Gebr Heinemann. More events, a bigger profile for brands and a. pledges new concepts and brand-led approach at Copenhagen

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3 October/November 2006 TENDER ANALYSIS Copenhagen Airport Gebr Heinemann pledges new concepts and brand-led approach at Copenhagen In this special section we assess some of the big tenders of 2006, beginning with Gebr Heinemann s dramatic victory in the duty free tender at Copenhagen Airport. When the German retailer takes over the concession next year, what stamp will it put on retailing at one of Europe s key travel retail locations? More events, a bigger profile for brands and a range of new high-end concepts: those are just some of the plans that Gebr Heinemann has lined up for Copenhagen Airport, the latest location in its retail portfolio. The German wholesaler and retailer takes over the main duty free contract from The Nuance Group on 1 March 2007, under a six-year deal. And it s a prospect that Gebr Heinemann is relishing. Copenhagen is a challenging airport close to our headquarters. We look forward to working with a professional team there, said Gebr Heinemann Co-owner Gunnar Heinemann on hearing the news last August. Since then the company has been busy laying out plans for the main duty free store s conversion to a 2,900sq m walk-through shop, aided by the airport s move to a central security zone. It will also take over four smaller stores and an Arrivals outlet. Liquor in the main tax free store expect a new high-end approach to a critical category Henrik Busch: We recognise there is a story behind the products on the shelves The retailer pledges stronger, more consumer-oriented events in all product categories. Of those categories, expect beauty to shine at Copenhagen just as it does at Frankfurt or its other large retail locations. Expect a new approach too, based on category management principles, to growing areas such as toys and accessories. The company says it will deliver a new high-end Line of Luxury approach in liquor and tobacco, and it will follow up the success of its Airport Specials concept, first launched at Frankfurt International Airport, with similar events surrounding new and exclusive products. The airport authority too is excited about the prospect of a new retail partner, and the approach to brand activity promised by Heinemann strikes a chord with Copenhagen Airports Vice President Commercial Affairs Henrik Busch. He says: We are already a well-branded airport. Although we are also volume driven we recognise there is a story behind the products on the shelves, which the brands have invested millions in. We need people to see the logos and feel the brands presence, as well as find what they want easily. Busch was impressed by the Heinemann attitude to the bid process. On the commercial side it was great to see how their top management and their owners participated in the process, says Busch. That convinced us they were focused on the operation here. And we have seen at Heinemann s other operations that they believe in a high level of events, so that will impress our customers. We ll see a more high-profile presence from the world s top brands. The layout and plans they presented take The Moodie Report 203

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5 October/November 2006 TENDER ANALYSIS Copenhagen Airport into account the needs of Copenhagen, which is very different from a Frankfurt or an Oslo. Once Heinemann has put its own stamp on the retail there, travellers won t confuse Copenhagen for anywhere else: the retailer says creating a distinct Sense of Place is a core part of its strategy. The short distance between Copenhagen and Heinemann s Hamburg base will also help in supplying the operation. That was one of several compelling factors in choosing Heinemann, says Busch: Heinemann provides us with a big understanding of the retail value chain; they are experts in areas such as space management and order replacement. Another key issue was their buying power, which is proven. And as an old retailer myself, it was good to see their understanding and appreciation of the downtown market, particularly in Copenhagen. Without an understanding of that downtown market, and the forces that drive Danish and Scandinavian consumers, Copenhagen s new duty free retailer would be operating in the dark. That regional travellers have lost some of their faith in Nordic travel retail is no secret. And all regional travel retailers face serious issues of consumer confidence. A Nordic Travel Retail Group-commissioned study earlier this year from research group Kjaer and Schmeltzer found that there was deep disillusion among some passengers about the price and value proposition. That disillusion applied to airports, airlines and the ferry business. Nordic Travel Retail Group Chairman Erik Thomsen says: The latest Nordic Travel Retail Seminar in May showed that we still have a long way to go before a majority of travellers find travel retail attractive and are willing to spend more money in our shops. That s the context in which Heinemann enters Copenhagen a location in which its predecessor The Nuance Group struggled to make money but its success in Norway suggests that it will be equal to the challenge. When its Travel Retail Norway joint venture took over duty free at Norway s international airports on 1 January 2005, it embarked on a series of initiatives that dramatically improved the fortunes of the duty free business. On day one in Norway the retailer slashed prices by between -5% and -23%, depending on the category, which it said was necessary to re-establish trust in prices among Norwegians. It streamlined the supply chain using its expertise in logistics, and created what it calls a high performance culture among staff. Its challenge now is to manage growth effectively 2006 sales There is a role for an enhanced fashion and accessories offer at Copenhagen Airport, says Henrik Busch will be double those of 2004 at well over 200 million. That growth has been bolstered by the introduction of Arrivals duty free in July 2005 a move that has hit other Nordic airports serving Norwegians, with Copenhagen possibly worst affected. It will be intriguing to see how the retailer manages Copenhagen s Norwegian business. But both Gebr Heinemann and Copenhagen Airport believe they can make money, especially with the forthcoming expansion of space. Busch says: The financial offer is a good deal for the airport and we re very happy and confident with what we ve seen. For Heinemann, they have proved themselves to be good businessmen. I m quite sure they will deliver a contract that makes money for them. And, typically understated, Gunnar Heinemann adds: We won t get rich, but it s a business that should provide us with a good result and, more importantly, provide Copenhagen Airports with a good result. Duty free retail isn t the only commercial area preparing for a facelift. The airport plans to develop a further 5 6,000sq m of space in the next two years. We want to expand the shopping centre and we ll add more speciality retail and food & beverage, says Busch. I have a list of 110 brands that want to come in, but we have to assess what the customer wants. So what does Busch, as a retailer himself, want to see? He replies: I believe there is room for more outlets for women s clothing and accessories, and children s products too, but the survey will help us assess our future needs. We capture 57% of customers in the stores today, so there is plenty of room for improvement. The Moodie Report 205