Issue 47 | July 2023
Spanish duty-free Tender: Playing the Grand Slam
Heralded as the biggest duty-free tender in history, the tender for the renewal of Dufry's duty-free concession at Spanish airports has mobilized many internal resources at Dufry.
The whole competition has been a whirlwind of events, with plot twists and an unexpected ending that could be the basis for a blockbuster movie. It has been a tender that has put us to the test and that has enabled us to show what the company is capable of doing and proposing.
Background
From the very beginning, Aena operator of the Spanish airports, wanted to play big. The scene was set at the 2022 TFWA World Exhibition & Conference in Cannes where Aena presented in front of the world’s leading duty-free operators, what was going to be the largest tender of duty-free shops in the airport industry. It includes over 85 duty-free outlets at 26 airports and occupying more than 55,000 m2 of space, the equivalent of more than 7 football pitches.
As expected, soon after that all the main travel retail powerhouses expressed their interest in participating in the tender, and thus try to wrest a historic concession from Dufry (Aldeasa, acquired by World Duty Free and later by Dufry, has been the sole duty-free operator of all Aena stores so far). Some 13 companies representing ten large international duty-free groups applied to bid.
The tender
Without getting into all the details, Aena’s strategy behind this mega-tender aimed at:
- Reaching more customers and boosting global sales
- Diversifying the business, expanding product categories and services, which included mixing retail and Food & Beverage concepts
- Incorporating and supporting the development and implementation of new technologies and digitization
The tender was divided into six different lots for which interested parties had to submit individual bids. This turned the tender into six simultaneous tenders, with bids that necessarily had to be tailored accordingly. It also imposed limits on the number of lots a single retailer could win (maximum of the 80% of the tendered business), even if its technical and economic offer was superior to that of the other bidders. This element required the definition of a strategy for the lots to bid for.
Our proposal
With this in mind, Dufry's teams – with the support and guidance of Autogrill's Food & Beverage colleagues – began to put together six proposals – one for each of the lots. And as a first step, they defined six different themes that would provide a link to the destination and serve to orchestrate the proposals in terms of store layout and design, commercial offer, marketing, sustainability, etc.
Weeks and months of intensive work resulted in six compelling proposals designed to win. Knowledge of the market and passengers, airport operations and industry best practice, as well as innovative and groundbreaking concepts such as Mind.Body.Soul. and our firm commitment to digitalization and sustainability, enabled us to develop technically flawless proposals capable of achieving maximum points.
With our homework done, it was time to strategize and make decisions, just like in a tennis match.
Not an easy task. Going for broke was not an option. Neither economically nor strategically, because one of the lots – the northern Spanish airports – was not the most attractive for us, but the terms of the tender required us to bid for it in order to be able to choose the jewel in the crown: Madrid Barajas Airport.
The results
Five bids – Five wins. Initially we submitted bids for three lots – Canary Islands, Balearic Islands and Mediterranean and Andalusian airports – and all three were awarded to Dufry, with technical proposals scoring over 94 out of 100. This speaks volumes about the quality of the proposals. Dufry did not submit a bid for the northern lot, which was awarded to another operator.
In this phase, for the Madrid and Catalonia lots, none of the operators participating in the tender submitted a bid. In the end, Dufry's bidding strategy benefited from this. Although both the Madrid and Catalonia lots were juicy and attractive for Dufry, the conditions imposed by Aena meant that presenting and bidding for all six lots would have meant giving up one of the other lots that we eventually won.
Once Aena had officially awarded us three of the lots, it was time to decide on the Madrid and Catalonia contracts. Bids were submitted… and as a result Dufry emerged as the winner of the two remaining lots. An exceptional result and the reward for a bold strategy.
The lessons learned
The tender organized by Aena was probably the first large opportunity we have had as a combined group to demonstrate how our Destination 2027 strategy can be implemented and add value. New commercial concepts, new commercial proposals, combination of travel retail and food & beverage concepts, sustainability, use of technology... The tender has been a great opportunity to demonstrate the full range of expertise and skills we have, thanks to the combination of the two businesses, as well as the desire of the different teams to work together. The results show that there is chemistry between the teams and that our value proposition has been accepted.
It is now time to deliver and to demonstrate that we have the tools to truly lead the transformation of the travel experience.
The winning lots
Canary Islands – The theme chosen for the Canary Islands lot was “The Paradise”. Either natural paradise, surf paradise, landscape paradise… the theme selected for the lot aimed to highlight the natural beauty of the islands – the southernmost European destination that welcomes more than 12 million passengers every year.
Balearic Islands – For the Balearic Islands, the theme was Choose Green Memories, making the connection with the nature, the environment and also with the rich landscape of this mediterranean spot. But there were many nods to make the connection with the destination: from Rafa Nadal to the world-famous Ibiza clubs, all of which served to build a strong sense-of-place.
Mediterranean and South – Under the theme “The Art of Gifting”, Dufry´s proposal for this lot was about all you can bring back home after visting the destiantion and aiming to make the connection with a varied offering, which include local products, curated perfumerie and spirit selections.
Madrid – “Open for you” was the theme selected for the Madrid lot. And reflects the openess of the city that welcomes passengers from many natioanlities. Being the largest airport of the country, it was also the best possible scenario to showcase what Dufry in combination with Autogrill is capable of delivering.
Catalonia – Culture, gastronomy, innovation, sports... are concepts that are associated with Barcelona and the Catalonia region. From the great architect Gaudí to some of the most innovative cuisine in Spain, the Catalunya Amb Tu (Catalonia with you) concept brings this rich heritage to the passenger experience.
