Travel consolidating at cost

The store operations team knows exactly when planes from Beijing land in London, and changes store displays dynamically to market to that customer.Since travel retail is generally an airport’s largest source of revenue (aside from airline landing fees) and since concession fees (i.e.The sideways trend describes the horizontal price movement that occurs when the forces of supply and demand are nearly equal.A sideways trend is often regarded as a period of consolidation before the price continues in the direction of the previous move.The key risks to the business model are weak passenger traffic and increased competition for concessions.

To address these issues in a crowded European market, airlines must aggressively pursue strategic alternatives, including collaboration (such as alliances and code-sharing arrangements) and consolidation (through mergers and acquisitions).For example, airport operators will work with retailers to design airport floorpans so that passengers quite literally have to walk through shops in order to get to their gates.Importantly, Dufry has numerous exclusive arrangements with key brands, preventing smaller peers from presenting a competitive retail offering.Since Dufry has been a consolidator in the space, it is fundamentally changing the tenor of its negotiating power with airports .Over the past 15 years, Europe’s full-service airlines have flown through turbulent skies as they generally failed to adapt to an increasingly price-competitive short-haul market.Dufry sells duty free items (64% of revenue) and duty paid items (36% of revenue) under several different retail flags.Dufry bids for multi-year concession rights from airport operators, and typically has exclusive rights to retail a particular category – said differently, Dufry operates a monopoly in each of its categories in a particular airport terminal.It is not uncommon to see a horizontal trend dominate the price action of a specific asset for a prolonged period before starting a move higher or lower.Brief consolidation is often needed during large price runs, as it is nearly impossible for such large price moves to sustain themselves over the longer term.Key category exposure includes: perfumes/cosmetics (32% of sales), wine/spirits (16%), confectionary/food (15%), and tobacco (10%).BUSINESS AND OPERATING MODELS Dufry is effectively a high end consumables business that markets premium products to international tourists.

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