Copenhagen launches duty-free tender—UPDATE

John Rimmer

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Incumbent The Nuance Group insists it is "unsurprised" by Copenhagen Airports' decision to tender the main duty-free concession at Copenhagen Kastrup

Copenhagen Airports has announced it is to tender the main duty-free concession at Copenhagen Kastrup airport. The contract has been held by The Nuance Group since 1995 and is due to expire at the end of February 2007. The launch of the tender follows the landlord's takeover by Macquarie Airports, which now owns over 52% of shares in Copenhagen Airports.

The tender will cover the main tax- and duty-free shop in the centre of Kastrup's shopping area, four satellite shops in or near piers and an arrivals shop in the baggage reclaim area. The contract will take effect from March 1 2007 and will expire on February 28 2012.
 
The deadline for expressions of interest has been set at March 6 and Copenhagen Airports (CPH) vice-president for commercial affairs Henrik Busch told RavenFox.com that tender documents would be sent out in April. Bids will be tabled in May and the result is expected in August. Busch said that it was too early to state whether any new space would be available as part of the new contract.

"The decision to tender the contract originates first and foremost from CPH's desire to test the market," said Busch in a statement. "The Nuance Group has operated the shops for more than 10 years and has done an excellent job. CPH thinks it proper now to give other international companies with indisputable international experience the opportunity to show what they can offer."

Nuance reacted calmly to the news, insisting that it expected a tough battle to defend its Copenhagen concession. President and CEO Roberto Graziani said: "The expiry date of the concession at Copenhagen has been known for a long time and it does not come as a surprise. Since we have held the concession since 1995, it is entirely reasonable to expect that a new airport owner would want to establish a valuation of the concession on the open market. We continue to work closely with Copenhagen Airports and value the tender process as an opportunity for a retailer to offer new approaches to structuring what is a significant contract. We will be one of many interested parties and we look forward to taking advantage of our intimate knowledge of this particular marketplace and of our specific retail expertise to deliver an innovative and interesting proposal for the airport and its shareholders."

Nuance has long ranked its main duty-free store at Kastrup among its most impressive worldwide, but the business has suffered in recent years amid stalling sales and onerous concession fees. Last year the retailer revamped its stores and forged closer ties with its landlord in a bid to turn the business around. The company's new CEO Europe Jean-Paul Bonnel said: "Despite our past difficulties, Nuance has always been committed to delivering first-class retail in Copenhagen and we have made significant investments in our operation which were carried out in close collaboration with the airport. The award-winning new shop concepts are performing to our satisfaction and have been well received by our customers."

The tender is likely to attract interest from all of Europe's leading retailers. After a year in Norwegian duty-free as part of the Travel Retail Norway venture, Gebr Heinemann has already forged a strong reputation in the Nordic trade and is certain to monitor developments at Kastrup. Dufry Group and Aldeasa, although inexperienced in the Scandinavian market, are also likely to challenge Nuance, as could Aelia, Alpha Retail and Aer Rianta International. Kastrup could also provide Global Airport Services, the joint venture between BAA and Crossbar Associates, with an opportunity to clinch its first contract.

Click here to view CPH's pre-qualification documents in PDF format.

Keep an eye on RavenFox.com for updates.