Business commentary andanalysis of key developments inthe global duty free and travelretail industry for readers of The Moodie Report

Fast, Factual, Free

ISSUE 24 DECEMBER 2006

The Moodie Report PLUS© ispublished by Moodie International.

Please direct any comments toMartin@TheMoodieReport.com

Written and edited by Martin Moodie;copyediting, layout and production byJon Elphick

i ns ide th i s i s sueThe Moodie Report’s best of the best.......2,3

The inspirational Niksa Milanovic .................2

Out of Africa, out of this world.....................2

Communication improvement required.......3

The flying Scotsman ........................................4

Dynamic DFASS.................................................4

Falic family forges forward............................4

All eyes on Incheon ..........................................5

Game on in Macao ............................................6

Valiram’s double coup ......................................8

The Moodie Report People of the Year ........9

From the Editor: Welcome to our annual year-end edition of The MoodieReport PLUS, in which we review the people, places, retailers, shop open-ings and stories that stood out in the travel retail industry during thetumultuous year that was 2006. It was a year dominated by so manyheadlines of the wrong kind that it was difficult at times not to feel deeplydepressed about the human condition, let alone our industry.

But as always, in life and in business, there was plenty to inspire and toalleviate the darker moments. As commentators it is easy to focus only onthe negatives – and certainly one must not ignore them – but one mustequally seek out the positives that lend both balance and optimism.

Just as Earle’s song ends hopefully (“I believe there’ll come a day when thelion and the lamb will lie down in peace together in Jerusalem”) in this specialreport we’ve tried to blend both the upsides and downsides of what mustsurely rank as one of the most difficult years in our industry’s 60-year history.

We begin with our own selection of the year’s highlights, followed by ourpopular A–Z of industry issues, identities and themes. And we concludewith our traditional People of the Year awards.

Store Opening of the Year (airport): Madrid Barajas Airport’s newTerminal 4, opened in early February, was touted as ushering in a new erafor the Spanish capital’s gateway.

Could the retail live up to the terminal’s thrilling design? Largely, yes. Weparticularly liked (though not the name) Aldeasa’s ‘The Shop’ – traditionalduty free categories, best expressed in fragrances & cosmetics – and thesame retailer’s Les Boutiques, the largest area for luxury brands in anySpanish airport, featuring specialist corners and areas for top brands suchas Omega, Cartier, Montblanc, Furla, Pedro del Hierra, Bvlgari, Loewe andCartier. Upmarket yet accessible, stylish and spacious in equal measure.

And top marks too for Aldeasa’s ‘Thinking España’ destination merchan-dise store, a beautifully understated testament to Spanish tastes and tra-ditions that is a sheer joy in which to shop.

Store Opening of the Year (non-airport): The King Power DowntownComplex in Bangkok wins for its sheer ambition and daring. Set againstthe most testing of backdrops – the retailer was simultaneously preparingfor an even more daunting opening at Suvarnabhumi six weeks later – thisnew store represents a triumphant flourish of will and vision.

The Moodie Report’s

Year inReviewI woke up this mornin’ and none of the news was good And death machines were rumblin’ ’cross the ground where Jesus stood And the man on my TV told me that it had always been that way And there was nothin’ anyone could do or say

–Steve Earle

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Retail Revamp of the Year: The new-look South wing of Tokyo NaritaAirport, opened amid great expectationin June, saw the unveiling of the coun-try’s largest duty free mall, NaritaNakamise. This 3,500sq m cocktail ofdesigner boutiques and traditional dutyfree shops took Japanese airport shop-ping to new and welcome heights.

Specialist Outlet of the Year: Weloved King Power’s ‘Once upon aTime’ upmarket children’s outlet inBangkok (downtown and airport) andsuppliers were warm in their praise ofthe new DFS watches store in Syd-ney Airport as being right out of thetop drawer. But our vote goes to thequite wonderful Jo Malone store atLondon Heathrow Airport TerminalThree. This gorgeous throwback to theway perfumeries used to be is a heaven-scent antidote for the stressed trav-eller who has just cleared security.Lovely merchandising, gleaming white-ness, great staff (a woman calledAngela on duty last time we visitedshould herself be bottled andfranchised throughout the industry)and a fabulously diverse range ofscents (all available to be tested) makethis a place to dwell – and to spend.

Airline Retailer of the Year: KoreanAir wins our vote for the second yearrunning, courtesy of its excellent(monthly) inflight duty free brochure,penchant for introducing high-end prod-uct success stories, deeply ambitiouswebsite, staff motivation powers and,most of all, its sheer success – sales ofUS$170 million were likely by year-end.

Inflight Duty Free Brochure of theYear: Selling off the page is a very dif-ferent science to selling off the shelf,and many airlines are highly adept at it.In a high quality field Qatar Airwaysgets the vote for its beautifullyproduced, renamed Shopping Extrava-ganza. Featuring art house transparentpaper section dividers, high qualityimagery and production values andclear, effective signposting, it is a classicof its genre.

Conference of the Year: Despite theusual flurry of industry events, qualitypickings were extremely rare in 2006.The best, undoubtedly, was the one with

the most validity – the Aviation Secu-rity Workshop in Cannes hosted byTFWA. It could have done with moretime but at least left delegates wantingmore, not – as at so many conferences –an escape route. MEDFA and ASUTILwere typically solid, as was the NordicTravel Retail Seminar.

Speech of the Year: From that sameworkshop we’ll give this award toETRC President Frank O’Connell forhis passable impression of newscasterPeter Finch in the great movie Networkdoing his famous “I’m mad as hell andnot going to take it any more” line.Frank was mad and this normally quietman of duty free truly got his messageacross as a result. Runner-up was a finepiece of advocacy of the tobacco cate-gory in duty free from BAT’s NeilLovett at November’s MEDFA confer-ence in Dubai.

Destination Merchandise Store ofthe Year: If ‘Thinking España’ wasgood Out of Africa was even better.The taped sounds of African wildlifebeckon you towards the destinationmerchandise store at Cape Town Inter-national Airport (there’s another atJohannesburg Airport). When you getinside you discover an incredible rangeof high-quality African merchandise,from fashion and accessories tochildren’s items, homeware, wood carv-ings, ostrich eggs, Africanthemed games, toys, localmusic, beads, jewellery, clothingand crafts. It’s all here inarguably the quirkiest retailenvironment in travel retail:Destination merchandise at itsbest. Out of Africa – and out ofthis world.

Promotion of the Year: Weconcur with the Frontier judges.We loved the concept of thepartnership between Emiratesand Montblanc (and the latter’sUAE representative Visions) –an ultra-luxury timepiece beingauctioned for a children’s chari-ty (the Emirates Foundation)over a three-month period. Theresult? A stunning US$250,000being paid for the watch, andthe sort of promotion thatgives our industry a good name.

The Moodie Report’s Interviews of the Year:1) Dermot Davitt’s interview withDubrovnik Airport’s Niksa Milanovicwas inspirational. Recalling the darkdays in 1991/92 as shells reined downon the streets of his Croatian villageand his beloved airport was blown topieces, Niksa said: “We used to cleanthe streets every day to prove to our-selves that normal life could go on, andalso to defy the soldiers on the hillside,to show them that we could not bebeaten. We came back in November1992, and the airport was totallydestroyed.” 14 years on the rebuilding islong complete, and a new airport is setto take shape.2) The Sung-Joo Kim story was anoth-er that ranked highly with The MoodieReport’s readers. The dynamic Koreanbusinesswoman who is driving the MCMbrand back to (and perhaps beyond) itsformer lustre is an interviewer’s dream:feisty, refined and profoundly articulatein equal measure. “I want to create anAsian powerhouse,” she told us. Onesuspects she already has.3) YS Choi. Our interview with Lotte’sgreat pioneer of duty free – an ever-present figure in the evolution of thedowntown and airport retailer’s busi-ness over the past three decades – wasfull of reminiscences and pride. A touch-ing and salient reminder of how peoplemake businesses.

AAAAAlpha: The most turbulent year in theretailer-to-catering company’s history,with a suspension from the stockexchange and the departure of bothChief Executive and Finance Director.But by year-end, under new CEO PeterWilliams, the company had stabilised andended 2006 in style by winning theDelhi International Airport duty freecontract in partnership with Pantaloon,ahead of hot international competition.

AENA: When will one of the industry’smost anticipated – and certainly mostoverdue – retail tenders take place forthe Spanish airport shops (other thanMadrid) currently run by Aldeasa? Orwill there even be a tender? As Dufrywaits in the wings to make its anticipat-ed challenge in Aldeasa’s heartland,Spanish airports authority AENA isplaying its cards close to its chest.

Arrivals shopping: Oslo set the Euro-pean precedent, and Switzerland is setto pick up the baton. Copenhagen isexploring the concept and others aroundthe world – notably Dubai Duty Free andAustralian airports – are looking at waysto extend it. In a security-obsessed agethat is hurting duty free in general,Arrivals shopping stands, perversely, tobe a major beneficiary.

BBBBBangalore: Emblematic of India’s fast-modernising, fast-privatising airportsector, Bangalore International Air-port’s conducting of the recent retailand food & beverage tenders was exem-plary. Not surprisingly it attracted aworld-class line-up, and the manage-ment can be well pleased with itsappointees – The Nuance Group withShoppers’ Stop, and HMSHost.

BAA and break-up: The UK Office ofFair Trading’s recent referral of BAA tothe Competition Commission almost cer-tainly means the divestment of one ormore airports from the Ferrovial-ledcompany’s portfolio. Gatwick (or Stanst-ed) and the Scottish airports are thelikeliest bets. An intriguing side issue from any divestment is the future of the

duty free contracts (all held by WorldDuty Free) at any acquired property.

Beirut: “There is currently only one flighta day but it is being serviced by the dutyfree operation.” With those words WalidSalah, Managing Director of PhoeniciaTrading – the joint-venture partner withAer Rianta International–Middle East inBeirut Duty Free – announced on 17August that the retailer was back inbusiness after the country’s short butbrutal conflict with Israel. Remarkablythe business has bounced back and isrunning ahead of last year’s sales; buthuge question marks remainover Beirut’s political future.

CCCCCopenhagen was the big dutyfree tender of the year in Euro-pean travel retail and it attract-ed a suitably high-calibre field.The bookmaker’s favourite,Gebr Heinemann, took the hon-ours, adding further mass tothe German company’s regionalstronghold first created by thewinning of the Norwegian ten-der in 2004. Copenhagen Air-ports commercial supremoHenrik Busch’s highly transpar-ent, information-led and cre-ative tender was a role modelof its kind.

Cathay Pacific Airways: Thesheer dynamism of the Hong

Kong carrier is well reflected in its mar-vellous online offer – a deserved winnerof The Moodie Report’s first-ever TravelRetail Website of the Year.

Communication: In too many instancesthis industry would get an ‘E’ ratherthan a ‘C’ (let alone an ‘A’) for communi-cation. Better intra-industry communica-tion and, more critically, an improvedconsumer effort are critical if the busi-ness is not to be permanentlyundermined by that other perennial ‘C’of recent months – confusion. How manytimes, for example, do we see landsideposters and leaflets outlining the 100ml

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Good, positive communication by WDF at Heathrow T3

liquids limit on what can be clearedthrough security, with no mention at allthat duty free items of all sizes can bepurchased once passengers are airside?

DDDDDubai Duty Free: Can the amazingUAE airport retailer crack the US$700million sales barrier this year, up fromUS$590 million in 2005? Amazingly,despite myriad security-related con-straints in 2006, the answer is yes. Andwith a new concourse, warehouse andlogistics centre coming on stream nextyear, Colm McLoughlin’s team has itssights set on US$1 billion by 2009. Theprobability is growing by the minute.

DFASS: Unquestionably 2006 was thebreakthrough year for Benny Klepach’sMiami-based company, which has diver-sified successfully – both by channel andby region – in recent times. This yearsaw DFASS pick up the Fort LauderdaleAirport contract as well as the impor-tant Delta Air Lines concession; but thereally big one was the hotly contestedtender for Singapore Airlines. In a singlegiant stride the win propelled DFASSinto a new league and a new region.

Dubai Aerospace Enterprise is amajor new aviation consortium, backedby the government of Dubai, whichplans to invest US$15 billion in the sec-tor by 2015. Its Chairman is H.H. SheikhAhmed bin Saeed Al Maktoum, Presi-dent of Dubai’s Department of Civil Avi-ation and Chairman of the EmiratesGroup. That’s quite some pedigree. Hesaid recently: “Within ten years DAEwill become an integral part of the glob-al aerospace industry and a leadingplayer.” Would you bet against it? It’s aclassic case of ‘watch this space’ or, inthis case, watch this aerospace.

EEEEWill 2007 be the year that duty free inEgypt really takes off? We think so. Thisyear saw some intriguing tenders in amarket of huge potential that has beenundermined to varying degrees downthe years by terrorism and bureaucracy.Sharm el Sheikh Airport drew a remark-ably strong field (and commensurately

strong bids) given its size, with incum-bent EgyptAir and Dufry finally sharingthe spoils. The Cairo T3 tender had aremarkable denouement – at the lastminute the bid was called off and thecontract awarded to EgyptAir.

Emirates: What an exuberant inflightoperation that flying Scotsman JohnSime (above) runs. The airline deserved-ly won a Frontier award for Best Part-nership Initiative with Montblanc (seeM) and its remarkable December initia-tive with Traveller in offering a BMW120i to the month’s best-selling cabincrew saw Sime’s and Emirates’ motiva-tional powers move into top gear.

European Travel Retail Council: ETRCis the body now driving the glob-al effort to adapt to the 6 Nov-ember European Commissionaviation security regulations.Perversely, though, much of itsimmediate attention is devotedto undoing the negative impactson transit passengers (see T) ofthe original deal it agreed to.The reality of 6 November isthat it could have been much,much worse without ETRC’sintervention – a ban on liquidsover 90ml in size, for example.The group needs financial andmoral support in equal measurein the difficult months ahead.

FFFFSpanish was (eventually) theloving tongue in the bitter fightfor control of BAA as Spanish

infrastructure giant Ferrovial outmuscledeven the might of Goldman Sachs to takecontrol of the UK airport operator. With aterrorism alert, an aviation security crisisand an Office of Fair Trading investiga-tion within months of closing the dealthe Spaniards must sometimes wonderwhat they have let themselves in for.

The Falic family – Simon, Leon andJerome – may not seek out the head-lines, but they keep making them inimpressive style. Their success with DutyFree Americas has surprised critics whopre-judged their ability to run a bonafide retail empire when they bought thecompany in a bargain deal from BAA.Just as interesting has been the compa-ny’s successful plunge into brand owner-ship – from luxury fashion house Christ-ian Lacroix to Hard Candy. Until nowDuty Free Americas has been an Ameri-cas-orientated retailer. Until now…

Frankfurt Airport: The year ended ona difficult note as Frankfurt’s hub statusmeant it was cast as the bad guy inhaving to confiscate tonnes of duty freeliquids from transit passengers (thatshould never have been sold to them inthe first place at other locations). Butotherwise 2006 was a banner year foran airport group that continuallyimpressed with its ability to deliver boldF&B and retail statements, openingsand promotions.

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Fun: Where did that word go during2006? For all the obvious reasons, fartoo many airports have become placesto escape from rather than places thatcontribute anything positive to the trav-el experience. Security concerns arehardly the airports’ fault but more,much more, can be done to convincetravellers that once they stumble out ofsecurity, belts done up, shoes back on,laptops back in bags, suntan lotion con-fiscated, that the worst really is over.

Put up signs immediately post-securitysaying ‘Your holiday starts here’, meetand greet those harried travellers. Havesome promotional offers promptly onhand, sample some drinks or chocolates.Drive that other crucial F, footfall, intothe stores, not away from the wholeairport experience.

GGGGGlobal Airport Services, one of theindustry’s most intriguing intellectualconcepts with arguably one of its worstacronyms (GAS), dominated the head-lines in 2005 after its set-up – but wasnotably absent from them in 2006 asjoint-venture partner BAA’s attentionswere diverted elsewhere.

It was a case of the GAS being turneddown and then off as the alliance withCrossbar Associates was quietly geareddown; though we’ll hear plenty more ofthe individuals who tied up with BAA –Steve Franklin, Adrian Murray andRandy Emch. They all still have a bigcontribution to make to the business.

GECAS: No, not a European Commis-sion version of GAS, but an equallycompelling new entrant into the airportinvestment scene. And this one has thering of a powerful long-term contender,backed as it is by the might of GeneralElectric.

Ex-BAA and Macquarie Airports execu-tive Marcus Balmforth is the mancharged with driving the airport invest-ments of the GE Commercial AviationServices (GECAS) unit. London City Air-port is already under his belt; anotherLondon property isn’t out of the ques-tion, and China and India will be otherpriorities.

HHHHWhat a year it has been for GebrHeinemann – a company so loyal to itsHanseatic roots and yet so dynamicallyprogressive in areas of supply chainmanagement and promotionalinitiatives, in particular. Copenhagen(see C) was a huge coup, as was thenew nine-and-a-half-year contract atGermany’s leading international airport,Frankfurt.

Co-owner Gunnar Heinemann once saidthat the company “made reliability theguiding principle of all that we do”.That’s true, but it’s only part of one oftravel retail’s great success stories –throw in absolute professionalism, abelief in partnership and long-termthinking and some good old family values and you begin to get the full picture.

IIIIIncheon International Airport, wherethe world’s biggest duty free tenderlooms in early 2007. Currently fourretailers (Lotte, DFS, KNTO and AKDuty Free) share the duty free cake.Will that number, and the names, staythe same? Lotte will be hard to budge– after all its main Incheon fragrances& cosmetics store is the world’stop travel retail beauty outlet –and so will KNTO (trading asDuty Free Korea), because ofthe critical role its revenuesplay in developing the country’stourism infrastructure.

But nothing is a given, and aperhaps unrivalled bidders’ line-up can be expected, includingthe incumbents, downtown rivalShilla and a host of big interna-tional names. The food & bever-age tender too is up for grabs:expect high levels of interestthere too.

India: The country on so manytravel retailers’ lips. A numberof contracts will be determinedin early 2007, which should seesome interesting internationaland local names join the likes of

Nuance, Shoppers’ Stop, HMSHost,Alpha and Pantaloon which were suc-cessful in the big contests that havebeen resolved so far in Bangalore andDelhi.

JJJJJapanese travellers: It’s been a mixedyear for outbound Japanese travel, witha soft Yen hurting Dollar-driven marketssuch as Hawaii; but business to Chinahas rebounded from the political diffi-culties of 2005. According to TravelJournal International Online, an increas-ing number of consumers follow threekey motivations – ‘cheap, nearby, short’– when planning their travel, helping toexplain the rising popularity of Thailand(rebounding to prominence after 2004’stsunami) and Vietnam.

John Sutcliffe: What an influential fig-ure the Irishman has been on MiddleEast and global duty free over the pasttwo decades. His achievement in build-ing Aer Rianta International–MiddleEast’s US$500 million retail empire inoften difficult and never stable circum-stances is one of the industry's greatachievements.

With Cyprus now on line, and the com-pany pushing hard for a Saudi foothold,2007 looks like being the best year yet.

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KKKKKing Power (Thailand): The astound-ingly ambitious dual opening within justsix weeks of the company’s new Down-town Complex and its all-embracingSuvarnabhumi Airport commercial offer(from duty free to destination merchan-dise, spa to specialist boutiques, food &beverage to foreign exchange), pushedthe company into a new qualitative uni-verse and gave Asia travel retail twofascinating retail propositions. Alwaysthe perfectionist, Chairman Vichai Rak-sriaksorn insists Suvarnabhumi shouldnot be judged for at least a year until allthe finishing touches are in place.

Korea: With Incheon in the spotlight,Korean Air once again proving theworld’s best inflight retailer, Lotte (seeL) riding high and the effervescentSung-Joo Kim leading luxury houseMCM’s renaissance, it was a great yearfor Korea in travel retail. 2007 (see I forIncheon) may be even bigger.

LLLLCan Lotte Duty Free move from a one-market phenomenon to a truly interna-tional force? We think so. Watch mar-kets such as Singapore and China, anddon’t count the company out of any ofthe big international tenders. It’s a verygood retailer indeed, and one that –buoyed by the right international experi-ence – could become a truly pan-indus-try force. Backed by the largest IPO inretail history (for Lotte Shopping Com-pany) it certainly lacks neither thefinance nor the will.

LAG: The year’s big acronym, firststruck by those great practitioners ofabbreviation, the Australians, todescribe ‘liquids, aerosols and gels’, theitems at the heart of the post-10August aviation security crackdown. It’sa term that, unfortunately, is likely toremain a key part of industry vocabu-lary for some time to come.

Liquor: What is the future of one of thegreat long-time staples of our industry?That’s a fundamentally important ques-tion, not only to the category but to thebusiness as a whole. Look at the suppor

pouring into the ETRC lobbying fundfrom the liquor sector – underlining justhow much is on the line here.

MMMMMichael Mulyoowa: The man responsi-ble for the single biggest duty free pur-chase of all time, from another M(Montblanc) – a ‘one of one’ limited-edition watch from the German luxuryhouse. The Ugandan businessman spentUS$250,000 on the timepiece, with allproceeds going to the Emirates Founda-tion to assist underprivileged children.What a great way to raise the averagespend per passenger.

Macao: It’s game on for travel retail asChina’s great gambling boom continues.DFS is in there in a major way, Nuance-Watson is opening a specialist outletand at least one other major industryname will unveil its presence in comingweeks. But is too much top-end retailgoing in? Fortunes are going to be wonand lost on the Cotai Strip – and we’renot just talking blackjack.

Media: The biggest change in yearswithin the trade media took place quietlyin December as DFNI bowed to the elec-tronic revolution and moved from a fort-nightly print frequency in place since1987 to become monthly. The MoodieReport went the other way,stepping up its print frequencyto five per annum, the numberwe consider optimum in a weband e-news driven media age.Frontier changed hands againduring the year and bolstered itsusp, the Frontier Awards. Expectmore change and consolidation.The winners will be those whodifferentiate and add value –just like the market they cover.

NNNNNarita: 2006 was the year ofNakamise at the Tokyo gateway.The revamped T1 South Wingretail offer was dubbed ‘bigchange’ by NAA Retailing and itwas exactly that, transformingthe look, appeal and success of along-criticised retail offer. 2007

will see Fifth Avenue come to the airport– not the real thing but a new duty freemall styled on the iconic New York street,with a range of big fashion brands blendedwith the traditional duty free categories.It should prove equally exciting. BravoNarita for daring to be different.

Nuance: 2007 was a better year forthe airport retailing giant. The NuanceGroup may have lost one of its glamourEuropean locations, Copenhagen, butprotracted historic losses there meantfew tears were shed internally.Conversely the retention of Sydney,against all bookmakers’ odds a year ear-lier, seemed to galvanise the companyboth regionally and internationally. Abig breakthrough followed in India,where Nuance’s canny selection of localpartner (Shoppers’ Stop) helped drivesuccess in the Bangalore tender.

OOOOOlivier Charriaud: A change of style atthe top of TFWA as the ex-Rémy Coin-treau executive took over from the DFS-bound Andrew Ford in October. ‘Back tobasics’ seems to be the welcome mes-sage to date for an association thatremains best when it is organising tradeshows and workshops and Charriaudwill be keen to underline TFWA’s pre-eminence at both.

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Online opportunity: While there areoases of excellence, too many airlines,airports and retailers fail to match theirin-store offer with a similar standard ofonline presence. But this year’s inauguralTravel Retail Website of the YearAwards, organised by The MoodieReport, identified a clear shift in thinkingamong airlines (especially), airports andsome concessionaires as they realiseboth the tremendous showcase and sell-ing opportunity the web provides.

PPPPPasternak: As in Lois and Paul andtheir deservedly well-regarded TravelMarkets Insider. Unlike so much of thetrade media that specialise in imitationrather than innovation, the Florida-basedhusband-and-wife team know exactlywhat they want to deliver, and who theywant to deliver it to. The result is a finespecialist medium for the Americas thatdeserves its mounting success.

Piovesana: As in Alessandra, the tire-less, passionate Managing Director ofNuance-Watson (Hong Kong), whoseefforts were richly rewarded this yearwhen the retailer won the first FrontierAirport/Land-based Retailer of the Yearto be conducted under the magazine’snew (and much better) adjudication sys-tem, which involved an industry votebefore a shortlist was put in front ofthe judges.

No award scoring system is flawless,but the general consensus was thatthis was one accolade that was trulydeserved. From its main stores in beauty,fashion and consumer technology tospecialist outlets such as Kiehl’s, Nuance-Watson (HK) is a retailer which gets itright more often than most – and whoseManaging Director’s name is synony-mous with integrity.

QQQQQueues: They follow security alertslike night follows day, and are one ofthe great deterrents to building storepenetration. Heathrow T3 is a primeexample and BAA CEO StephenNelson’s recent big investment inimproved manpower and facilities

underlines his need to address theproblem from a customer and revenueretention perspective – fast.

Qatar Airways: Is there no stoppingthe growth of Akbar Al Baker’s aviation-to-retail success story? A pioneeringnew First and Business Class terminal,an outstanding new inflight catalogueand the phenomenal development of theairline itself suggests the answer is notfor a long, long time.

RRRRRome: One of the true retail turn-arounds of the year came at Aeroportidi Roma (ADR) where a long-criticisedretail offer at Fiumicino and Ciampino isbeing transformed dramatically into amarriage of fashion, style and shoppingthat such a great city deserves. ADRExecutive Vice President Business UnitCommercial Andrea Belardini has takena series of calculated risks and both heand Rome’s retailers and passengers arereaping the rewards.

Russia: Driven by surging oil and gas rev-enues, the country’s booming economy isfuelling an unprecedented surge in out-bound travel – with spends to match.There is much impressive airport retailactivity going on there too (St PetersburgDuty Free and Runway Duty Free atDomodedovo are comparativelyunsung heroes of the business)and ever intensifying competitionin the Moscow heartland.

But the big win in recentweek’s was Dufry’s seven-yearcontract at Moscow Shereme-tyevo Airport, where it willoperate some 3,345sq m ofretail space (across all productcategories) in the new T1expected to open in 2007 .Dufry CEO Julián Diaz rightlydescribes it as one of the com-pany’s most important contractgains ever.

SSSSSydney Airport was arguablythe glamour tender of the yearand, as mentioned, few would

have initially wagered serious money onNuance, the incumbent, carrying off thespoils. But it did – not only because ofan increased financial offer but moreimportantly through its strong ‘Sydney-centric’ branding initiative, a creativepricing, customer service and promo-tions and marketing offer and, not least,the enormous commitment of anotherS, Nuance CEO Australia and NewZealand, Christian Strang.

Can Nuance make money where for solong it complained of heavy losses? Ifthe regulators don’t get in the way, yes.

Sealed bags. Security was alwayslikely to rear its ugly head as a keytheme of 2006, but who would havethought finding the right sort of trans-parent, plastic bag would become apressing industry concern? Alas that isthe sad world we live in. Against abackdrop of plastic bags and securitysearches, how the industry manages torestore a sense of joy to airport retailingis, we believe, one of the greatchallenges of the new year.

SSP: 2006 was a landmark year for theUK food & beverage specialist after theJune divestment by former parent com-pany Compass to private equity firmEQT. Now, in classic private equitymode, the emphasis is on rapid growth– and Andrew Lynch’s team has

responded with a series of headline-grabbing contract gains or openings inairport locations as diverse as Oslo,Shanghai, Hong Kong and Birmingham. There is plenty of expansion left on thiscorporate F&B menu.

TTTTTransit: A utilitarian word, but onewith profound implications for travelretail in 2006 and 2007. The new rulesare as simple as ABC, aren’t they? Well,sort of. Airport A can sell duty free liq-uids of over 100ml and so can airportsB and C. But travellers cannot takegoods bought in A through B to C. Sodepending on the location of B and C,retailers in A shouldn’t really sell theitems in the first place. As we said, assimple as…

Trinity: Now an established part ofindustry parlance and one encouraginglyused by more and more airport execu-tives. A swift definition? Improved align-ment of the respective interests of air-ports, concessionaires and brands. Neverhas the concept been more important.

Terrorism: As fundamental to ourindustry’s fortunes as training, promo-tion and concession fees. Few nowdoubt that the ‘war on terror’ has madethe world a much more unsafe place –and, alas, our industry with it.

UUUUUnderstanding: What the politiciansneed desperately if they are not to killoff our industry. Understanding of thecritical role of airport commercial rev-enues. Understanding of trading realitieswhen passing knee-jerk legislation.Understanding that the world’s travel-ling public should not be treated likecattle.

Urioste: As in Enrique Urioste, thehuman dynamo who heads Argentineantravel retailer InterBaires. He’s in bigdemand as a conference speaker thesedays (ASUTIL and MEDFA conferencesin 2006, ACI Business & Trinity Forumin 2007), and that’s because he practis-es what he preaches. Watch out for hisbiggest initiative to date in 2007.

VVVVValiram: The well-regarded Malaysianluxury retailer snatched victory fromDFS Group at the latter’s Changi T2fashion stronghold in one of the surprisetender results of the year. Valiram mayhave been an outsider but it was nonovice – the company has extensiveretail experience at Changi and inMalaysia and, more importantly, excel-lent luxury brand relationships throughits domestic market operations. As wewent to press it announced the appoint-ment of former DFS US GroupPresident Julian Levy as Chief OperatingOfficer. Two coups in a matter of weeks.

Vespucci: Abu Dhabi Duty Free invitedtravellers to take a ‘voyage of discovery’with the retailer’s new owned brand,launched earlier this year. It’s a suitabletagline – the brand was named afterthe great Italian explorer AmerigoVespucci, who discovered South Ameri-ca – and we think many travellers willtake the voyage, such is the investmentand belief in the brand and the qualityof it.

Vancouver: It’s less than three monthsbefore Spanish travel retailer Aldeasatakes up its duty free residence at Van-couver International Airport. Its mainfocus will be the much anticipatedopening of the new International Termi-nal. Big moments with much at stakefor both airport and retailer – get readyfor something spectacular.

WWWWWIT: As in Women in Travel, the newgroup that aims to champion the interests,knowledge and skills of women in travelretail. Those who claim this industry hasno glass ceiling are those who live aboveit, though not surprisingly on gender-relat-ed issues not everyone agrees with us.

Won: The rise of the Korean Wonagainst both the US Dollar and theJapanese Yen was one of the key influ-ences in the Korean duty free businessduring 2006. But what the god of cur-rencies giveth, he also taketh away.While the Won has risen nearly +10%against the greenback this year, theJapanese Yen fell to a nine-year low of782.64 Won per 100 Yen as we went topress: bad news for the Japanese spend.

XXXXAlways the toughest letter to completein this column, especially given the dis-appointing lack of a boom in xylophonesales. So we have to settle for X-rays,now an integral part of the travel expe-rience. Will someone develop a fail-safe,financially viable method of identifyingliquid explosives at airports in 2007?

YYYYYen: In this column two years ago theJapanese Yen stood at ¥105 to the USDollar; a year ago the rate was ¥117. Aswe end 2006 it stands at around ¥118,well south of a mid-May appreciation to¥110. Any retailer selling in US Dollars– or linked currencies – will be watchingthat relationship avidly next year.

ZZZZZodiac: 2007 is the Chinese Year of thePig. That may not seem a promising signto Westerners, but the Pig of Chineseastrology is considered to be the mostgenerous and honourable of creatures.Those born under the sign are perfection-ists with impeccable manners and taste.They also delight in luxury, finery and rich-es. What finer symbol for travel retail?May 2007 be crisis free, and may pigs fly.

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Vichai Raksriaksorn: The Chairman ofKing Power realised not just one dreambut two this year. The Thai travel retail-er opened its grandly ambitious Bang-kok Downtown Complex in August, andfollowed up just six weeks later withthe complete duty free to food & bever-age offer at the massive new Suvarnab-humi Airport. Each was an extraordi-nary undertaking; collectively theyrepresented a phenomenal achievement.Coupled with his huge charitable contri-butions to the dispossessed and under-privileged of Thai society, Vichai richlydeserves his place here.

Julián Diaz: A couple of years back Ilunched with the then-new Dufry CEO,

who quietly but confidently outlined hisplans. Remarkably he has delivered onalmost every one of them, from bigacquisitions such as Brasif to the com-pany’s IPO on the Swiss StockExchange. One gets the unmistakableimpression that there are several major

plays left in the tank, and no-one nowdoubts Diaz’s ability to make it happen.

Hyun-Ah (Heather) Cho: The drivingforce behind the sustained pre-eminenceof Korean Air (KAL) at the top of theinflight sales league. To produce amonthly catalogue of the size and quali-ty of KAL’s is one thing; to continuouslyinnovate in terms of ranging, with a per-haps unrivalled emphasis on new lines

and airline exclusives, is another. When400 cabin crew gathered for their year-end party in Incheon earlier this monththey had plenty to celebrate – the retail-er is heading for all-time record sales ofover US$170 million, up from justUS$124 million in 2004.

Frank O’Connell: The ETRC Presidentand Aer Rianta Retail Director’s bravuraon-stage performance in Cannes at theaviation security workshop was some-thing to behold. Anger at the lack offunding, frustration at the lack of knowl-edge, and passion about the need to dosomething urgently all blended into ararely so fired-up Frank and confirma-tion of just how much this man has putinto the whole lobbying effort. n

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People of the YearIndividuals who The Moodie Report believes by their deeds, attitudesand behaviour advanced the industry’s cause in 2006.

Gunnar and Claus Heinemann: Contractual coups in Copenhagen and Frankfurt(page 5) were impressive enough, but the Heinemann cousins, co-owners of the great

German travel retailer, wintheir place here more for theoutstanding sense of reasonand commitment that theybring to our industry. AfterETRC President Frank O’Con-nell’s somewhat desperate pleain Cannes for those present todonate €3,000 per company,the Heinemanns turned a trick-le into a charge by pledging€50,000. Gunnar Heinemann

was among the first major industry figures to truly realise the impact of the transitissue, describing it as “the biggest threat ever” to the travel retail channel.