Year in Review. The Moodie Report s. inside this issue

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1 Fast, Factual, Free The Moodie Report s Year in Review I woke up this mornin and none of the news was good And death machines were rumblin cross the ground where Jesus stood And the man on my TV told me that it had always been that way And there was nothin anyone could do or say Steve Earle ISSUE 24 DECEMBER 2006 Business commentary and analysis of key developments in the global duty free and travel retail industry for readers of The Moodie Report is published by Moodie International. Please direct any comments to Martin@TheMoodieReport.com Written and edited by Martin Moodie; copyediting, layout and production by Jon Elphick inside this issue The Moodie Report s best of the best...2,3 The inspirational Nik^sa Milanović...2 Out of Africa, out of this world...2 Communication improvement required...3 The flying Scotsman...4 Dynamic DFASS...4 Falic family forges forward...4 All eyes on Incheon...5 Game on in Macao...6 Valiram s double coup...8 The Moodie Report People of the Year...9 From the Editor: Welcome to our annual year-end edition of The Moodie Report PLUS, in which we review the people, places, retailers, shop openings and stories that stood out in the travel retail industry during the tumultuous year that was It was a year dominated by so many headlines of the wrong kind that it was difficult at times not to feel deeply depressed about the human condition, let alone our industry. But as always, in life and in business, there was plenty to inspire and to alleviate the darker moments. As commentators it is easy to focus only on the negatives and certainly one must not ignore them but one must equally seek out the positives that lend both balance and optimism. Just as Earle s song ends hopefully ( I believe there ll come a day when the lion and the lamb will lie down in peace together in Jerusalem ) in this special report we ve tried to blend both the upsides and downsides of what must surely rank as one of the most difficult years in our industry s 60-year history. We begin with our own selection of the year s highlights, followed by our popular A Z of industry issues, identities and themes. And we conclude with our traditional People of the Year awards. Store Opening of the Year (airport): Madrid Barajas Airport s new Terminal 4, opened in early February, was touted as ushering in a new era for the Spanish capital s gateway. Could the retail live up to the terminal s thrilling design? Largely, yes. We particularly liked (though not the name) Aldeasa s The Shop traditional duty free categories, best expressed in fragrances & cosmetics and the same retailer s Les Boutiques, the largest area for luxury brands in any Spanish airport, featuring specialist corners and areas for top brands such as Omega, Cartier, Montblanc, Furla, Pedro del Hierra, Bvlgari, Loewe and Cartier. Upmarket yet accessible, stylish and spacious in equal measure. And top marks too for Aldeasa s Thinking España destination merchandise store, a beautifully understated testament to Spanish tastes and traditions that is a sheer joy in which to shop. Store Opening of the Year (non-airport): The King Power Downtown Complex in Bangkok wins for its sheer ambition and daring. Set against the most testing of backdrops the retailer was simultaneously preparing for an even more daunting opening at Suvarnabhumi six weeks later this new store represents a triumphant flourish of will and vision.

2 Retail Revamp of the Year: The newlook South wing of Tokyo Narita Airport, opened amid great expectation in June, saw the unveiling of the country s largest duty free mall, Narita Nakamise. This 3,500sq m cocktail of designer boutiques and traditional duty free shops took Japanese airport shopping to new and welcome heights. Specialist Outlet of the Year: We loved King Power s Once upon a Time upmarket children s outlet in Bangkok (downtown and airport) and suppliers were warm in their praise of the new DFS watches store in Sydney Airport as being right out of the top drawer. But our vote goes to the quite wonderful Jo Malone store at London Heathrow Airport Terminal Three. This gorgeous throwback to the way perfumeries used to be is a heavenscent antidote for the stressed traveller who has just cleared security. Lovely merchandising, gleaming whiteness, great staff (a woman called Angela on duty last time we visited should herself be bottled and franchised throughout the industry) and a fabulously diverse range of scents (all available to be tested) make this a place to dwell and to spend. Airline Retailer of the Year: Korean Air wins our vote for the second year running, courtesy of its excellent (monthly) inflight duty free brochure, penchant for introducing high-end product success stories, deeply ambitious website, staff motivation powers and, most of all, its sheer success sales of US$170 million were likely by year-end. Inflight Duty Free Brochure of the Year: Selling off the page is a very different science to selling off the shelf, and many airlines are highly adept at it. In a high quality field Qatar Airways gets the vote for its beautifully produced, renamed Shopping Extravaganza. Featuring art house transparent paper section dividers, high quality imagery and production values and clear, effective signposting, it is a classic of its genre. Conference of the Year: Despite the usual flurry of industry events, quality pickings were extremely rare in The best, undoubtedly, was the one with the most validity the Aviation Security Workshop in Cannes hosted by TFWA. It could have done with more time but at least left delegates wanting more, not as at so many conferences an escape route. MEDFA and ASUTIL were typically solid, as was the Nordic Travel Retail Seminar. Speech of the Year: From that same workshop we ll give this award to ETRC President Frank O Connell for his passable impression of newscaster Peter Finch in the great movie Network doing his famous I m mad as hell and not going to take it any more line. Frank was mad and this normally quiet man of duty free truly got his message across as a result. Runner-up was a fine piece of advocacy of the tobacco category in duty free from BAT s Neil Lovett at November s MEDFA conference in Dubai. Destination Merchandise Store of the Year: If Thinking España was good Out of Africa was even better. The taped sounds of African wildlife beckon you towards the destination merchandise store at Cape Town International Airport (there s another at Johannesburg Airport). When you get inside you discover an incredible range of high-quality African merchandise, from fashion and accessories to children s items, homeware, wood carvings, ostrich eggs, African themed games, toys, local music, beads, jewellery, clothing and crafts. It s all here in arguably the quirkiest retail environment in travel retail: Destination merchandise at its best. Out of Africa and out of this world. Promotion of the Year: We concur with the Frontier judges. We loved the concept of the partnership between Emirates and Montblanc (and the latter s UAE representative Visions) an ultra-luxury timepiece being auctioned for a children s charity (the Emirates Foundation) over a three-month period. The result? A stunning US$250,000 being paid for the watch, and the sort of promotion that gives our industry a good name. 2 The Moodie Report s Interviews of the Year: 1) Dermot Davitt s interview with Dubrovnik Airport s Nik^sa Milanović was inspirational. Recalling the dark days in 1991/92 as shells reined down on the streets of his Croatian village and his beloved airport was blown to pieces, Nik^sa said: We used to clean the streets every day to prove to ourselves that normal life could go on, and also to defy the soldiers on the hillside, to show them that we could not be beaten. We came back in November 1992, and the airport was totally destroyed. 14 years on the rebuilding is long complete, and a new airport is set to take shape. 2) The Sung-Joo Kim story was another that ranked highly with The Moodie Report s readers. The dynamic Korean businesswoman who is driving the MCM brand back to (and perhaps beyond) its former lustre is an interviewer s dream: feisty, refined and profoundly articulate in equal measure. I want to create an Asian powerhouse, she told us. One suspects she already has. 3) YS Choi. Our interview with Lotte s great pioneer of duty free an everpresent figure in the evolution of the downtown and airport retailer s business over the past three decades was full of reminiscences and pride. A touching and salient reminder of how people make businesses.

3 A Alpha: The most turbulent year in the retailer-to-catering company s history, with a suspension from the stock exchange and the departure of both Chief Executive and Finance Director. But by year-end, under new CEO Peter Williams, the company had stabilised and ended 2006 in style by winning the Delhi International Airport duty free contract in partnership with Pantaloon, ahead of hot international competition. AENA: When will one of the industry s most anticipated and certainly most overdue retail tenders take place for the Spanish airport shops (other than Madrid) currently run by Aldeasa? Or will there even be a tender? As Dufry waits in the wings to make its anticipated challenge in Aldeasa s heartland, Spanish airports authority AENA is playing its cards close to its chest. Arrivals shopping: Oslo set the European precedent, and Switzerland is set to pick up the baton. Copenhagen is exploring the concept and others around the world notably Dubai Duty Free and Australian airports are looking at ways to extend it. In a security-obsessed age that is hurting duty free in general, Arrivals shopping stands, perversely, to be a major beneficiary. B Bangalore: Emblematic of India s fastmodernising, fast-privatising airport sector, Bangalore International Airport s conducting of the recent retail and food & beverage tenders was exemplary. Not surprisingly it attracted a world-class line-up, and the management can be well pleased with its appointees The Nuance Group with Shoppers Stop, and HMSHost. BAA and break-up: The UK Office of Fair Trading s recent referral of BAA to the Competition Commission almost certainly means the divestment of one or more airports from the Ferrovial-led company s portfolio. Gatwick (or Stansted) and the Scottish airports are the likeliest bets. An intriguing side issue from any divestment is the future of the Good, positive communication by WDF at Heathrow T3 duty free contracts (all held by World Duty Free) at any acquired property. Beirut: There is currently only one flight a day but it is being serviced by the duty free operation. With those words Walid Salah, Managing Director of Phoenicia Trading the joint-venture partner with Aer Rianta International Middle East in Beirut Duty Free announced on 17 August that the retailer was back in business after the country s short but brutal conflict with Israel. Remarkably the business has bounced back and is running ahead of last year s sales; but huge question marks remain over Beirut s political future. C Copenhagen was the big duty free tender of the year in European travel retail and it attracted a suitably high-calibre field. The bookmaker s favourite, Gebr Heinemann, took the honours, adding further mass to the German company s regional stronghold first created by the winning of the Norwegian tender in Copenhagen Airports commercial supremo Henrik Busch s highly transparent, information-led and creative tender was a role model of its kind. Cathay Pacific Airways: The sheer dynamism of the Hong Kong carrier is well reflected in its marvellous online offer a deserved winner of The Moodie Report s first-ever Travel Retail Website of the Year. Communication: In too many instances this industry would get an E rather than a C (let alone an A ) for communication. Better intra-industry communication and, more critically, an improved consumer effort are critical if the business is not to be permanently undermined by that other perennial C of recent months confusion. How many times, for example, do we see landside posters and leaflets outlining the 100ml 3

4 liquids limit on what can be cleared through security, with no mention at all that duty free items of all sizes can be purchased once passengers are airside? D Dubai Duty Free: Can the amazing UAE airport retailer crack the US$700 million sales barrier this year, up from US$590 million in 2005? Amazingly, despite myriad security-related constraints in 2006, the answer is yes. And with a new concourse, warehouse and logistics centre coming on stream next year, Colm McLoughlin s team has its sights set on US$1 billion by The probability is growing by the minute. DFASS: Unquestionably 2006 was the breakthrough year for Benny Klepach s Miami-based company, which has diversified successfully both by channel and by region in recent times. This year saw DFASS pick up the Fort Lauderdale Airport contract as well as the important Delta Air Lines concession; but the really big one was the hotly contested tender for Singapore Airlines. In a single giant stride the win propelled DFASS into a new league and a new region. Dubai Aerospace Enterprise is a major new aviation consortium, backed by the government of Dubai, which plans to invest US$15 billion in the sector by Its Chairman is H.H. Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai s Department of Civil Aviation and Chairman of the Emirates Group. That s quite some pedigree. He said recently: Within ten years DAE will become an integral part of the global aerospace industry and a leading player. Would you bet against it? It s a classic case of watch this space or, in this case, watch this aerospace. E Will 2007 be the year that duty free in Egypt really takes off? We think so. This year saw some intriguing tenders in a market of huge potential that has been undermined to varying degrees down the years by terrorism and bureaucracy. Sharm el Sheikh Airport drew a remarkably strong field (and commensurately strong bids) given its size, with incumbent EgyptAir and Dufry finally sharing the spoils. The Cairo T3 tender had a remarkable denouement at the last minute the bid was called off and the contract awarded to EgyptAir. Emirates: What an exuberant inflight operation that flying Scotsman John Sime (above) runs. The airline deservedly won a Frontier award for Best Partnership Initiative with Montblanc (see M) and its remarkable December initiative with Traveller in offering a BMW 120i to the month s best-selling cabin crew saw Sime s and Emirates motivational powers move into top gear. European Travel Retail Council: ETRC is the body now driving the global effort to adapt to the 6 November European Commission aviation security regulations. Perversely, though, much of its immediate attention is devoted to undoing the negative impacts on transit passengers (see T) of the original deal it agreed to. The reality of 6 November is that it could have been much, much worse without ETRC s intervention a ban on liquids over 90ml in size, for example. The group needs financial and moral support in equal measure in the difficult months ahead. F Spanish was (eventually) the loving tongue in the bitter fight for control of BAA as Spanish 4 infrastructure giant Ferrovial outmuscled even the might of Goldman Sachs to take control of the UK airport operator. With a terrorism alert, an aviation security crisis and an Office of Fair Trading investigation within months of closing the deal the Spaniards must sometimes wonder what they have let themselves in for. The Falic family Simon, Leon and Jerome may not seek out the headlines, but they keep making them in impressive style. Their success with Duty Free Americas has surprised critics who pre-judged their ability to run a bona fide retail empire when they bought the company in a bargain deal from BAA. Just as interesting has been the company s successful plunge into brand ownership from luxury fashion house Christian Lacroix to Hard Candy. Until now Duty Free Americas has been an Americas-orientated retailer. Until now Frankfurt Airport: The year ended on a difficult note as Frankfurt s hub status meant it was cast as the bad guy in having to confiscate tonnes of duty free liquids from transit passengers (that should never have been sold to them in the first place at other locations). But otherwise 2006 was a banner year for an airport group that continually impressed with its ability to deliver bold F&B and retail statements, openings and promotions.

5 Fun: Where did that word go during 2006? For all the obvious reasons, far too many airports have become places to escape from rather than places that contribute anything positive to the travel experience. Security concerns are hardly the airports fault but more, much more, can be done to convince travellers that once they stumble out of security, belts done up, shoes back on, laptops back in bags, suntan lotion confiscated, that the worst really is over. Put up signs immediately post-security saying Your holiday starts here, meet and greet those harried travellers. Have some promotional offers promptly on hand, sample some drinks or chocolates. Drive that other crucial F, footfall, into the stores, not away from the whole airport experience. G Global Airport Services, one of the industry s most intriguing intellectual concepts with arguably one of its worst acronyms (GAS), dominated the headlines in 2005 after its set-up but was notably absent from them in 2006 as joint-venture partner BAA s attentions were diverted elsewhere. It was a case of the GAS being turned down and then off as the alliance with Crossbar Associates was quietly geared down; though we ll hear plenty more of the individuals who tied up with BAA Steve Franklin, Adrian Murray and Randy Emch. They all still have a big contribution to make to the business. GECAS: No, not a European Commission version of GAS, but an equally compelling new entrant into the airport investment scene. And this one has the ring of a powerful long-term contender, backed as it is by the might of General Electric. Ex-BAA and Macquarie Airports executive Marcus Balmforth is the man charged with driving the airport investments of the GE Commercial Aviation Services (GECAS) unit. London City Airport is already under his belt; another London property isn t out of the question, and China and India will be other priorities. H What a year it has been for Gebr Heinemann a company so loyal to its Hanseatic roots and yet so dynamically progressive in areas of supply chain management and promotional initiatives, in particular. Copenhagen (see C) was a huge coup, as was the new nine-and-a-half-year contract at Germany s leading international airport, Frankfurt. Co-owner Gunnar Heinemann once said that the company made reliability the guiding principle of all that we do. That s true, but it s only part of one of travel retail s great success stories throw in absolute professionalism, a belief in partnership and long-term thinking and some good old family values and you begin to get the full picture. I Incheon International Airport, where the world s biggest duty free tender looms in early Currently four retailers (Lotte, DFS, KNTO and AK Duty Free) share the duty free cake. Will that number, and the names, stay the same? Lotte will be hard to budge after all its main Incheon fragrances & cosmetics store is the world s top travel retail beauty outlet and so will KNTO (trading as Duty Free Korea), because of the critical role its revenues play in developing the country s tourism infrastructure. But nothing is a given, and a perhaps unrivalled bidders lineup can be expected, including the incumbents, downtown rival Shilla and a host of big international names. The food & beverage tender too is up for grabs: expect high levels of interest there too. India: The country on so many travel retailers lips. A number of contracts will be determined in early 2007, which should see some interesting international and local names join the likes of 5 Nuance, Shoppers Stop, HMSHost, Alpha and Pantaloon which were successful in the big contests that have been resolved so far in Bangalore and Delhi. J Japanese travellers: It s been a mixed year for outbound Japanese travel, with a soft Yen hurting Dollar-driven markets such as Hawaii; but business to China has rebounded from the political difficulties of According to Travel Journal International Online, an increasing number of consumers follow three key motivations cheap, nearby, short when planning their travel, helping to explain the rising popularity of Thailand (rebounding to prominence after 2004 s tsunami) and Vietnam. John Sutcliffe: What an influential figure the Irishman has been on Middle East and global duty free over the past two decades. His achievement in building Aer Rianta International Middle East s US$500 million retail empire in often difficult and never stable circumstances is one of the industry's great achievements. With Cyprus now on line, and the company pushing hard for a Saudi foothold, 2007 looks like being the best year yet.

6 K King Power (Thailand): The astoundingly ambitious dual opening within just six weeks of the company s new Downtown Complex and its all-embracing Suvarnabhumi Airport commercial offer (from duty free to destination merchandise, spa to specialist boutiques, food & beverage to foreign exchange), pushed the company into a new qualitative universe and gave Asia travel retail two fascinating retail propositions. Always the perfectionist, Chairman Vichai Raksriaksorn insists Suvarnabhumi should not be judged for at least a year until all the finishing touches are in place. Korea: With Incheon in the spotlight, Korean Air once again proving the world s best inflight retailer, Lotte (see L) riding high and the effervescent Sung-Joo Kim leading luxury house MCM s renaissance, it was a great year for Korea in travel retail (see I for Incheon) may be even bigger. L Can Lotte Duty Free move from a onemarket phenomenon to a truly international force? We think so. Watch markets such as Singapore and China, and don t count the company out of any of the big international tenders. It s a very good retailer indeed, and one that buoyed by the right international experience could become a truly pan-industry force. Backed by the largest IPO in retail history (for Lotte Shopping Company) it certainly lacks neither the finance nor the will. LAG: The year s big acronym, first struck by those great practitioners of abbreviation, the Australians, to describe liquids, aerosols and gels, the items at the heart of the post-10 August aviation security crackdown. It s a term that, unfortunately, is likely to remain a key part of industry vocabulary for some time to come. Liquor: What is the future of one of the great long-time staples of our industry? That s a fundamentally important question, not only to the category but to the business as a whole. Look at the suppor pouring into the ETRC lobbying fund from the liquor sector underlining just how much is on the line here. M Michael Mulyoowa: The man responsible for the single biggest duty free purchase of all time, from another M (Montblanc) a one of one limitededition watch from the German luxury house. The Ugandan businessman spent US$250,000 on the timepiece, with all proceeds going to the Emirates Foundation to assist underprivileged children. What a great way to raise the average spend per passenger. Macao: It s game on for travel retail as China s great gambling boom continues. DFS is in there in a major way, Nuance- Watson is opening a specialist outlet and at least one other major industry name will unveil its presence in coming weeks. But is too much top-end retail going in? Fortunes are going to be won and lost on the Cotai Strip and we re not just talking blackjack. Media: The biggest change in years within the trade media took place quietly in December as DFNI bowed to the electronic revolution and moved from a fortnightly print frequency in place since 1987 to become monthly. The Moodie Report went the other way, stepping up its print frequency to five per annum, the number we consider optimum in a web and e-news driven media age. Frontier changed hands again during the year and bolstered its usp, the Frontier Awards. Expect more change and consolidation. The winners will be those who differentiate and add value just like the market they cover. N Narita: 2006 was the year of Nakamise at the Tokyo gateway. The revamped T1 South Wing retail offer was dubbed big change by NAA Retailing and it was exactly that, transforming the look, appeal and success of a long-criticised retail offer will see Fifth Avenue come to the airport not the real thing but a new duty free mall styled on the iconic New York street, with a range of big fashion brands blended with the traditional duty free categories. It should prove equally exciting. Bravo Narita for daring to be different. Nuance: 2007 was a better year for the airport retailing giant. The Nuance Group may have lost one of its glamour European locations, Copenhagen, but protracted historic losses there meant few tears were shed internally. Conversely the retention of Sydney, against all bookmakers odds a year earlier, seemed to galvanise the company both regionally and internationally. A big breakthrough followed in India, where Nuance s canny selection of local partner (Shoppers Stop) helped drive success in the Bangalore tender. O Olivier Charriaud: A change of style at the top of TFWA as the ex-rémy Cointreau executive took over from the DFSbound Andrew Ford in October. Back to basics seems to be the welcome message to date for an association that remains best when it is organising trade shows and workshops and Charriaud will be keen to underline TFWA s preeminence at both.

7 Online opportunity: While there are oases of excellence, too many airlines, airports and retailers fail to match their in-store offer with a similar standard of online presence. But this year s inaugural Travel Retail Website of the Year Awards, organised by The Moodie Report, identified a clear shift in thinking among airlines (especially), airports and some concessionaires as they realise both the tremendous showcase and selling opportunity the web provides. P Pasternak: As in Lois and Paul and their deservedly well-regarded Travel Markets Insider. Unlike so much of the trade media that specialise in imitation rather than innovation, the Florida-based husband-and-wife team know exactly what they want to deliver, and who they want to deliver it to. The result is a fine specialist medium for the Americas that deserves its mounting success. Piovesana: As in Alessandra, the tireless, passionate Managing Director of Nuance-Watson (Hong Kong), whose efforts were richly rewarded this year when the retailer won the first Frontier Airport/Land-based Retailer of the Year to be conducted under the magazine s new (and much better) adjudication system, which involved an industry vote before a shortlist was put in front of the judges. No award scoring system is flawless, but the general consensus was that this was one accolade that was truly deserved. From its main stores in beauty, fashion and consumer technology to specialist outlets such as Kiehl s, Nuance- Watson (HK) is a retailer which gets it right more often than most and whose Managing Director s name is synonymous with integrity. Q Queues: They follow security alerts like night follows day, and are one of the great deterrents to building store penetration. Heathrow T3 is a prime example and BAA CEO Stephen Nelson s recent big investment in improved manpower and facilities underlines his need to address the problem from a customer and revenue retention perspective fast. Qatar Airways: Is there no stopping the growth of Akbar Al Baker s aviationto-retail success story? A pioneering new First and Business Class terminal, an outstanding new inflight catalogue and the phenomenal development of the airline itself suggests the answer is not for a long, long time. R Rome: One of the true retail turnarounds of the year came at Aeroporti di Roma (ADR) where a long-criticised retail offer at Fiumicino and Ciampino is being transformed dramatically into a marriage of fashion, style and shopping that such a great city deserves. ADR Executive Vice President Business Unit Commercial Andrea Belardini has taken a series of calculated risks and both he and Rome s retailers and passengers are reaping the rewards. Russia: Driven by surging oil and gas revenues, the country s booming economy is fuelling an unprecedented surge in outbound travel with spends to match. There is much impressive airport retail activity going on there too (St Petersburg Duty Free and Runway Duty Free at Domodedovo are comparatively unsung heroes of the business) and ever intensifying competition in the Moscow heartland. But the big win in recent week s was Dufry s seven-year contract at Moscow Sheremetyevo Airport, where it will operate some 3,345sq m of retail space (across all product categories) in the new T1 expected to open in Dufry CEO Julián Diaz rightly describes it as one of the company s most important contract gains ever. S Sydney Airport was arguably the glamour tender of the year and, as mentioned, few would 7 have initially wagered serious money on Nuance, the incumbent, carrying off the spoils. But it did not only because of an increased financial offer but more importantly through its strong Sydneycentric branding initiative, a creative pricing, customer service and promotions and marketing offer and, not least, the enormous commitment of another S, Nuance CEO Australia and New Zealand, Christian Strang. Can Nuance make money where for so long it complained of heavy losses? If the regulators don t get in the way, yes. Sealed bags. Security was always likely to rear its ugly head as a key theme of 2006, but who would have thought finding the right sort of transparent, plastic bag would become a pressing industry concern? Alas that is the sad world we live in. Against a backdrop of plastic bags and security searches, how the industry manages to restore a sense of joy to airport retailing is, we believe, one of the great challenges of the new year. SSP: 2006 was a landmark year for the UK food & beverage specialist after the June divestment by former parent company Compass to private equity firm EQT. Now, in classic private equity mode, the emphasis is on rapid growth and Andrew Lynch s team has

8 responded with a series of headlinegrabbing contract gains or openings in airport locations as diverse as Oslo, Shanghai, Hong Kong and Birmingham. There is plenty of expansion left on this corporate F&B menu. T Transit: A utilitarian word, but one with profound implications for travel retail in 2006 and The new rules are as simple as ABC, aren t they? Well, sort of. Airport A can sell duty free liquids of over 100ml and so can airports B and C. But travellers cannot take goods bought in A through B to C. So depending on the location of B and C, retailers in A shouldn t really sell the items in the first place. As we said, as simple as Trinity: Now an established part of industry parlance and one encouragingly used by more and more airport executives. A swift definition? Improved alignment of the respective interests of airports, concessionaires and brands. Never has the concept been more important. Terrorism: As fundamental to our industry s fortunes as training, promotion and concession fees. Few now doubt that the war on terror has made the world a much more unsafe place and, alas, our industry with it. U Understanding: What the politicians need desperately if they are not to kill off our industry. Understanding of the critical role of airport commercial revenues. Understanding of trading realities when passing knee-jerk legislation. Understanding that the world s travelling public should not be treated like cattle. Urioste: As in Enrique Urioste, the human dynamo who heads Argentinean travel retailer InterBaires. He s in big demand as a conference speaker these days (ASUTIL and MEDFA conferences in 2006, ACI Business & Trinity Forum in 2007), and that s because he practises what he preaches. Watch out for his biggest initiative to date in V Valiram: The well-regarded Malaysian luxury retailer snatched victory from DFS Group at the latter s Changi T2 fashion stronghold in one of the surprise tender results of the year. Valiram may have been an outsider but it was no novice the company has extensive retail experience at Changi and in Malaysia and, more importantly, excellent luxury brand relationships through its domestic market operations. As we went to press it announced the appointment of former DFS US Group President Julian Levy as Chief Operating Officer. Two coups in a matter of weeks. Vespucci: Abu Dhabi Duty Free invited travellers to take a voyage of discovery with the retailer s new owned brand, launched earlier this year. It s a suitable tagline the brand was named after the great Italian explorer Amerigo Vespucci, who discovered South America and we think many travellers will take the voyage, such is the investment and belief in the brand and the quality of it. Vancouver: It s less than three months before Spanish travel retailer Aldeasa takes up its duty free residence at Vancouver International Airport. Its main focus will be the much anticipated opening of the new International Terminal. Big moments with much at stake for both airport and retailer get ready for something spectacular. 8 W WIT: As in Women in Travel, the new group that aims to champion the interests, knowledge and skills of women in travel retail. Those who claim this industry has no glass ceiling are those who live above it, though not surprisingly on gender-related issues not everyone agrees with us. Won: The rise of the Korean Won against both the US Dollar and the Japanese Yen was one of the key influences in the Korean duty free business during But what the god of currencies giveth, he also taketh away. While the Won has risen nearly +10% against the greenback this year, the Japanese Yen fell to a nine-year low of Won per 100 Yen as we went to press: bad news for the Japanese spend. X Always the toughest letter to complete in this column, especially given the disappointing lack of a boom in xylophone sales. So we have to settle for X-rays, now an integral part of the travel experience. Will someone develop a fail-safe, financially viable method of identifying liquid explosives at airports in 2007? Y Yen: In this column two years ago the Japanese Yen stood at 105 to the US Dollar; a year ago the rate was 117. As we end 2006 it stands at around 118, well south of a mid-may appreciation to 110. Any retailer selling in US Dollars or linked currencies will be watching that relationship avidly next year. Z Zodiac: 2007 is the Chinese Year of the Pig. That may not seem a promising sign to Westerners, but the Pig of Chinese astrology is considered to be the most generous and honourable of creatures. Those born under the sign are perfectionists with impeccable manners and taste. They also delight in luxury, finery and riches. What finer symbol for travel retail? May 2007 be crisis free, and may pigs fly.

9 People of the Year Individuals who The Moodie Report believes by their deeds, attitudes and behaviour advanced the industry s cause in who quietly but confidently outlined his plans. Remarkably he has delivered on almost every one of them, from big acquisitions such as Brasif to the company s IPO on the Swiss Stock Exchange. One gets the unmistakable impression that there are several major Vichai Raksriaksorn: The Chairman of King Power realised not just one dream but two this year. The Thai travel retailer opened its grandly ambitious Bangkok Downtown Complex in August, and followed up just six weeks later with the complete duty free to food & beverage offer at the massive new Suvarnabhumi Airport. Each was an extraordinary undertaking; collectively they represented a phenomenal achievement. Coupled with his huge charitable contributions to the dispossessed and underprivileged of Thai society, Vichai richly deserves his place here. Julián Diaz: A couple of years back I lunched with the then-new Dufry CEO, plays left in the tank, and no-one now doubts Diaz s ability to make it happen. Hyun-Ah (Heather) Cho: The driving force behind the sustained pre-eminence of Korean Air (KAL) at the top of the inflight sales league. To produce a monthly catalogue of the size and quality of KAL s is one thing; to continuously innovate in terms of ranging, with a perhaps unrivalled emphasis on new lines and airline exclusives, is another. When 400 cabin crew gathered for their yearend party in Incheon earlier this month they had plenty to celebrate the retailer is heading for all-time record sales of over US$170 million, up from just US$124 million in Gunnar and Claus Heinemann: Contractual coups in Copenhagen and Frankfurt (page 5) were impressive enough, but the Heinemann cousins, co-owners of the great German travel retailer, win their place here more for the outstanding sense of reason and commitment that they bring to our industry. After ETRC President Frank O Connell s somewhat desperate plea in Cannes for those present to donate 3,000 per company, the Heinemanns turned a trickle into a charge by pledging 50,000. Gunnar Heinemann was among the first major industry figures to truly realise the impact of the transit issue, describing it as the biggest threat ever to the travel retail channel. Frank O Connell: The ETRC President and Aer Rianta Retail Director s bravura on-stage performance in Cannes at the aviation security workshop was something to behold. Anger at the lack of funding, frustration at the lack of knowledge, and passion about the need to do something urgently all blended into a rarely so fired-up Frank and confirmation of just how much this man has put into the whole lobbying effort. 9