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Isabel Zarza, managing director, Dufry Africa, a global travel retailer, manages duty free stores in eight airports in Africa where Dufry operates. These eight countries include Cape Verde, Morocco, Algeria, Egypt, Kenya, Ghana, Ivory Coast and Nigeria. In this exclusive interview with Ifeoma Okeke, she speaks on strategies governments across Africa can use to grow revenue.
How long have you been managing duty free stores within these airports?
It depends on the countries because in some countries, we have been for a long period of time and in some other countries, we are quite new. We have been in Africa for more the 20years.
What is the shopping culture like in airports across Africa?
When you talk about Africa, it is a big continent. The profiles of passengers are not the same in the north of Africa, South of Africa and the central Africa. In the North of Africa, you will have more passengers from the Europe and very frequent fliers. They are looking more for souvenirs and products that are cheaper in Africa than in Europe.
For Nigeria, we offer perfumes and cosmetics and we have exclusive brands. Textiles, spirits and tobacco are the key categories that people look for.
How do you think an airport can be structured to attract non-aeronautical revenues?
Airports are looking at increasing the non- aeronautical revenues because that is the way they can increase the plane tickets and increase the number of passengers.
The way they can do it is to have duty free walk through shops. This means that in order to arrive to the gate, you need to go through the shops. It will also be important for us to have only one entrance.
For example, in Nigeria currently, you have two entrances to the airport. This means you are dividing passengers and cannot attract them to the same offering. You need to duplicate the offering and that is not convenient. So, if you have one only entrance with one walk through shop, it will be much better because revenue will increase for everyone.
The other thing is to be flexible with the operatory in order to be able to sell the products based on the analysis that we do with passengers. Basically, we analyse periodically what they buy and we compare the nationalities that we have in the airports where we operate to find out what we need to introduce. Most importantly is to have a good relationship between the duty free operators and the airport authorities in order to be flexible and to meet the customers’ needs.
Don’t you think just one walk through shop will be inconvenient for passengers, considering a surge in passenger traffic?
We have this working in some airports. They have built one single entrance with one walk through shop. It is very important to take into consideration that airports need to increase the number of passport controls and security controls, so you expedite the way passengers go into the shops and into the airport. For the shops, if you have wider corridors and that is perfectly done, it will not be a problem. The problem is the security and customs. We need to have sufficient number of them in order to be able to go through.
As an expert in this field, what do you expect an ideal airport to possess in a bid to promote the shopping and retail culture?
Most importantly, there should be a good relationship with operators so that they will be able to be flexible. It is important to understand the passengers’ profiles so that it will be important for them to tell the operators what can be expected so they can also adapt to the customers that will come. It is important to be open to have duty free but it is important to also have only one duty free. Nigeria has two duty free and that sometimes has a lot of competition but in a bad way because it is a price fight between the competitors. It is really important to have a good walk through shop and to have proper investment within the shop.
Africa Retail Development Index has it that the number of Africans patronising retail outlets has continued to increase by 20percent annually. Can this patronage be said of retail outlets across African airports as well?
There is a huge opportunity for development at the airport. I think we are still in the early stages. First of all, we need to develop a beautiful walk through shop but it is important to increase the types of shop. In Nigeria, you also have an example because you don’t only have the duty free shop but specialty retail, which is also increasing. Passengers are willing to really buy at the airports. They need to arrive two hours before their flights and once they are in the airside, they have that free time to shop.
How do you make airports attractive for non-flying publics?
In Africa this is very difficult because most African countries do not allow non-flyers to enter into the airport. In Europe and in other countries you are able to enter. There are also countries in Africa where you can enter into the airport as non-flyers but most of them, you cannot. You cannot make an offer attractive for people who are not going to fly. In Europe, you have that mostly on the arrivals because when you fly and depart, you want to go but when you arrive, you have meeters and greeters and people who go to meet their relatives. So, that is where you can have convenience shops where you see newspapers and flowers.
Do you think Africans need to review this system?
This depends on the security of each country. I am thinking it is something they can develop so that people will be able to enter into the terminal. It is important to understand that security is key and for that reason, I understand they do not want people coming into the airport if they do not want to fly.
What is the future of tax free shopping across Africa given the ban on the sale of cigarettes, and alcohol or the limitation of transport of purchases by air carriers?
The proposed ban is out of place and we are trying to fight against it. What the World Trade Organisation is saying is that they want to ban tobacco being sold illegally and we understand that.
In the duty free shops, we are not selling tobacco illegally, it is totally legal and it is the right way to do it. If passengers don’t buy tobacco at the airport, they will buy it somewhere else and that money is not going to the airport authority and not adding to the country’s revenue. An average of 33percent of the total sales at the airport in Africa is from tobacco. This could be higher or lower depending on the country. If tobacco is banned, the non- aeronautical revenues from the retail side will be banished from the airport. This will make it difficult for airports to increase non- aeronautical revenues if tobacco is banned.
The World Trade Organisation is talking with the government and when government says they want to ban illicit trade of tobacco, that is good but it is important to understand that duty free is legal. That is why it is important to work with airport authorities and governments in order to make them understand that duty free is legal. We control what products go into duty free shops.
What is the percentage of non- aeronautical revenues as against aeronautical revenues in Africa?
Non- aeronautical revenue in all African countries is reduced compared to what it is in Europe. In Europe, we are arriving 30 to 40percent of non- aeronautical revenues as against aeronautical revenues. In Africa, we are below 20percent. The reason for this is that retail is not yet well developed. We need to invest in this part of retail. It is important to develop retail is African countries. There are new terminals that are being built in Nigeria. We need to work with Federal Airports Authority of Nigeria, (FAAN) to build the perfect shops in the new terminals.
What are the non-aeronautical areas we can leverage on to grow the economy?
Non- aeronautical areas include shops and food and beverage. We can also improve the packing and VIP lounges amongst others.
How can tax free shops leverage on the diverse cultural backgrounds of passengers in an airport to sell their products?
It is actually very difficult because in an airport, the difference between the duty free and the retail is that in retail you know the customers are at the receiving end. You are in an area and you know people you are dealing with are people in a surrounded area of people in the country. For duty free, you are dealing with people all over the world, so it is a quite difficult to have one offer that suits everyone. So, we try to adapt the offer based on the nationalities or based the destinations of the passengers.
How can the government create a favourable working environment for tax free shops and retailers to operate and make profits at airports?
For the government, it is important to know that you can do duty free both at the airports and the borders with the other countries. Government can make customs easy in order to be able to sell the products. VAT is something that shouldn’t apply to the duty free products because they are going outside the country. It is not for consumption internally. In terms of regulation, they can also help with the duty free licences. Also they should fight against bans that don’t make any sense to the industry.
