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Today’s announcement of a joint venture between DFS and The Valiram Group to bid for the pivotal Terminal 2 fashion concession at Singapore Changi Airport is a deeply pragmatic response to unique trading conditions both at Changi and in the travel retail channel worldwide.
A one-off alliance for now – though it’s conceivable that both partners will examine a wider relationship – the JV (if it secures the concession) will allow vital economies of scale at Changi’s largest dedicated retail operation.
As our main story points out, the agreement also cannily removes the main competitor for each of the likeliest front-runners in the bid.
While in one sense a marriage of convenience, it is also one of similar mentalities. Both companies know each other well as rivals (both for contracts and luxury brand relationships) and through personal contacts – Valiram Chief Operating Officer Julian Levy was with DFS from 1988 to 2006. There is an innate and shared respect.
They are both ardent and passionate brand-builders with hard-earned reputations for nurturing some of the world’s most upscale labels. Joint ventures are notoriously tricky propositions but this one seems to have plenty going for it both commercially and culturally.
It’s not a given that the partnership will win the concession – at least one other industry major is known to have been interested – but the alliance will take some beating.
If successful, the partnership could take Changi fashion retailing to a new level for the consumer, and generate a sustainably profitable business for both players.
Troubled times often throw up unexpected industry developments. This will be widely viewed as a positive one.