebound at Unifree Duty Free: Istanbul Airport is among the locations that have out-performed in Q1, says Gebr. Heinemann management
While presenting the key numbers, importantly the team led by CEO Max Heinemann also candidly addressed the latest market trends, and spoke about the obstacles as well as the positives facing the group and the wider market today. They discussed progress towards true partnership; sustainability and supply chain; encouraging newness in the assortment; growth channels and regions – and crucially, how Heinemann can become “the most human-centric company in travel retail”.
Key takeaways I – Towards 75% of 2019 sales
Gebr. Heinemann has budgeted that it will reach 75% of 2019 turnover in 2022, or around €3.6 billion, alongside “solid profitability”. Given the continuing uncertainties around COVID-19, the Russia-Ukraine crisis, inflation, supply chain and other issues, it appears a stiff target, but it’s one that management says can be achieved. Chief Operating Officer Raoul Spanger said: “In Q1 2022 we reached 67% of 2019 turnover but we are seeing turnover growth going towards the direction of our target. What we have seen in April and over Easter just confirms this.” He said that the ‘revenge shopping’ phenomenon had driven higher than average spends in the return to travel phase, though this appears unlikely to be maintained beyond next year. Spanger added: “We are also seeing several locations over-perform against expectations. Istanbul is one example. Also, at Sydney we had not budgeted any business in the first half but this is already back at 30% of 2019 with limited travel so far. “75% is a tough target, an ambitious target, but we are fighting for it and there’s no reason we cannot reach it despite the external factors we all face.”
Max Heinemann: “What the crisis has taught us is that we need a global focus”
Key takeaways II – A global company
Raoul Spanger and Max Heinemann underlined the ambition for Gebr. Heinemann to become a more global company, though currently its turnover is weighted heavily towards Europe (84% of 2021 sales). Spanger said: “We will invest further in Europe and in Asia. We won’t make strategic investments in America in the next two years and are focused on those markets that we believe in. That also includes America which is a US$100 million business if the cruise business remains OK. The Miami base will be kept for sure, and maybe in two years’ time we will change our policy again.” Max Heinemann added: “What the crisis has taught us is that we need a global focus. Pre-crisis we were going everywhere at the same speed; now we set a timeframe for reaching certain goals. But our vision is based on being a global travel retail company, not just a travel retail company.” On the importance of operating in retail plus distribution, Spanger said: “Our strong multichannel approach was very supportive throughout the year. 2021 also confirmed again how important it is to stand on two strategic pillars – this way we remain stable and independent of single markets.”
The Luxury Zone at Istanbul Airport will see new, on-trends brands and categories such as sneakers added this year
Key takeaways III – Reflections on the Ukraine crisis
Gebr. Heinemann management commented on the Russian invasion of Ukraine, both key markets in which Heinemann employs many people. The company has suspended all deliveries to Russia, which it acknowledged would affect both distribution and retail. Max Heinemann said: “As a global travel retailer this is part of our responsible corporate governance. As Europeans with all our hearts we take pride in being a multi-cultural organisation. We will carefully analyse how the situation develops.” Combining the impact of in-market sales and sales to travellers from Russia in other markets that are likely to disappear this year, Raoul Spanger said that around 10% of turnover in its European business would be affected. “Also, the profitability of the business in Russia and also in Ukraine was good. So this is hitting more than turnover, and of course this has a big effect.”
Raoul Spanger: Russian crisis impact estimated at around 10% of sales in the European business
Key takeaways IV – Evolution of the product mix
Gebr. Heinemann Chief Commercial Officer Dr. Dirk Schneider addressed the promise to travellers of ensuring a ‘sustainable and spectacular assortment’. Schneider said that new “exclusive, rare, trendy and sustainable products” had helped update the mix. Examples include the launch of The Yamazaki 55 Year Old (sold for €488,000 through Unifree Duty Free at Istanbul Airport) or the Cohiba 50th anniversary humidor. Rare spirits items that will enter the stores this year include Bowmore 53 and 50 year old expressions, Glen Grant 60 year Old, The Glenlivet 50 year Old, and Midleton Very Rare 27 Year Old. In beauty, a key element of the strategy is to include more niche brands, especially in fragrances, which account for 80% of category sales in retail today. “We will give more room to innovative concepts and brands in the niche area of fragrances,” said Schneider. He also highlighted the focus on low and no alcohol items, as well as low-sugar items in confectionery. After Gebr. Heinemann streamlined the assortment by around 30% during the pandemic, Schneider also addressed how it was building the assortment back today, while leaving room for newness. “This range management was a necessity but it was also thinking one step ahead, because now we need this freedom to fulfil our promise of a spectacular assortment. So it will be more sustainable, it will be more trendy, it will include more rare products, it will be more exclusive. We want that room in our mix, on top of what we have, to fulfil this promise.”
Dr. Dirk Schneider: Innovation and newness in the mix
Key takeaways V – Sustainability at the core
A key element of the updated Gebr. Heinemann mission statement is sustainable impact, which has been anchored as a promise to travellers.
One example of the implementation of this strategy is the sustainable category concept for responsible shopping, which Gebr. Heinemann said it was the first travel retailer worldwide to develop.
As a first step, a ‘future friendly’ seal identifies products with sustainable packaging and materials in the shop. That drive began online and at key German airports, with more to follow.
Dr. Dirk Schneider said: “It is the beginning of a longer journey. We are starting to do pioneering work together with our suppliers who are very supportive. Basically, we are setting a new standard for responsible shopping. Together we plan to redefine the concepts and to add more sustainability attributes to our ‘future friendly’ standards. We will continue this path and we will expand the product range, focusing on sustainable packaging and ingredients, giving customers the choice to make their contribution to a better world.” A further crucial goal, Schneider revealed, is to achieve ‘climate-positive’ supply chain by 2032. “We want to go beyond carbon neutrality. We will be carbon dioxide-neutral in scope one and two for our own supply chain operations already by 2024. And including scope three, we are going to reduce those emissions by -25% by the same year.”
The ‘future friendly’ concept targets those travellers who already shop consciously and others whose interest in sustainable consumption could be awakened
Key takeaways VI – Data & insights
“We see volatile times as an opportunity to adapt and to future-proof the travel business. That’s why we have enter a new era of data-driven decisions.” So said Dr. Dirk Schneider on the launch of a best-in-class cloud platform to use one of Heinemann’s greatest assets to its full potential: its data. He said: “We turn numbers into stories and data into insights, fast and global for all our brands and suppliers.” The new platform is called ‘HeiSights’, which combines the words Heinemann and insights. It links up to the group ‘HeiCloud’, which is a collaboration platform for B2B customers that is already in place. “With ‘HeiSights’ we will share with our partners best in class dashboards that are always accessible, up to date and easy to navigate. Sharing this knowledge will drive actions and faster growth initiatives. It means we can become faster, more transparent, more intelligent in our cooperation with brands and suppliers than ever before.”
Automation in supply chain has improved with the addition of new proprietary technology. LogSeal, on which Heinemann has a Europe-wide patent, seals the goods on a pallet after they have been wrapped. “We are bringing the world’s first technical solution to the market that seals a load within the secure supply chain,” says Dirk Schneider
Key takeaways VII – A new vision and mission
Gebr. Heinemann recently presented an updated vision and mission that will guide its future. CEO Max Heinemann, representing the fifth generation of family leadership of the company, said his mandate was to rethink the previous mission statement and to translate it for the future. “Our vision is that we turn travel time into valuable time as the most human-centric company in global travel retail. With our vision we manifest our corporate culture: the ultimate focus on people, on humans. This is what defines and differentiates us in global travel retail and what can be decisive for potential new partnerships in and outside our industry. “We want to be accountable and take on clear responsibility. Putting people at the centre frames a specific way of behaviour. We intend to put this into practice and to set an example. “At a time like this, a reshaped and refocused mission statement is a strong signal, both for our group itself and for our partners. This underscores the fact that we as a company are looking at the next ten to 15 years.”
Gebr. Heinemann recently set out its key sustainability goals to 2030 with a key ambition to generate more than half of its sales through sustainable products
Key takeaways VIII – a positive future
“We understood early that we need to remain positive no matter the challenge. We switched into future mode quickly along the way. We are definitely hit. It has made us humble and sharpened our instincts. The industry now has a more volatile business model.” So said Max Heinemann as he addressed the path forward. “People thought it would be a time of consolidation but no players have disappeared. We see more progressive partnership, more transparency. “It has opened our eyes to the vast potential that is there. We were comfortable before as an industry, surfing a good wave. Now we have seen the fragility of the business and confirmed the business model and our ability to survive the greatest crisis we have had. “Now we aim to be the best at what we know and become great at what we might not yet know. It has shown us what we are good at and what we are not yet quite that good at yet. It has shown us that we can build bridges to make the industry a brighter place. “We can confirm that we will play a leading role and seek to create needed change to unlock the potential of the sixth continent.” “The traveller journey is the main focus,” he concluded. “We want to make their lives easier, more exciting, give them back the idea of being excited about travel. “I am convinced that the partnerships we built are even stronger now, and that the next years will be decided by how good these partnerships are, and by how we actually really collaborate in our industry. That will be a differentiating factor.”
Smartseller, the joint venture between Gebr. Heinemann and travel food company casualfood, opened an integrated retail space combining duty free, food & beverage and convenience at Ljubljana Airport in 2021. The retailer says it can be a viable solution for small and medium-sized airports.
Family values: Claus, Max and Gunnar Heinemann
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