For information about opening a Bijoux Terner boutique contact

For information about opening a Bijoux Terner
boutique contact:
Charles Pelegrin • + (1) 786 301 0190
charles@bijouxterner.com
Rosa Terner • + (1) 305 266 9000
rterner@bijouxterner.com
Miami • Florida • United States • +(1) 305 266 9000
BEN GURION AIRPORT • James Richardson
January 2006
James Richardson
aims to drive up penetration
at Ben Gurion
James Richardson’s stores at Tel Aviv Ben Gurion Airport are spacious, well-stocked
and inviting – now the retailer has to persuade more customers to visit them. Hui Min
Neo reports from Israel in the first part of an extended feature on travel retailing at
the country’s splendid new gateway airport.
F
or Israeli travellers undecided whether or not to buy
in the cavernous 3,500sq m James Richardson duty
free store, the posters outside are a strong incentive
to switch into purchasing mode. “You will not find it
cheaper elsewhere. If you find the product at a lower price
in Israel, we will give it to you for free,” reads one poster
in Hebrew.
That is probably the best guarantee any store could give,
notes Amnon Tagori, James Richardson’s Sales and Shops
Manager of the liquor, tobacco, perfumes, cosmetics and
confectionery (LTPCC) category.
At the entrance to the store, located in the year-old Ben
Gurion International Airport Terminal Three, he points
out another prominent poster. “That one says that if you
buy more than US$39-worth on an Israeli credit card,
you can pay by 12 monthly instalments. The interest is on
us,” he says.
“So not only do customers have a price guarantee, but
30
also the option of paying interest-free over 12 months.
We hope this will convince them,” says Tagori.
It certainly convinces many – most of them Israeli
nationals. Because of the tense political situation in Israel,
the Tel Aviv airport acts more as an end-station rather
than a transit hub like other international airports such as
Amsterdam Schiphol or London Heathrow. As a result,
Israelis typically make up the largest proportion of passengers and spenders. A scheme to allow Israelis to purchase in duty free on departure and pick up on return
offers a further incentive to shop. Hence duty free retailers put a big effort into marketing to locals.
Pricing has to be a key platform of that marketing. Due
to a price war among perfume and cosmetics merchants
in the domestic market, James Richardson monitors
prices closely across this key sector. Duty Free Division
Executive Chairman Garry Stock tells the Moodie Report
that high street price rivalry has brought about a perception that duty free can be more expensive than the
The Moodie Report
BEN GURION AIRPORT • James Richardson
January 2006
high street. In fact, he estimates that prices are -15% to
-30% lower in duty free, and that is not taking into
account off-season products – some of which are not
even available in the domestic market.
To improve the perception of duty free retailing in the
country, the company regularly runs television commercials and newspaper advertisements. When the store first
opened James Richardson also ran an advertising campaign, promoting the business of duty free as well as
showing the variety and quality of the products in the
store.
Customers seem convinced. One cannot fail to notice the
large numbers of passengers walking to their boarding
gates bearing bags emblazoned with the James Richardson logos. Stock declines to give figures, but he confirms
that sales and spend per customer for both Israelis and
tourists are up this year.
The LTPCC duty free store generates the highest
turnover at the airport and contributes some 75–80% of
the Israel Airports Authority’s total non-aeronautical revenues at Ben Gurion.
A liquor sampling counter draws interest. At the time
of The Moodie Report's visit, Hennessy Cognac was
being promoted via this attractive display.
A large selection of non-humidor cigars is available
That’s not surprising. Bulk purchasing is encouraged
here. ‘Buy two get one free’, or ‘Buy three get one free’
promotions are available in all categories. For liquor
there are tags marking out bottles that sell at two for
US$22.90, US$29.90 or US$35.90, and customers can
mix and match products bearing the same colour tags.
Variety is the key
If the price doesn’t catch a customer’s eye, the sheer variety of products probably will: over 20,000 SKUs are
available. So even though the overall retail area is 3,500sq
m, one never feels that there is too much space.
“It is our intention to have the biggest variety of products,
says Tagori. “In duty free we do not target a certain market. We need to satisfy the demands of all the travellers
who use this airport, so we stock not just the best-sellers
or the latest products but also products which are not
from the current season.”
Stocking such a large variety means that some products
are “sitting on our stock budget”, admits Tagori, but he
feels that it is a necessary service to customers. “People
know that they can find products here that they can no
longer find elsewhere.”
The variety is evident across all categories. In the cigar
section, for example, non-humidor cigars alone line at
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The Moodie Report
BEN GURION AIRPORT • James Richardson
January 2006
least two display cupboards. In addition, the retailer
offers a 60sq m humidor which is reputed to be among
the largest in worldwide duty free. In this section, where
temperature and humidity are controlled separately from
the rest of the store, there are “something like 500
SKUs”, says Tagori.
A similar scale of choice is available in the liquor section.
“It is rare to see this variety of whisky in a duty free shop,”
says Tagori, pointing to two shelves full of single malt
Glenmorangie lines. And it is not just the selection of
brands available, but also the choice of sizes – there are
super-sized bottles, 1.75 litres, one litres, half litres, twin
packs and triple packs.
“This is a big department and it is constantly growing,”
says Tagori, noting that Israeli consumers are increasingly
getting into whisky, wine and cigars.
The company’s attempt at introducing Israeli wine to the
selection has also proved successful. From just two lines,
there are now several dedicated showcases – ranging
from boutique labels to more generic table wine.
A sampling counter generates more interest. When The
Moodie Report visited, Hennessy Cognac was being promoted, helping to draw customers into the store and
convert them to purchasers.
Similarly at the cosmetics section, new make-up counters
have just been added where professionals are on hand to
teach customers to use products they may not be familiar
with and recommend the best products for individuals.
Tagori says that the store has recently begun experimenting with product placements. In the tobacco section, for
example, there are battery packs slung along the sides of
the shelves. “We’ve noticed that people do pick them up.”
Increasing footfall: James Richardson’s duty free
sports store at Ben Gurion offers a good selection of
products, at very inviting prices
Other related products such as lighters or magazines
about cigars are also within easy reach in the tobacco
section. In the liquor section books on wine appreciation,
for example, are available. There is also a dedicated showcase featuring Riedel crystal glasses and fancy bottle
openers. All this evokes a sense of added value as well as
being useful business in its own right.
Following the relaxing of rules on over-the-counter medicine, the store has recently added vitamins and some
non-prescription drugs to its selection.
Tucked into this area are dedicated cashiers for the
company’s Gold Card customers, who now number tens
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The Moodie Report
BEN GURION AIRPORT • James Richardson
January 2006
In vintage form: The wine selection has expanded impressively to include several dedicated showcases
of thousands. These are frequent flyers who are also regular customers at the duty free store and now receive an
exclusive and innovative service.
button and communicate directly with the manager using
the camera. This saves employees from running around
to find a manager while customers wait in a queue.
James Richardson clearly knows how to treat its customers in a special way. Hidden behind the humidor is
a VIP room for cigar connoisseurs. Again there is a dedicated cashier and a selection of complimentary beverages, and also cigars that are sold individually instead of
in a box.
The company also invested in a sophisticated conveyer
belt and lift system. Items that Israelis wish to pick up on
their return are put into a separate bag by the cashier.
This is dropped into an automated lift that sends the bag
away to a storage warehouse until the passenger returns
for his or her purchase upon arrival.
“Our passengers can smoke in here, so they can buy just
one cigar to try the taste. If they like it, they may return
and buy it the next time they fly. Sometimes you want to
try a new cigar, but it’s not always easy to ask someone to
give you one. But at the same time you don’t want to
spend hundreds of dollars on a box you don’t know anything about. This is a service that may appeal to them,”
says Tagori.
The smaller sweets store also stocks products like
hummous in a chiller, catering to travellers who wish
to buy some ready-to-eat products that they can
consume onboard or on arrival at their destination
Beyond making top-spenders feel special, the company
also invested in its information technology system to
give a seamless service at the cash points. Near the store’s
exit a manager has access to cameras – not just throughout the store, but also at every cash point. “This is sort of
our battlefront control,” says Tagori.
If a cash point runs into problems the cashier can press a
36
The Moodie Report
People buy from
people they like
Valora Trade Travel Retail, Transformervej 16, DK-2730 Herlev, Phone +45 4457 5859
BEN GURION AIRPORT • James Richardson
January 2006
Amnon Tagori, Sales and Shops Manager for liquor,
tobacco, perfumes, cosmetics and confectionery,
showcases some duty free bargains
Penetration issues
Despite all the virtues of this store and the clever and
intense marketing that goes into it, Stock points out that
the main challenge is how to increase penetration. “Sales
are up for both Israelis and tourists, but penetration is an
area for improvement. We think it could be higher than
it currently is,” he says.
In terms of penetration, other shops, such as the sports
store and branded fashion store which are also operated
by James Richardson, suffer more than LTPCC.
To ensure that travellers have time to head to the sports
store for a look, store assistants are stationed at the exit
points of the LTPCC store. They hand out leaflets that
encourage passengers to head quickly to the other stores by offering a discount if they get there within a certain
time of leaving the LTPCC store.
give passengers more reason to linger in the Rotunda
centre – and hence miss out on the duty free stores.
At the same time, located in one of the corridors branching out from the circle, is another eating area with three
food concessions, including McDonald’s. Stock notes
that integrating the eateries could give travellers less reason to sit down in the fountain area.
The company had seen the design plans before entering
into its contract, but it did not realise that the scale of the
seating area and fountain would have such a strong impact.
It is too late to make any fundamental changes to the circle design. Stock says, however, that the airport and its
concessionaires need to look at how to continue to search
The problem, also highlighted by the
other main retailer Sakal Duty Free
(see feature, page 45), is the size and
circular design of the seating area surrounding the fountain, which is at the
centre of the circle.
Stock points out that the airport
authority could re-examine its food
& beverage concept. At the moment
there are two café counters surrounding the seating area which, he says,
38
How to fill those
trolleys?
Penetration is the
key issue at Ben
Gurion Airport
The Moodie Report
F I N E
C H A M PA G N E
C O G N A C
BEN GURION AIRPORT • James Richardson
January 2006
The duty free store
stocked just two
Israeli wines at
first, but the
selection has since
grown significantly
Bargain buys:
Products at
discounted prices
are featured in
James Richardson’s
landside sports
store
for ways to overcome the design problem and shorten the
time it takes for passengers to arrive at the shops.
“There will always be issues of penetration in the design.
We’re going to have to make up for that with greater efficiency,” he says.
Meanwhile there is a problem landside, where James
Richardson also operates some stores. Travellers are finding no incentive to buy in the landside shops rather than
airside.
and if check-in times continue to be reduced.”
So those are the key messages: pricing and penetration;
making customers feel special; an extensive and differentiated range; and an adept use of information technology. It all adds up to a customer-focused approach that is
paying dividends for one of the industry’s most experienced retailers.
Stock says that the company has established the landside
sports store as a Diadora concept store. This is in order
to differentiate it from the airside sports shop, which
offers many more products – from apparel to rollerblades
to shoes. The landside store now also sells off-season
products at clearance prices.
“This is so that we can appeal to airport workers looking
for bargains,” he says.
At the landside LTPCC store the company has introduced a new line of Israeli bath and skincare products,
Laline, which is popular in the domestic market but not
available in duty free. The company also operates a pharmacy as well as a sweet shop; but perfumes and cosmetics are not sold landside.
“There is an expectation that tourist numbers will
increase,” Stock says, looking to the year ahead. “We are
hoping that there will be improvements in the business as
Israelis become more familiar with the new terminal,
40
Stock control:
Duty Free
Division
Executive
Chairman Garry
Stock shows a
product from the
Laline bath and
skincare line
The Moodie Report
BEN GURION AIRPORT • James Richardson
January 2006
James Richardson’s two-hub strategy for duty free
When the line-up of bidders for the Kuwait International Airport duty free contract was revealed earlier
this year it included a surprise candidate – James
Richardson, the powerful Australian travel retailer.
secured a ten-year concession for the liquor, tobacco, perfume, cosmetics and confectionery categories
in the new Terminal Three, which opened in November 2004.
James Richardson Duty Free Division Executive
Chairman Garry Stock reveals to The Moodie
Report: “[Company owner] David Mandie is optimistic about the future relationship between Israel
and the Arab nations. He was keen to bid for this
project… he sees this as a step towards building
bridges.”
Besides the 3,500sq m store the company also
operates T3’s sports store together with MGS – the
Adidas, Diadora distributor in Israel, a brand-name
fashion store with Vendom – an established local
fashion retail chain, a confectionery store and three
smaller duty free shops in the new terminal. The
three smaller stores are located close to the boarding gates, and give passengers the opportunity to
buy products at the last minute.
It was not to be, however. Spanish retailer Aldeasa
together with local partner ThatEs Salasil won the
Kuwaiti race with a minimum annual guarantee way
ahead of any of the other four competitors’ bids.
Did James Richardson’s operations at Ben Gurion
Airport affect its chances? Stock says no, as the
company had asked about this factor in the initial
stages, and the Kuwaitis had assured them that it
would not. “The Kuwaitis were very professional and
consistent throughout the process,” he says.
Stock adds that the company will certainly look at
any future possibilities in the region. “We will look at
places where we feel we can contribute,” he says.
The company’s strategy is to build two operational
hubs – one in the Israel/Mediterranean area to
include locations in the Arab and Eastern European
nations, and the other in Australasia. “We are looking at places which are three to four hours on a
plane, we will go where we feel we can make a
difference,” says Stock.
James Richardson entered the duty free retailing
business in 1972, when it began operations at Brisbane Airport. Between 1972 and 1995 it expanded
its business in the Australian duty free market,
moving from Brisbane to Sydney, Melbourne, Perth
and Cairns airports. In 1995 it sold the duty free
business in Australia, including 23 off-airport shops,
to Swissair. These stores, together with those of
Allders International, eventually became part of The
Nuance Group.
Since the sale the company has focused on its duty
free operations in Israel as well as on its domestic
businesses in Australia. It began operations in Israel
after Mandie was approached to bid for the duty
free retailing business at Tel Aviv Ben Gurion International Airport. The company won the tender and
has operated the store there since 1998. It also
42
Elsewhere in Israel it operates two border stores –
one at the northern Jordanian crossing, the other at
the Sinai Peninsula crossing into Egypt. It also
supplies cruise ships leaving from Haifa, and it runs a
shop supplying sailors and a shipchandling business
there. In addition it supplies airlines Arkia and Israir.
The company hopes that the inflight business of
recently privatised national carrier El Al may
become available.
Even though James Richardson missed out on
Kuwait, it quickly moved on to Australasia. It bid on
the recent Wellington International Airport tender
and re-entered the duty free business in Australia
recently by opening off-airport stores in Melbourne,
Perth and Adelaide.
Stock sees these shops as complementary to the onairport shops. Together they strengthen the duty
free industry, he says. “We don’t see them as competing stores, we see them as meeting different
needs,” he adds.
Stock confirms that the company has put in an
expression of interest for the A$220 million duty
free concession at Sydney Airport. He believes that
beyond the company’s familiarity with Australia, its
off-airport stores should strengthen its case for a
duty free operation at Sydney Airport.
“As we have just opened in Perth, Adelaide and
Melbourne, we can tell Sydney Airport that we have
already a marketing team, a human resources team,
a purchasing team and so on ready… we don’t have
to manufacture a team from scratch,” Stock says.
Sydney Airport says a decision is targeted for next
June.
“If we get it, we get it. If we don’t, well we don’t.
We’ll try our best,” Stock says. ■
The Moodie Report