Concentrating hard in travel retail

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

It’s been an incredible week in travel retail, and a tragic one in the aviation industry.

The latter must come first. The tragedy of Germanwings flight 4U9525, flown into the side of a mountain by co-pilot Andreas Lubitz is almost beyond comprehension. 150 dead, including children and babies; not one body found intact. Horror. One can only pray for the souls of those lost and for the bereaved left behind.

By comparison, the events within travel retail seem utterly unimportant. But in the context of our industry they matter.

In the space of a few days, Shilla of South Korea bought 44% of DFASS (with a call option in five years for another 36%); ex-Nuance boss Roberto Graziani joined the Shilla board, charged with driving its international expansion (no prizes for guessing where the DFASS connection came from; Gebr Heinemann snapped up a 60% stake in Schiphol Group; and, the biggest blockbuster of all, Dufry announced it had entered into a binding control of World Duty Free Group.

That deal had been well-telegraphed by us, by the investor press and by analysts, but it still carried bombshell status. I had been sitting at my screen early on Saturday evening catching up on e-mails when the explosion went off. The sound is still ringing in my ears.

I wrote the following words in a column in the Orlando show (which I attended last week) daily newspaper and events since have only consolidated my view: “Travel retail, so perennially vulnerable to (and sometimes beneficiary of) external events, has always been a market of non-stop evolution. But I believe that mid-way through the second decade of the 21st century, we have reached a period of seminal change.

“That’s being driven by two key factors – sector consolidation and changes in consumer communication (by and to them), the latter driven by the extraordinary pace of development in the social and digital media world.”

More of the latter another time. For now, consolidation is the only story in town. Dufry has written a story that would have been considered far-fetched a decade ago.

Dufry must feel like a blue whale that’s just swallowed a Finback whale (Nuance) and a Right whale (World Duty Free Group) in rapid succession. The digestion process is going to be fascinating. And dolphins should watch out. [Picture: Wikipedia]




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