DFS New Zealand beats Regency to win Auckland duty-free contract

Tina Milton

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DFS New Zealand has won the fight to be the single duty-free operator at Auckland International airport beating competition from fellow incumbent The Nuance Group subsidiary Regency Duty Free

DFS New Zealand has been awarded the licence to operate duty-free stores at Auckland airport for seven years from April 2008 and plans to invest over NZ$18m ($14m) in the redevelop of the duty-free shopping facilities. DFS fought off competition from The Nuance Group subsidiary Regency Duty Free to win the contract and will become the single duty-free operator at Auckland from August 2009.

Auckland International Airport Limited (AIAL) chief executive Don Huse said: “This will bring significant enhancements to duty-free shopping that travellers will begin to see from next year.  Both our organisations are focused on delivering a uniquely kiwi experience and value for money through special deals, promotional vouchers and rewards programmes. DFS will stock a much wider variety of goods than is currently available at the airport.”

AIAL expects that the new duty-free licence, combined with the recent foreign exchange and car rental concession tenders, will add about $7m in minimum annual guaranteed retail revenue in the 2008 financial year and $10m in the 2009 financial year.
 
A strong price comparison procedure across product ranges is at the core of the new licence.  This will ensure duty-free goods are sold at Auckland at competitive prices. “Independent research tells us that travellers compare on-airport duty free prices to local high street prices, online shopping, parallel import retailers and overseas retailers,” said Huse. “A key factor in duty-free shopping is price  – that is why we, along with DFS, are so committed to price comparisons. This means travellers can be assured of getting great value for money here. Travellers can still expect to be able to buy their favourite duty-free products at prices that match or better Australian duty-free airport prices, for example.”

DFS has enjoyed a strong 20-year partnership with AIAL to serve international travellers through Auckland.  DFS Group chairman and CEO Ed Brennan said: “DFS will introduce a number of new retail concepts and a greatly expanded line-up of New Zealand and internationally-renowned brands. DFS looks forward to growing the Auckland Airport duty-free business and to exceeding Auckland customers’ expectations in every way.”

Nuance said it was “saddened” that Auckland had not valued its proven retail performance, particularly as it claimed to have “consistently outperformed the head-to-head competitor for the past decade”, with a market share of 56% at the airport and above 50% in every product category.

Nuance Australia and New Zealand vice chairman Jonathan Stent-Torriani said: “We are proud of what our team has achieved in Auckland and we offered what we believe was a fair and sustainable financial package, based on our superior track record of converting passengers into customers. We trust [the] decision was based on satisfying the needs of passengers at Auckland airport...”
Torriani also emphasized that Nuance, under the Regency Duty Free fascia, continues to operate at Wellington and Christchurch airports in New Zealand.

In May 2007, AIAL called for tenders to operate the duty-free retail stores until June 2015. The tender means there will be a phased approach from April 2008 to August 2009 as AIAL migrates from two operators to one. AIAL elected to proceed with a tender in conjunction with the existing duty-free operators to allow the new duty-free arrangements to be finalised before the opening of the new duty-free space in the $100m international terminal’s expanded arrivals area. The initiative is expected to be completed in April 2008 and will double the arrivals duty-free space from 800sq m (8,608sq ft) to 1,600sq m (17,216sq ft).