Issue 46 | March 2023

Hitting the Target

No two airports are the same and no team knows this better than our business development team. Fernando Perez-Peña is responsible for leading this team which strives to convince our airport partners that Dufry is the best partner for them. He tells us how the professionalization of airport management has changed the way we approach tenders, how innovation is taking over and the expected effect that Dufry´s business combination with Autogrill will have.

How is the relationship with the airport operators today?

The relationships with our airport partners across all our operations are very good and reflect the spirit of partnership that has developed through the pandemic. The unprecedented crisis and challenges faced by our industry in these past 3 years placed both airports and retailers in a position which enabled us all to establish a very open, continuous and frank dialogue aimed at finding solutions and agreements to the problems that our industry never thought would impact us with such strength and global reach.

I have to say that we have seen a very positive, understanding and flexible response from most of our airport partners, agreeing to temporary arrangements that have been key for both parties to help overcome the financial and operational challenges created by the pandemic. The good relationships and fantastic team work developed by our colleagues across all airports and countries have made all the difference.

The pandemic proved that difficult situations requiring unprecedented solutions can be better managed if you have built good relationships with your business partners. As we are now leaving the crisis period behind, these positive relationships will provide a strong foundation on which to continue building our business development and growth.

And to what extent does the business combination with Autogrill position our company as a stronger player?

There is no doubt that the business combination between Dufry and Autogrill strengthens our position in the market.

Airports are investing heavily in upgrading their facilities in the wake of the pandemic. And in this process of innovation and change in airport spaces, a clear hybridization of concepts is taking place.

The combination of Food & Beverage (F&B) and Retail concepts is something we have been seeing in recent years. If we take Hudson as an example, much progress has been made in offering mixed concepts that combine F&B, convenience and retail concepts. And it’s working fairly well – as we have experienced with concepts like Decanted and some other F&B developments. This is a clear example that reinforces the idea of what airports are looking for today: experiences and innovation.

With Autogrill, we are taking another step in this direction, reinforcing our value proposition with one of the strongest companies in the F&B sector. The synergy is very clear, and it allows us to opt for proposals that previously would have been much more complicated for us to develop. Dufry now takes on the role of reference partner to manage the main source of non-aeronautical revenue for airports.

Can you elaborate a bit more on the above?

Joining hand in hand with Autogrill, Dufry now takes on the role of a partner with sufficient capacity to fully plan the entire airport space - this includes retail and catering space. It opens the door for us to generate ideas that, based on our experience, the airport might not even have considered. And that brings a lot of value to them. Just think what it brings to the airport operator to have a partner who can not only plan all the space, but manage it in an integrated way, with a single digital platform and a unique loyalty program that brings together all the benefits that a passenger can have.

And it also allows us to pursue new opportunities, such as Master Concessionaire (essentially complete space management) that previously Dufry or Autogrill, on their own, did not reach - or did so in a more limited way.

Did you get any feedback from airport partners so far?

Yes, and not only feedback!. We have already had many airports proactively approaching us to discuss master-concession projects, invite us to participate in tenders, talk about hybrid concepts and improve existing operations.

Autogrill is a market leader and a highly valued brand and this unique combination of our organizations makes our work in Business Development much easier, as it means we have the advantage of being able to offer a level of experience and credibility that no other company could have brought to Dufry.

To give you a couple of example, I was recently visiting and meeting with an important airport that will soon go to tender. As part of the submission, they will request that businesses present ideas and proposals to develop a terminal design proposition that includes the layout of retail integrated with F&B, seating and promotional areas. They were delighted to see that we would be able to tender with a concept that covered both retail and F&B. Similarly, there is another project in South America where we’re in discussions to develop a master-concession operation.

You´ve been in the business for over 20 years, so you have the chance to put things in perspective. Has the business changed much?

20 years is a long time for nothing to change! But the truth is that the change has been accentuated in recent years. From the pandemic to the present day, business development activity has been frenetic and reflects a clear shift in what passengers - and therefore airports - are demanding from companies like ours. There has been a very strong professionalization of the sector, more accentuated on the side of airport managers. Many of the airports have been privatized, and this private management has brought in teams that have raised the technical - and economic - standards of the spaces they manage.

Change is driven by three factors. The first is the search for experiences, over and above the traditional concept of retail. This is something transversal, not only to our industry. It is a consolidated trend that has accelerated in the wake of the pandemic. It is no longer enough to visit a destination. It's more about what is experienced - and after all, it’s these memories of experiences that last the longest.

The second factor is clearly innovation, the continuous search to surprise the end customer. To propose new things, but always in balance with the things that have always worked - and still do!

Finally, flexibility. Both in the concepts proposed and in the relationship between retailers and airport operators, to adjust to changes that have proved difficult to manage.

Today, we are dealing with highly trained teams, who want innovative and reliable partners. There is a continuous search for customization and for creating truly unique spaces.

We read that consumer behavior is changing, with new demands and a more environmental mindset. Is this reflected in the demands coming from airport partners?

Indeed it is! The expectations of consumers and of airports have definitely evolved. And in line with this, so have our proposals, which are bolder and more daring than in the past.

To find the WOW effect that the market demands these days, we play with emotions, innovation and engagement, in-store experiences, with surprising customers and, although it sounds obvious, with giving them what they want. The store of the future, shop in shop formats like Mind.Body.Soul. or Indi beauty, the search for the premium, immersive digital experiences and 360° campaigns... are all concepts that we have already launched and to which the market is responding very positively.

The sustainable product offer is one of the pillars that all airport partners are expecting to see in our proposals. Environmental aspects of our business are also high-up in the airports’ agendas. All operators have ambitious plans and targets on ESG and are placing growing pressure on their business partners to support their ambition. Over the last 2 years, all tenders have included ESG as an important section of a the submission and subsequent scoring. Dufry’s vision on ESG in its Destination 2027 strategy fits perfect with these expectations and we have been highly rated in all our recent projects, as we are able to offer a comprehensive approach covering products, packaging, logistics, store construction, utilities and so on.