BARBADOS REPORT Caribbean ARI April Caribbean ARI claims. a new standard

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1 BARBADOS REPORT Caribbean ARI April 2007 Selected photographs courtesy of Photo Dynamics Caribbean ARI claims a new standard Caribbean ARI, the joint-venture partnership between Caribbean Airways and Aer Rianta International, opened for business at Grantley Adams International Airport last month and it did so with a pledge to deliver the very highest standards in regional travel retail. Dermot Davitt reports from Barbados on a fledgling Irish- Barbadian operation, one that exudes a true Sense of Place. When Caribbean ARI won six of the 16 retail concessions on offer at Barbados Grantley Adams International Airport last year, the partners in the joint venture Aer Rianta International and Caribbean Airways set themselves an ambitious goal: to create a new benchmark for airport duty free in the region. A new standard for duty free retailing in the Caribbean was how ARI Regional Manager North America and Caribbean Philip Eckles described the scene as the first stores opened in March. Regional rivals such as SMT Puerto Rico or Dufry would doubtless argue the case, but one thing is sure: the partnership s execution of its grand ambition is bold and imaginative, and delivers a wonderful sense of the vibrancy of Barbados. Nowhere is that more evident than in the retailer s fragrances and cosmetics outlet Runway Beauty in Departures, immediately after security. It s Caribbean ARI s most important concession, one that s projected to deliver 42% of the retailer s total sales in year one (estimated by The Moodie Report to be around US$10 million). Already it s got the look and feel of a potential Frontier Award winner of the future. 92 The Moodie Report

2 April 2007 BARBADOS REPORT Caribbean ARI Gold standard: Caribbean ARI aims to create a new benchmark for duty free with its Barbados Airport stores, says ARI Regional Manager Philip Eckles (pictured above left with Retail Operations Director Bill Maxwell) The 1,850sq ft space is flooded with natural light, and it brings an outdoors theme to an indoor environment. Typical Barbadian chattel house roofs blend with images of palm trees against a blue sky; grass laminates and pale timber finishes. Then there s the clear visibility through the store, right to the back wall, which houses the personalised sections of the world s leading beauty names. We ve introduced standards of retailing that would stand up well against those in Western Europe or anywhere else, says Eckles. The quality of the design and fit-out is top class, and we made that Sense of Place a really central part of our offer. The stores reflect Barbados very well, and the customers are responding. Although it s early days we are already exceeding our budgeted spends per passenger. ARI Retail Operations Director Bill Maxwell, one of three ARI members on the Caribbean ARI board (the others are Eckles and ARI Director General Eamon Foley), adds: As a company we believe in including a Sense of Place in our retail stores. It s important for our customers, for our partners and for the airport to know that their culture is respected. We have a lot of experience in developing stores in different environments and cultures, and we brought that to bear here. The Moodie Report 93

3 BARBADOS REPORT Caribbean ARI April 2007 Thomas McCrave, who was seconded from ARI s Shannon headquarters as Interior Retail Designer, says the retailer had a strong hand to play with, given the new terminal provided by the airport. The airport design is only eight years old so it s very modern, and the architects had created a Caribbean theme already. From the time of the RFP it was intended to create a relaxed flavour for the fragrances and cosmetics area, and to have that outdoors feel to it. Very often airport beauty stores can be white and sterile. This is very different, but it also manages to be upscale too. Sales are expected to be weighted 60:40 in favour of fragrances, but cosmetics 40% share reflects the increasing importance of skincare and make-up to travellers, especially those from the core target market, the UK. The brands that dominate the back-wall spaces also reflect the tastes of that audience: Elizabeth Arden, Biotherm, Clarins, Lancôme, Clinique, Estée Lauder, Dior, YSL, Origins, Chanel (cosmetics), La Prairie and Fashion Fair Cosmetics. The upscale look continues from the beauty store to two adjacent outlets, also operated by Caribbean ARI: Airport beauty stores are often white and sterile, but this is very different Runway Fashion and Runway Voyager. The Runway stores, though each represents a different category, carry individual motifs that give them coherence and a point of interest for travellers. The entrance walls to Runway Beauty carry the image of an orchid; Runway Fashion sports an indigenous bird; Runway Voyager has a cruise line motif and Runway Duty Free a seascape. Meanwhile the Beach Hut Arrivals store speaks for itself. The shelves, which carry sunglasses, sandals, camera film and other impulse buys, have been created with a bleached driftwood effect to evoke lazy, sunny afternoons and deliver a message of welcome to visitors. Back in Departures, the 523sq ft Runway Fashion outlet offers Hugo Boss and Lacoste fashions, reflecting the interests of the predominantly UK and European audience. Runway Voyager, at 695sq ft, features travel retail luggage staples such as Samsonite and Longchamp alongside popular regional leathergoods brand Land. The shop also sports panelling that is ribbed designed to look like luggage racks neatly adding to the sense of being in a premium travel environment. From the two fashion stores the traveller is drawn either Know your customer: Runway Fashion and Runway Voyager carry brands that reflect the interests of the predominantly UK target audience 94 The Moodie Report

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6 April 2007 BARBADOS REPORT Caribbean ARI Ireland and Barbados forge a unique travel retail partnership Spirit of partnership: Irvine Griffith (above left) praises ARI Project Manager Linda Bruton for getting the business off the ground; (right) Griffith shares a light moment with Philip Eckles (far left), Grantley Adams Airport CEO Leon Romero (second right) and Caribbean ARI General Manager Donald Harlow-Powell (far right) at the opening It s easy to imagine that, just a few months ago, most Barbadians would have struggled to name a single memorable fact about Ireland, apart maybe from the two countries shared status as small islands perched in the Atlantic. Today, though, most Barbadians have not one but two Irish references to draw on. First, there s the Irish cricket team that has made waves across the Caribbean for its spirited performances in the World Cup, hosted by Barbados and other islands in the West Indies. Second, there s the Irish-Barbadian partnership Caribbean ARI that has just opened some of the region s highest class duty free stores at Grantley Adams International Airport. The partnership is 50% owned by Aer Rianta International (ARI) and 50% by Caribbean Airways, whose CEO is Irvine Griffith. Griffith tells The Moodie Report: The two companies are a great fit. We have similar histories and we are both state owned. We are very happy to have found each other and our young relationship already promises much. For our part we have found the Irish great people to work with. Caribbean Airways is something of a misnomer, as the company is not an airline; although it used to be. Griffith explains: The government s idea of Caribbean Airways was of an organisation that would kick-start tourism to Barbados from Europe in the 1980s, which it did through what at the time were low-cost fares. When other carriers took on routes to Barbados Caribbean Airways ceased to fly, but diversified into providing aviation services such as ground handling, operating airport lounges and retail, all of which we still do today. For 15 years Caribbean Airways operated the Arrivals duty free shop at Grantley Adams International Airport, until Duty Free Caribbean won the business in last year s tender. The company was disappointed to lose a traditional plank of its business, but by then it had moved on and landed a bigger prize through its newly forged partnership with ARI. The partnership won six of the 16 concessions on offer under the new-look retail concessions programme (see main feature). Yet as a retailer with a long track record at Grantley Adams, couldn t Caribbean Airways have tendered alone? We could, says Griffith candidly, but couldn t have produced alone what we have done with ARI. ARI brought their expertise and knowledge of the industry and raised the standard, just as the airport wanted from the RFP. To win any of the businesses we knew we had to go up a level from where we were before, and ARI gave us that opportunity. The shape of our business is changing now, adds Griffith. The government has decided that it doesn t want to be directly involved in commercial activities so our board has been given a mandate to pursue privatisation. This venture is the first step on that path to privatisation, although that remains a loose plan with no timescale written in yet. And Barbados can be the first step in a long-term story of regional growth for the partnership, says Griffith. We will look for additional opportunities. We will grow the business here, and also by spreading our wings to other airports. In the Caribbean we have the trading bloc Caricom (Caribbean Community and Common Market), whose aim is to integrate the economies of the region. Barbados is part of that, which opens up the region from Jamaica to Guyana to us, and offers us a wealth of opportunity. The Moodie Report 97

7 You ll Only Find These Three Kings In One Location: Duty-Free Shops Worldwide. Daniel Nuñez, Macanudo Cigar Master As an international traveler who appreciates the smooth, sophisticated taste of premium Macanudo cigars, you will be pleased to know Macanudo Cigar Master Daniel Nuñez has created three exclusive, limited edition Macanudos to make you feel like a monarch as you travel the globe. Available only in duty-free shops, each cigar is handcrafted from specially selected, richly flavored Dominican Piloto Cubano and Mexican filler leaves, bound with a Mexican San Andrean binder, then finished with a golden-brown Connecticut Shade wrapper, exemplary of the world s finest wrapper leaf. These kingly cigars are available in the three sizes preferred by the international traveler: Melchor 6" x 45 (21 x 152 mm), Gaspar 5"x 54 (22 x 133 mm) and Baltasar 6" X 52 (21 X 152 mm). And they come in elegant cedar travel/gift cases of ten cigars each. Cigar Master Nuñez hopes the Three Kings will make your travel extraordinarily rewarding. Macanudo Melchor Macanudo Gaspar Macanudo Baltasar

8 April 2007 across the walkway to the first of the jewellery and watches concessions (operated by Diamonds International) or down to the main liquor outlet operated by Caribbean ARI s rival Refinery Ltd. Direct competition This is where the coherence of the airport s commercial offer begins to break up. With a range of competing concessionaires in place, each with its own retail style and design, that s no surprise. It s especially obvious in liquor where there are three retailers in direct competition, each with design, merchandising and even pricing all of their own. Local group Refinery has the prime position, right after the Caribbean ARI stores which travellers pass postsecurity. There s also the newly introduced liquor store from the Department of Agriculture, and Caribbean ARI s 1,739sq ft shop, a Runway Duty Free concept, which combines spaces that had originally been tendered by the airport authority as separate liquor/tobacco and confectionery stores. ARI s Maxwell says: Some of our positions in the terminal are very strong; others are weaker, such as the liquor store. But we re sure we can improve penetration there over time through our marketing and promotions. Although it s competing with nearby rival stores with virtually the same offer, Caribbean ARI expects to generate a third of its turnover at the airport from the liquor, tobacco and confectionery store. And 60% of those sales will come from rum, a staple purchase for departing Europeans. Eckles says: Brands such as Mount Gay, Cockspur and RL Seale s have been very supportive. At the start, dealing with a new retailer, they had some concerns about how well they would be represented, especially as we intended having a true international flavour, but their fears have been assuaged by their strong positions at the front of the store. This store too features a strong local sense, with distressed timber and beech and cherry wood floors leading passengers through. The aisles have been kept deliberately wide to allow for the best possible movement of passengers a critical factor when 75% of sales are completed in a four-hour window, and 90% in seven hours of the day. There is colour-coding too to differentiate the categories: blue for liquor, red for confectionery and yellow for tobacco. The confectionery range carries a strong destination BARBADOS REPORT Caribbean ARI Celebrating a new travel retail era at Grantley Adams International Caribbean ARI launched its Runway retail concept at a ceremony on 28 March which was attended by The Moodie Report. Senator Rudy Grant (pictured above), representing the Government of Barbados, said: The new Grantley Adams International Airport is a significantly better place after its recent expansion, and that is partly due to the world class retail facilities that Caribbean ARI has put in place. The new stores reflect the high-end tourism that Barbados aspires to attract, and really suit the type of destination we want to create. Representing Caribbean Airways, Deputy Chairperson Joyce Dear said: Caribbean Airways has operated retail at Grantley Adams for 15 years (through its former Arrivals shop Ed), and we look forward to continuing our involvement with a company of the experience and expertise of Aer Rianta International. ARI Director General Eamon Foley said: It s a privilege to be here to open the stores officially. We believe we ve created a wonderful Sense of Place with the stores, one that truly reflects Barbados, and which the airport and the whole country can be proud of. ARI acknowledges the contributions of the Caribbean Airways senior team including Peter Odle and Luther Miller, and Leon Romero, Kathy- Anne Hewitt and Kay Richardson of Grantley Adams International Airport for their support. ARI Director General Eamon Foley presents Senator Grant with a gift from Ireland at the Runway launch The Moodie Report 99

9 BARBADOS REPORT Caribbean ARI April 2007 Core categories: The duty free savings on tobacco and liquor make them a critical part of the offer for the UK audience offer from the likes of Paton s and Tortuga Rum, all positioned close to the check-outs to drive impulse purchases of these items. A real duty free bargain Pricing is in Barbados Dollars, and marketing the duty free saving, especially versus the UK, will form a central part of Caribbean ARI s message in the stores. The UK passenger is very aware of prices against those at home, says Maxwell. We need them to know that they can buy 1,000 sticks for the price of 200 on the UK high street, or cosmetics at 60% of the UK price. Many of them are here for a week or two on holiday, so by the time they leave they know the true value of the duty free offer. designer create bespoke costumes for the staff, with bright friendly colours, says Eckles. You often see quite formal dress among retail staff in the Caribbean, and this is our way of creating a local feel that s smart but wears well and isn t off-putting. Although this is a new venture for ARI, its partnership with Caribbean Airways already looks a neat fit just like the uniforms. ARI brings with it the experience and expertise of operating in a range of diverse global markets, plus the pulling power of brands, while Caribbean Airways previously Arrivals duty free retailer at Grantley Adams for 15 years has an unrivalled insight into the market and, as a state-owned company, all the right connections. In a category like tobacco it s a big contrast with our operations in Moscow, for instance. There, we can t offer a saving in tobacco, but here we can. For ARI it s a throwback to the old Eurotunnel days: the UK passenger dominates, and there is a real duty free bargain. The positive pricing messages to consumers are backed by another vital ingredient: customer service in the stores. The friendly, relaxed approach from staff comes fairly naturally in the Caribbean, but an emphasis on customer service is also written into retailers contracts. Eckles says: It might sound odd, but we are contractually obliged to provide smiling staff on the shop floor. It s written into our contract with the airport. Fortunately we re blessed with a team of people, led by General Manager Donald Harlow-Powell, for whom this comes easily enough. The attention to detail in the Caribbean ARI approach extends to the new-look staff uniforms. We had a local We are contractually obliged to provide smiling staff on the shop floor ARI is open to any type of agreement or partnership, from straight concession to management contract to joint venture, says Eckles, and this agreement works well. We have a revolving chairmanship between the two companies, and three representatives from each on the board. It also works well under ARI s new regional structure, which was introduced last July. Previously Donald Harlow-Powell would have reported directly to Bill, whereas now he reports to me as Regional Manager, and he gets regional support from Montreal. Buying support comes centrally from ARI in Shannon, with assistance from ARI-North America and even from ARI s joint venture ARI-Sardana in New York. We have the services of Matt Hogan at JFK, whose role is 85% in the fashion business, says Eckles. It made sense to have him work with Hugo Boss and Lacoste for the fashion store here too, as he s a specialist. And Caribbean ARI will benefit from the changes filtering through ARI s central purchasing and distribution functions, spearheaded by Henry Rook who heads that arm in Shannon. 100 The Moodie Report

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12 Caribbean ARI Maxwell says: There are some areas that we have been weak in traditionally, and we believe we can use the muscle of our corporate side much better than we have done. In the past suppliers sometimes knew more about our business than we did, but that is changing. We intend to drive change in our business much more from within, including those critical areas of purchasing and logistics. Improvements to those functions will benefit what ARI hopes will be an expanding Caribbean ARI business too. We believe strongly in our ability to grow the business here; we wouldn t be involved if we didn t, says Eckles. With a strong UK profile and duty free s price advantage, we think it will be a success. Next will come opportunities elsewhere. We bid for the duty free business in Aruba, where we were unsuccessful, but Barbados could be the platform on which we build a regional group of companies. Maxwell adds: We ve forged a reputation as a company that is a good partner, one that fits well into other cultures and environments, and we think that can translate well in this region too. There are many more commercially minded airport authorities in the Caribbean today, although it takes time to convince some governments of the need for international expertise at their airports. We think we can provide solutions for some of those airports. It s a tough market, but we don t need to be frightened of it just because it s new to us. We have successfully defended our positions in Eastern Europe and the Middle East against competition, and that will only continue. But equally we need to look for alternative sources of revenue. Sometimes the best form of defence is attack, and we ll be targeting the opportunities that come our way as this region develops. Face value: Caribbean ARI is contractually obliged to provide smiling staff in the shops The Moodie Report 103