DFNI conference reveals regional optimism

Around 120 delegates gathered for the DFNI Eastern Europe and Emerging Markets conference in Istanbul

The 2011 DFNI Eastern Europe and Emerging Markets conference began this morning at the Point Hotel Taksim in front of an audience of around 120 delegates, featuring presentations from key figures in the duty-free industry from the region and beyond.

The event is sponsored by Turkish duty-free operator ATÜ (premier sponsor), liquor supplier Diageo Global Travel Retail and Middle East (cocktail party sponsor), Marzipan supplier Niederegger (coffee break sponsor) and supporting sponsors Ferrero, Perfetti van Melle, Kraft Foods World Travel Retail, Capella Industries and The Nuance Group.

DFNI editor Bill Lumley was the first to take the stage, presenting a brief overview of the key issues in travel-retail in Eastern Europe—among them the threat posed to the industry by the new Russian Customs Union. According to Lumley, the threat is of the magnitude of that posed by intra-EU duty-free abolition in 1999. He also reminded delegates of the first meeting of the newly formed Central and Eastern European Travel Retail Association taking place at the end of the day.

The morning session entitled Turkey's Strategic importance to Eastern Europe began with a presentation from TAV Airports Holding board member and CEO Sani Sener, who cited employee satisfaction as a key sales driver. He said: “Happy employees create happy customers and happy customers create more sales.” According to Sener, happy passengers spend €10.80 ($14.80) more compared with unhappy passengers and sales have increased due to increased passenger numbers and spending, in addition to passengers buying the same amount but more often.

Sener, who reported an 18% growth in revenue to €785m ($1.07bn) in 2010, praised the company's partners. “We are not exceptional innovators, but are partners are exceptional.” he said. “Our projects require sophisticated knowledge and lots of small steps are being taken to improve the business.”

Next on stage was ATÜ general manager Ersan Arcan, who highlighted the strategic importance of Turkey from a geographical perspective and its position between Europe, the Middle East and Africa. Before introducing his company, Arcan revealed a 56% increase in revenue between 2006 and 2010 and a 91% rise in commercial space from 12m sq m (129m sq ft) in 2006 to 23m sq m ($247m sq ft) in 2010. Established in 2010 as a joint venture between airport operator TAV and a partnership between Unifree and Gebr Heinemann, the company has a 4.55% market share in the Turkish duty-free sector, said Arcan, who cited duty-free in Turkey as a contributor to exportation and a major source of income for privatisation.

Arcan was followed on stage by The Nuance Group joint venture Net Urart managing director Cengiz Iman, a late replacement for Nuance CEO Europe Andrea Belardini. After revealing a double-digit growth in the region's travel-retail market in recent years (average 18% per annum) and attributing this to increased leisure and business passengers among other elements, he had words of caution regarding the future. “Growth in emerging markets will slow and face similar dynamics to what we have experienced today in more mature markets,” he said.

Iman went on to reflect on the opening of Nuance's latest duty-free concept at Antalya International airport in May. The new 1,000sq m (10,760sq ft) duty-free shop is made up of a series of boutiques reflecting each core category as a separate department with its own design. He said. “It is not a store but a shopping destination.” Giving strong visibility to brands was a priority, according to Iman. “It was important to give strong visibility to all brands. We have also tried to meet the demands of different customer profiles such as those interested in gifting and those seeking self-indulgence.”

The final presentation before the coffee break was delivered by Setur deputy general manager Kivanç Altinöz, who outlined the development of the company's duty-free business at Sabiha Gokçen International airport. Altinöz said the retailer operates 5,000sq m (53,819sq ft) of space at the airport with an emphasis on the core product categories and others including jewellery and accessories. He also pointed to a change in management philosophy which involved coming up with “a clearly-defined vision and strong leadership,” he explained. He also pinpointed the analysis of internal data from employees for example and external information from customers and supplies as key to ensuring to ensuring the success of the business.

After the coffee break, Panchatantra CEO Valentin Nikov, assisted by daughter Valeriya Geogieva serving as translator, called for “cooperation and partnership” in an attempt to force the passing of legislation to enable the return of duty-free and travel-retail business in Bulgaria. The company was established in 1990 and won the right to operate duty-free shops at two border points in 1991. The shops were in operation until 2008, when the Bulgarian government closed them.

In the final session before lunch, Nikov said: “The Bulgarian government has not reacted to proposals to restore the business. There are huge prospects for duty-free and travel-retail business in Bulgaria. It is the government that should decide who wins the game and not others,” he concluded.

Andrew Pentol

18-Oct-2011