News

06 June 2019

"Lagardère wants to de-standardize travel retail"

interview of Dag Rasmussen
by Philippe Bertrand
Les Echos, June 6th 2019

 

The head of the travel retail division (duty-free, airports and train stations) of the Lagardère Group presents the evolution of the business supported by an increase in the number of passengers. With e-commerce, it is the fastest growing segment of retail. He considers that the localness of stores needs to be reinforced in order to offset the uniformization of commercial spaces in terminals.​

Dag Rasmussen

The Lagardère empire has shrunk as a result of divestments decided by Arnaud Lagardère. The travel retail division is now the no. 1 contributor with 51% of the total turnover in 2018, amounting to 3.67 billion euros. The management of concessions and shops in airports (70% of the business) and stations generates 29% of operating income (119 million). Lagardère Publishing reaches 190 million for 2.2 billion sales. Over the past 12 months, Lagardère Travel Retail has strengthened its presence in North America through the acquisition of Hojeij Branded Foods, which operates over 124 bars and restaurants in 38 airports throughout the United States and Canada. This in addition to Paradies that was acquired in 2015. Headed by Dag Rasmussen, Norwegian and agraduate of l’Essec Business School, Lagardère Travel Retail also won fashion contracts at Vienna and Beijing Daxing airports, opened a 600 sqm food hall in Dubai, inaugurated 5,400 sqm in Venice and opened shops in Libreville in Gabon. Lagardère Travel Retail is present in 37 countries, and in 2020 it will open over 3,000 sqm of shops and 1,800 sqm of restaurants in Abu Dhabi’s new terminal.
 

The global travel retail market increased by 9.3% in 2018, reaching $76 billion, thanks to a 6.5% growth in passenger traffic. Can one rely on this trend to succeed in this industry?
Travel retail is definitely one of the two growing niches of retail, together with e-commerce. Travelers are the best consumers in the world. They tend to be of higher socio-demographic profile and in airports and stations they have time on their hands and are open to discovery. That being said, our industry has nothing to do with what it was ten years ago. Terminals and train stations are constantly renovated by their operators. We have to adapt here as everywhere else to new consumer behaviors. We are in a phase of complete reinvention. For instance, take-away is gradually superseding sit-down dining. Our credo is to de-standardize and bring value to travel retail, to make it less conventional and more attractive, to be truly different from traditional retail on the high street.


How does one innovate in this sector?
Innovation is about introducing new concepts and evolving our current ones. Relay, for instance, has changed a lot. Before these shops were dedicated to press and tobacco. Now they offer a wide range of on-the-go products, accessories, technical products, snacks and drinks. Our role - as you can see in the new Orly T3 terminal or at Montparnasse train station - is to bring in new brands like Nespresso, Victoria's Secret, Anne-Sophie Pic’s restaurants (Daily Pic and André), the NY gourmet food brand Dean & DeLuca or shops developed with Monocle magazine. We also have a project with Trip Advisor.


Does innovation also affect duty free stores which tend to (almost) all look the same?
lt is true that duty free had become quite uniform. We do our best to ensure that the traveler knows where he is and to give a strong local identity to our stores. This requires a careful selection of brands and local products or the creation of a specific uniform for our sales staff...In Dakar our teams brought in a woman who sells delicious jams on the side of the main road, we helped her organize her production so that she can now sell her products in our store at the airport. We don’t have a one size fits all strategy, we adapt ourselves to each country, to each site.


In Paris, renovated train stations have turned into real shopping malls. Don’t you fear competition from shopping center developers, who also manage retail brands?
Not only do we manage retail brands, we also operate them. It takes a real skill to be efficient on all fronts, from a logistic and human resource point of view, managing spaces that are open 7 days a week, with very long opening hours - from 5am to midnight - in restricted areas.  We also massively invest to maintain our leadership position. Our investment varies depending on the duration of our contracts, ranging from 3 to 30 years. With an average of 7 to 8 years, there is a lot we can do. Per year we invest 130 million euros across the world.


Consumers tend to purchase more and more online. How are your brick & mortar stores coping?
First and foremost, we sell experiences. We tell stories with our brands. We also offer e-booking services for our products - Click and Collect. For those who are doing a round-trip we also offer a service whereby we hold on to their purchases until their return, Shop and Collect. On some platforms, we also developed loyalty programs that offer exclusive benefits such as access to VIP lounges. In our stores we offer services such as free barber, shoeshine, or make. Imagine our satisfaction when, like in Rome, 68% of the customers say they prefer to make purchases at the airport rather than downtown.


Low-cost airlines are booming. These attract travelers who don’t necessarily have the same buying power as other travelers...
Low cost is also an opportunity. For instance, Ouigo TGV travelers count on there being a food offer at the train station. "Multi-brand stores" have a wider offer than mono-brand shops. In China, high speed train stations are no different from airports.