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How Much?
What Will Retailers Pay For Aena’s Tender?

By: Peter Marshall

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Few things suggest that travel retail is returning to normal like the presence of an exciting, high-profile tender. The announcement by Aena of the “world’s biggest tender” at the start of this year seemed to offer just that. But now, with the details in the open and the tender in motion, I must confess I am disappointed.

Throughout the Covid pandemic, which closed much of our industry and led to large amounts of much-needed self-assessment, the travel retail industry seemed to agree that a new, vibrant and flexible business model was needed to take the market into the future. I fear this discussion still remains just words in many places.

The future of our market must be joint ventures and collaborations. But the travel retail market is so slow on the uptake and this tender shows clear signs of clinging to the way we did business before Covid-19. 

Is this a model which really speaks to the needs of the modern traveller? I am not sure. On paper, the opportunity is a great one, it is a chance to plant a flag in a new market. But doing so with a long-term contract under a business model which is very much dated, seems to me to be a risk.

It was no surprise to see Gebr Heinemann, the family-owned German retailer, step away from the tender citing “red lines” it would not cross. While the Aena model clearly does not match Heinemann’s chosen co-operative approach, their withdrawal also highlights the potential commercial challenges of this tender. Like many, Heinemann has been battered by the impact of Covid and the war in Ukraine.  Could it be that the offer in Spain, while attractive, is one risk too far?

There appears to be little flexibility in the Aena tender

The Aena response to Heinemann’s withdrawal, for me, underlined their key focus here. Aena wanted a tender offer which would draw the attention of global companies and make a mark on the world stage. They have done that in spectacular fashion and for that they should be commended. The company can clearly see the value in its offer and it has communicated that in a way that has captured the attention of big players. This, too,  is understandable. The opportunity to stake a claim in a new market is always going to appeal, especially to companies looking to rebuild and generate serious growth after recent challenges. However, that gives Aena leverage in what they can demand from those who want to break into Spain’s travel retail market. 

Nothing underlines the initial success of the tender like the much-touted presence of China Duty Free group (CDFG), the world’s leading travel retailer, in the field. In many ways this offer is perfectly tailored to appeal to CDFG, and their presence also boosts the perceived value of the tender. Which is good news for Aena. 

Were CDFG to walk away with something, so making their first foray into the European market a success, it would be a huge success for Aena. But interest does not necessarily translate to success and it will be interesting to see if CDFG are willing to put in the funding and risks that Aena desires.

 I would not be surprised to see CDFG take something away here.  But if the world’s other big ongoing tender – at Incheon –  has taught us anything, it is that retailers are increasingly unwilling to put it all on the line if the maths do not add up.

In the background to all of this, Dufry remains a large and looming presence. As the incumbent, the company already has a foothold in Spain and it remains the biggest travel retailer outside of Asia Pacific. So, if the content of this tender has not been ground-breaking, I would not be surprised if the result follows suit. Dufry understands the supply chain challenges when supplying 27 airports across the Spanish mainland and islands. The company knows the costs and rewards of doing business in Spain and that will always play to its advantage, so do not be surprised to see them retain a concern in Spain when the dust clears.

I think that Lagardere may well secure some business, too.

So who’s playing the money ball?

For everyone else, the question is simple: Is it worth the cost? With the length of the contract extended from 7 years to 12, this is a long-term decision. How much do retailers want to spend on a contract whose business model lacks the flexibility that the modern market seems to demand?

We’ll find out soon enough

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