Leveraging Value of Hybrid Retail and F&B Concepts
Avolta provides concession partners with best-in-class retail concepts and a detailed understanding of customer expectations and shopping behaviors, to create value and maximize revenue generation from their retail spaces. Now substantially expanding our expertise in travel F&B through the legacy Dufry-Autogrill combination, the extended offering will provide concession partners with an even larger portfolio, including hybrid travel retail and F&B formats. The trust our concession partners have been placing in Avolta has allowed our company to become the market leader in travel retail, currently operating over 5,500 shops in 75 countries located in airports, seaports, railway stations, motorways, downtown areas, border crossings, cruise liners & ferries, hotels and other locations with captive audiences.
Benefitting from the widest industry experience
Avolta traditionally features a comprehensive portfolio of attractive retail concepts tailored to the individual needs of both duty-free and duty-paid environments, to serve domestic and international passengers and this is constantly renewed and updated to meet the expectations of newly emerging customer profiles. The Group has recently expanded into travel retail F&B – an evolution already existing in some of our current operations – thanks to the business combination Dufry-Autogrill. Additionally, all these physical retail and F&B concepts are supported by a comprehensive array of online services and platforms, which considerably increase the number of touchpoints along the traveler’s whole journey. Complemented with the extensive expertise in all operational and regulatory aspects, as well as the sustainability management systems provided by Avolta, concession partners receive a complete package to best operate their spaces in a profitable and sustainable way.
Attractive shopping experiences drive success and profitability.
Customer insights regularly collected through dedicated surveys, in-store technologies and by analyzing online engagement of our customers and social media, allows us to develop successful marketing initiatives tailored to meet the requirements of every single airport or any other shop environment. Our worldwide presence and the extensive intelligence of customer profiles are core competitive advantages and key drivers to increase sales and profitability, combined with our ongoing evolution of commercial offerings and recipes, shop & restaurant design and customer services.
Real Partnership is key for value creation
Over the many years we have been in the business, we have been advocating for the importance of close collaboration between concession partners and retailers as a base for optimizing sales. By joining forces with our concession partners, we can create attractive commercial spaces that maximize spend from the passengers’ arrival at the airport until their boarding – and if legislation allows – also for arrival duty-free and F&B after landing.
Fully integrated digital experience across shops and online channels.
Highly digitalized shops with stunning sense-of-place
Avolta has continued to evolve shop digitalization by offering new services and increasing the level of customer interaction by nationalities and languages, while at the same time still managing location specific shops with highly attractive sense-of-place designs. What started several years ago with the launch of digitalized New Generation Stores – operated in Buenos Aires (ARG), Amman (JOR), Malaga and Alicante (ESP), Madrid (ESP), Cancun T3 and T4 (MEX), Melbourne (AUS), Zurich (CH) and London Heathrow T3 (UK) – has evolved to the opening of the first Hudson Nonstop shops at several locations in the US, now number 10. These highly digitalized shops offer customers a complete contactless shopping experience by using the Amazon technology, including the newest innovation of the Amazon One palm recognition technology at Dallas Love Field Airport.
Highly digitalized shops – which include applications such as Reserve & Collect and above all the loyalty program Red By Dufry – are currently in operation in over 50 locations and the implementation of the advanced technology is typically done in the context of the periodic refurbishments or when a new shop is built. For a more detailed description of our digital strategy, please also refer to pages 54 and 55 of the Annual Report 2022.
Avolta's shop format concepts provide for a high degree of customization including the sense-of-place designs of the shops, which are an important aspect for our concession partners. Avolta knows how to perfectly match local requirements and specific customer profiles with efficient retail and F&B formats, to best serve travelers’ needs and to generate value for concession partners, brand partners and Avolta alike.
Adding new concessions and extending existing contracts
Concession contracts are the key business driver for travel retail and F&B operators, as they provide the right to sell their products and services at a given operation for a defined time period. In 2022, Avolta saw several new contracts wins and renewals of existing concession contracts, thus successfully strengthening the remaining average lifetime of its portfolio, which is currently close to 6 years.
Among the most important contract wins and extensions in 2022, highlights included the extension of the Heathrow concession contract for three years until 2029. Heathrow encompasses 24 of our shops across all terminals, is the largest single location operated by Avolta and annually serves over 80 million passengers (2019 level). In F&B new contracts were mainly the ones to Rome Fiumicino (Italy), Salt Lake City (USA), Bangalore (India) and Doha (Qatar) airports. In 2023, Avolta also won the tenders for a five-year duty-paid contract at Chongqing International Airport, China, as well as the Kempegowda International Airport Bengaluru (KIAB), India, with a new fifteen year contract to operate and manage duty-free outlets - while also operating F&B in the same locations.
Avolta was also awarded contract extensions with La Romana International Airport and Seaport in the Dominican Republic, at Ontario International Airport (CA, US), and at Salvador International Airport in Brazil. In addition, Avolta opened new Hudson Nonstop travel convenience stores in both Nashville International Airport and Dallas Fort Worth International Airport, adding to its other Hudson Nonstop locations in the US. Also in the United States, won a ten-year contract extension at Charleston International Airport in South Carolina. In 2022, Avolta was awarded also several F&B contract extensions mainly to American airports (Fort Myers, Miami and Honolulu) and to the Swedish Airport of Atlanta.
A detailed overview of concession wins and extensions is available on pages 28 -43 as part of the regional reviews of legacy Dufry's 2022 Annual Report. Please see page 74 of Autogrill's 2022 Annual Report for legacy Autogrill.
In average, every year Avolta renews existing contracts that generate between 10 % and 15 % of the Group total turnover, while at the same time adding new contracts.
Long-term concession portfolio.
Avolta's concession portfolio is highly diversified and well balanced across emerging and mature markets on all six continents. This considerably reduces risks exposure to impacts in single markets and operations. For the combined Avolta Group, there is no single concession contributing above low-single digit % of turnover.
Focusing on investment returns
Avolta traditionally follows the approach of financial discipline when evaluating new projects and opportunities. This methodology, successfully developed in the past, has again proven its value during the recently challenging business environment by contributing to optimize costs and adding flexibility to investments. Projects are analyzed individually on a commercial and financial basis. The many aspects of a project being put together include development potential and analyzing initial investment requirements, as well as the expected development of passenger numbers and profile perspectives. Through a strict evaluation of these criteria and our disciplined approach on returns, we ensure that our concession portfolio remains of the highest quality and that each concession offers attractive returns for the Group. This methodology is applied for all project types, irrespective of whether we participate in a tender process, engage in direct negotiations with concession owners or perform acquisitions. As part of “Destination 2027”, we have put active portfolio management at the core of our long-term strategy following the principle of full profitability evaluation for each concession contract and, at the appropriate times, renegotiation or exit from any concession that does not match our concession specific objectives. We continuously update and review our portfolio, including post-opening performances.
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