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WELCOME to The Moodie Report. In an industry saturated with media we’re surprised at the lack of fanfare regarding The Nuance Group’s new Indian joint venture with local retailer Shopper’s Stop. We think it’s one of the year’s big stories; a canny move by the Swiss retailer, one of many industry players striving for ascendancy in a fast-changing, perennially frustrating market with huge potential but equally commensurate risks. Foreign sojourns, when taken alone, have an unhappy knack of failing in the retail sector, which is notoriously dependent on local knowledge. Nuance is banking much on India but it knows it will be difficult to land any of the big prizes alone. Shopper’s Stop appears a good partner (we particularly like the name of its headquarters, Eureka Towers, which might also sum up the reaction of Nuance management when the partnership was conceived). Here’s Shopper’s Stop’s vision statement: “To be a global retailer in India and maintain number one position in the Indian market in the department store category.” Nuance’s equivalent could be: “To be a global retailer in India and maintain number one position in the world airport retail market.” It’s a promising marriage – and its announcement explains why Nuance so confidently advertised for a CEO in India through The Moodie Report last month. Our other major story comes from Russia, where local knowledge has proven crucial time and again in overcoming challenges. Last summer the Russian authorities intro- duced stringent domestic market labelling requirements for all imported products containing alcohol, including fragrances. Duty free gained a reprieve, but now it too must adopt the measures. Not for the first time the country’s travel retailers must react to irksome, difficult and often last-minute legislative hurdles. To do that successfully, international companies need strong connections. During a fleeting visit to St Petersburg last week I was honoured to attend the 51st birthday celebrations of Lenrianta Director General Anatoly Shashin. A remarkable man and a great character, he is the Russian counterpart (representing co-shareholder Pulkovo Aviation) to Aer Rianta International General Manager Liam Flood. Without Shashin and his organisation ARI would not be the force it is in the city, let alone as able as it is to cope with legislative threat. As Liam Flood and ARI Retail Operations Director Bill Maxwell toasted him warmly, the power of partnership was there for all to see. The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected] Page 1 THURSDAY 15 JUNE 2006 FAST, FACTUAL, FREE COLM MCLOUGHLIN: THE DUBAI DUTY FREE MAN- AGING DIRECTOR THIS WEEK ANNOUNCED A NEW DAILY SALES RECORD OF US$4.9 MILLION, POSTED ON THE RETAILER’S 22ND ANNIVERSARY. WHAT A PERFORMANCE – SOME +57% AHEAD OF THE PREVIOUS 24- HOUR RECORD. Liam Flood: ARI’s General Man- ager in St Petersburg last week opened the latest addition to Lenrianta’s excel- lent retail offer at Pulkovo Airport. Constant promo- tions and store renewal, allied to some first-rate shop floor staff and detailed analysis of sales by space, is driving impressive spends. If Russia ever lifts its visa require- ment for most European travellers watch this airport take off. Nigel Keal: The gardening leave is over for the long-time World Duty Free Head of Category for perfumes and cos- metics as he finally takes up his new post as Procure- ment Director at Dufry. With this signing, his native Spain thrashing Ukraine 4–0 in the World Cup and his adopted Switzerland sur- prising the French with a 0–0 draw, it’s been a great week for Dufry CEO Julián Diaz. “Our aim is ultimately to grow into the leading destination retailer in the Caribbean.” Eric de Jager, Managing Director of Tourvest’s Retail Merchandising Divi- sion, celebrates the 60% acquisition of Barbadian souvenir retailer Ganzee. The deal adds lustre to Tourvest’s impres- sive destination focus. PERSONALITIES OF THE WEEK THE MOODIE REPORT DATA ROOM – TRAVEL & TOURISM NEWS INSIDE THE MOODIE REPORT Russian labelling dilemma ... 5 Tourvest expands in UK and Caribbean ... 6 BAA/WDF spread their web ... 7 Desert Island Duty Free: Peter Sant ... 12 QUOTE OF THE WEEK INTERNATIONAL. Tourism traffic between countries has increased by between +12% and +35% following deregulation of their air service agreements, according to a new study on the Economic Impact of Air Service Liberalization. The report was conducted by research group InterVISTAS and was jointly sponsored by the Pacific Asia Travel Association, other global travel organisations and Boeing. The report predicts that liberalising a further 320 air routes currently not operating in an ‘Open Skies’ environment would generate traffic growth of almost +63%, compared to typical world traffic growth of +6–8%. In addition it would create US$490 billion in gross domestic product which, said the report, “corresponds to an economy almost the size of Brazil”.

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Ray Heath DesignWELCOME to The Moodie Report.
In an industry saturated with media we’re surprised at the lack of fanfare regarding The Nuance Group’s new Indian joint venture with local retailer Shopper’s Stop. We think it’s one of the year’s big stories; a canny move by the Swiss retailer, one of many industry players striving for ascendancy in a fast-changing, perennially frustrating market with huge potential but equally commensurate risks.
Foreign sojourns, when taken alone, have an unhappy knack of failing in the retail sector, which is notoriously dependent on local knowledge. Nuance is banking much on India but it knows it will be difficult to land any of the big prizes alone. Shopper’s Stop appears a good partner (we particularly like the name of its headquarters, Eureka Towers,
which might also sum up the reaction of Nuance management when the partnership was conceived).
Here’s Shopper’s Stop’s vision statement: “To be a global retailer in India and maintain number one position in the
Indian market in the department store category.” Nuance’s equivalent could be: “To be a global retailer in India and maintain number one position in the world airport retail market.” It’s a promising marriage – and its announcement explains why Nuance so confidently advertised for a CEO in India through The Moodie Report last month.
Our other major story comes from Russia, where local knowledge has proven crucial time and again in overcoming challenges. Last summer the Russian authorities intro- duced stringent domestic market labelling requirements for all imported products containing alcohol, including fragrances. Duty free gained a reprieve, but now it too must adopt the measures. Not for the first time the country’s travel retailers must react to irksome, difficult and often last-minute legislative hurdles.
To do that successfully, international companies need strong connections. During a fleeting visit to St Petersburg last week I was honoured to attend the 51st birthday celebrations of Lenrianta Director General Anatoly Shashin. A remarkable man and a great character, he is the Russian counterpart (representing co-shareholder Pulkovo Aviation) to Aer Rianta International General Manager Liam Flood. Without Shashin and his organisation ARI would not be the force it is in the city, let alone as able as it is to cope with legislative threat. As Liam Flood and ARI Retail Operations Director Bill Maxwell toasted him warmly, the power of partnership was there for all to see.
The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected] Page 1
THURSDAY 15 JUNE 2006
FAST, FACTUAL, FREE
COLM MCLOUGHLIN: THE DUBAI DUTY FREE MAN- AGING DIRECTOR THIS WEEK ANNOUNCED A NEW DAILY SALES RECORD OF US$4.9 MILLION, POSTED ON THE RETAILER’S 22ND ANNIVERSARY. WHAT A PERFORMANCE – SOME +57% AHEAD OF THE PREVIOUS 24- HOUR RECORD.
Liam Flood: ARI’s General Man- ager in St Petersburg last week opened the latest addition to Lenrianta’s excel- lent retail offer at Pulkovo Airport. Constant promo- tions and store renewal, allied to some first-rate shop floor staff and detailed analysis of sales by space, is driving impressive spends. If Russia ever lifts its visa require- ment for most European travellers watch this airport take off.
Nigel Keal: The gardening leave is over for the long-time World Duty Free Head of Category for perfumes and cos- metics as he finally takes up his new post as Procure- ment Director at Dufry. With this signing, his native Spain thrashing Ukraine 4–0 in the World Cup and his adopted Switzerland sur- prising the French with a 0–0 draw, it’s been a great week for Dufry CEO Julián Diaz.
“Our aim is ultimately to grow into the leading destination retailer in the Caribbean.” Eric de Jager, Managing Director of Tourvest’s Retail Merchandising Divi- sion, celebrates the 60% acquisition of Barbadian souvenir retailer Ganzee. The deal adds lustre to Tourvest’s impres- sive destination focus.
PERSONALITIES OF THE WEEK
THE MOODIE REPORT DATA ROOM – TRAVEL & TOURISM NEWS
INSIDE THE MOODIE REPORT Russian labelling dilemma ... 5 Tourvest expands in UK and Caribbean ... 6 BAA/WDF spread their web ... 7 Desert Island Duty Free: Peter Sant ... 12
QUOTE OF THE WEEK
INTERNATIONAL. Tourism traffic between countries has increased by between +12% and +35% following deregulation of their air service agreements, according to a new study on the Economic Impact of Air Service Liberalization. The report was conducted by research group InterVISTAS and was jointly sponsored by the Pacific Asia Travel Association, other global travel organisations and Boeing. The report predicts that liberalising a further 320 air routes currently not operating in an ‘Open Skies’ environment would generate traffic growth of almost +63%, compared to typical world traffic growth of +6–8%. In addition it would create US$490 billion in gross domestic product which, said the report, “corresponds to an economy almost the size of Brazil”.
US. Orlando and the state of Florida are expected to welcome more Japanese visitors in coming months.
Orlando is one of the dozen cities being promoted by the US Department of Commerce’s tourism promotion cam- paign in Japan that will begin next month, Travel Journal International (TJI) Online reported this week.
Last year Orlando was one of the few major cities in the US that saw fewer Japanese visitors, down -14.6% to 35,000. The region’s hurricanes were a major deterrent. Florida handled some 66,000 Japanese visitors, off -18.5%.
“We have fallen down on Japan market- ing,” said Bill Peeper, Director of the Orlando Convention and Visitors Bureau. However, marketing efforts with the federal government are expect- ed to help turn things around.
He said that aside from the popularity of Universal Studios Orlando, Disney World and other theme parks and attractions in the city, downtown Orlando is gaining as a new destination.
Thursday 15 June 2006The Moodie Report
Page 2The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]
THE MOODIE REPORT DATA ROOM – TRAFFIC NEWS
Selected traffic numbers reported in the past week
Country Airline/Airport Apr ’06 vs Apr ’05 (%)
Country Airline/Airport May ’06 vs May ’05 (%)
Germany Hamburg Airport +29.7 (international) Ireland Dublin Airport +23.9 (total pax) Japan JAL Group -6..2 (international) Japan Osaka Kansai International Airport +1.0 (international) Spain AENA (all airports) +19.7 (international) Spain Madrid Barajas Airport +25.0 (international) Thailand Bangkok Don Muang Int. Airport +12.0 (international) US AirTran Airways +33.2 (total pax) US Charlotte/Douglas Int. Airport +15.9 (international) US Orlando International Airport +2.1 (international) US Pittsburgh International Airport -29.2 (international) US Portland International Airport +9.6 (international) US Seattle-Tacoma -0.2 (international)
Canada Ottawa International Airport -3.5 (international) China China Southern Airlines +7.2 (total pax) Croatia Dubrovnik Airport -0.3 (total pax) Denmark Copenhagen Kastrup Airport +6.1 (international) Finland Finnair Group (three airlines) +6.5 (total pax) Finland Helsinki Vantaa Airport +11.5 (international) France Nice Côte d’Azur Airport +4.1 (international) Iceland Keflavik Leifur Eiríksson Int. Airport +14.9 (total pax) New Zealand Christchurch International Airport +2.0 (international)
Note: ‘total pax’ may include domestic traffic Source: ©The Moodie Report
DENMARK. Passenger numbers at Copenhagen Airport rose by 119,780 or +7% in May over the same month last year. Scheduled international passengers increased by +7.4% or 108,329, while interna- tional charter numbers decreased by 12,771 (-11.5%). Consequently, the total number of international passengers increased by 95,430 (+6.1%). Locally departing passengers increased by 61,316 (+10.7%) while transfer/transit passengers decreased by 3,241 (-1.1%).
EUROPE. Overall passenger traffic at European airports increased by +10.3% year-on-year in April, according to ACI Europe figures released this week. The comparative numbers were boosted by Easter falling in April this year; in 2005 the holiday fell in March. Passenger figures for April once again indicate that Group 4 airports (airports handling less than 5 million passengers per year) posted the largest increase in traffic with an average rise of +15.1% year-on-year, and an average increase of +27.8% when compared with April 2004.
Airports welcoming more than 25 million passengers per year (Group 1), airports with between 10 and 25 million passengers (Group 2) and airports handling between 5 and 10 million passengers (Group 3) reported average increases of +8.1%, +11.8% and +8.7% respectively when compared with April 2005. The same comparison of April 2006 with April 2004 demonstrates average increases of +12.1%, +16.5% and +14.3% respectively.
Examples of airports that experienced the highest increase in passenger traffic per group, when comparing March 2006 with March 2005, include: – Group 1 airports: Barcelona (+17.5%),
Madrid (+14.7%) and London Gatwick (12.4%)
– Group 2 airports: Lisbon (+24.9%), Dublin (+23.9%) and Milan Malpensa (+18.3%)
– Group 3 airports: Lanzarote (+18.9%), Gran Canaria (+17.9%) and Warsaw (+15.5%)
– Group 4 airports: Moscow Vnukovo (+48.9%), Rome Ciampino (+47.4%) and Liege (+46.2%).
GERMANY. Frankfurt Airport this week reported its busiest May on record. The total number of passengers using the country’s hub airport increased by +2.6% year-on-year to 4,639,416.
Western Europe and Northern Europe passenger traffic grew noticeably by +6.5% and +12.1% respectively year- on-year. The Asian market increased by +7.5%, with sharp and encouraging
growth recorded; destinations in Japan (up +11.2%) and China (up +16.7%) rose particularly fast.
6,477,826 passengers used parent company Fraport Group’s airports in May, up +2.9% year-on-year. Some 325,163 pas- sengers used Frankfurt-Hahn Airport, a +16.6% jump. Hannover Airport registered a -1.1% dip to 501,831 passengers and Saarbrücken Airport a -12.6% drop to 42,391 passengers.
At Turkey’s Antalya Airport redistribution of passenger flows across the two terminals, effective since late April, showed up in traffic results for the first time in May. “Capacity utilisation of Fraport’s Antalya terminal improved noticeably in May and will continue strongly during the coming months,” Fraport said – good news for its duty free retailer The Nuance Group. The terminal served 501,248 passengers, up +3.2%. Passenger traffic at Peru’s Lima Airport rose by +3.8% to 468,611 passengers in May.
JAPAN. The number of Japanese travellers going abroad in April fell by 2.4% year-on-year to 1,298,000, the lowest monthly tally in 2006. But the dip may be attributable to a change in holiday phasing, said Travel Journal International (TJI) Online, the country’s leading travel publication, which described the outbound market as “a roller- coaster ride for overseas travel”.
Late April marked the start of Golden Week travel in Japan, one of the most important travel periods. One reason for the April fall, TJI said, was the shift in travel during Golden Week from April to May to take advantage of the better combination of holidays and weekends.
For the first four months of 2006 the number of Japanese going abroad has fallen to 5,608,215, down -1.5% compared to a year ago. The government predicts that outbound travel in 2006 will top 18 million.
Thursday 15 June 2006The Moodie Report
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Selected traffic numbers reported in the past week (continued)
Country Airline/Airport May ’06 vs May ’05 (%)
Note: ‘total pax’ may include domestic traffic Source: ©The Moodie Report
Norway Oslo Gardermoen Airport +16.6 (international) Portugal Lisbon Airport +9.2 (total pax) Slovakia SkyEurope +44.2 (total pax) South Korea Seoul Incheon Airport +8.0 (international) Spain Iberia +7.8 (international) Spain Spanair +25.4 (total pax) Sweden LFV (19 airports) +12.3 (international) Sweden SAS Scandinavian Airlines +3.3 (total pax) Switzerland Geneva Airport +6.9 (total pax) Switzerland Swiss International Air Lines +9.7 (total pax) Switzerland Zürich Airport +8.6 (total pax) UK BAA (seven airports) +3.6 (total pax) UK Aberdeen Airport +13.1 (total pax) UK easyJet +15.2 (total pax) UK Edinburgh Airport +1.5 (total pax) UK Glasgow Airport -1.9 (total pax) UK London Gatwick Airport +4.3 (total pax) UK London Heathrow Airport +1.4 (total pax) UK London Stansted Airport +11.3 (total pax) UK Southampton Airport +2.9 (total pax) US jetBlue Airways +17.8 (total pax) US United Airlines +5.7 (total pax)
Thursday 15 June 2006The Moodie Report
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THE MOODIE REPORT RETAIL NEWS
FRANCE. Aelia has unveiled plans for its recently-won six-year retail contract at the new low-cost terminal, known as MP2, at Marseille Provence Airport. Aelia Director of Regional Airports Pascal Le Droff told The Moodie Report: “The business will probably start in September. The shop is to be 286sq m and will include the traditional alcohol, tobacco, wine and Champagne, perfumes and cosmetics activities.”
And there will be other new concepts. These include sunglasses and luggage offers, plus single-price proposition Bijoux Terner and L’Occitane. Le Droff said: “The low-cost passengers at Marseille will therefore be able to find a wide range of products adapted to their specific profile.” The new contract adds strength to Aelia’s presence in Marseille. It already has two shops in Terminal One, one of 570sq m in Hall 1 and the other of 78sq m in Hall 3. Aelia replaced Dufry as the main travel retailer at Marseille in February, after winning a tender for the business last December.
INDIA. The Nuance Group is teaming up with one of India’s leading retailers – Shopper’s Stop Ltd, part of the K Raheja Corp (Chandru L Raheja Group) – in a joint venture designed to enter the Indian airport retail market. The partnership will be equally owned by both partners and plans to offer a comprehensive range of services, from operat- ing master concessions to distribution of international brands. The Memorandum of Understanding was signed by the companies’ representatives in Hyderabad last week.
Shopper’s Stop has built up a strong competence in department stores and operates 20 Shopper’s Stop stores all over India, which carry a mix of both national and international brands. The company has been instrumental in bringing to India some of the best names in fashion and cosmetics. It has a national presence and is the country’s largest depart- ment store chain.
Nuance said: “India is one of the most promising markets as far as airport development and marketing is concerned. This process is further accelerated by the upcoming privatisation of several major airports across the country as well as by the fast expansion of various airline companies in the country. The Nuance Group has defined India as one of its key strategic expansion areas.
“Teaming up in a 50:50 joint venture, the two companies offer a perfect combination in expertise of international airport retailing and retailing to the Indian customer. The objective of the joint venture is to offer a wide range of services for Indian airport retail both on the duty free side and the domestic side as per applicable regulations, from the operation of master concessions, duty free and food & beverage concessions to the franchise of concepts developed by Nuance or third parties as well as distribution of international brands of wine and liquor to hotels and other wholesalers as may be permitted by Foreign Direct Investment Regulations.”
The Nuance Group Executive Vice President Business Development & Strategic Marketing Carlo Bernasconi commented: “The signing of this MoU with Shopper’s Stop Ltd is a first milestone for The Nuance Group’s entry into the dynamic growth market India. We are convinced that together we will be able to create a truly unique offer perfectly tailored to the needs of the customers at Indian airports.”
Shopper’s Stop Managing Director BS Nagesh added: “We believe with this partnership we will extend our unique shopping experience to the airports and touch the lives of millions of travellers. This will also help us create a larger footprint across the country.”
Interest in India is at an all-time high in the travel retail industry thanks to a flurry of contract tenders allied to airport privatisations due to take place over the short and medium term. Earlier this month State Minis- ter for Civil Aviation Praful Patel said that the country’s airline passen- ger traffic was set to increase by at least +25% on an annual compound growth basis over the next decade.
INDIA. The Indian duty free industry was dealt another blow last week when the Bombay High Court ruled that the India Tourism Development Corp (ITDC) must obtain a licence for the sale of foreign
Thursday 15 June 2006The Moodie Report
Page 5The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]
liquor at Chhatrapati Shivaji International Airport in Mumbai. The judge also ruled that ITDC must pay duties for liquor sold at the store from 2001. The court case arose after ITDC filed a petition against letters sent by the Bombay State Government in November 2001 and April 2002 instructing the state-owned retailer to pay excise duty on the sale of liquor. An industry source said that the development was “highly detrimental to the growth and prosperity of the Indian duty free industry”, especially since liquor is such a key revenue-generating category.
ITDC is not alone in being slapped with tax demands. Flemingo is battling against the State of Kerala’s demands for sales taxes on duty free turnover at the company’s Trivandrum and Calicut airport stores. And at Chennai Airport the company is being asked by the State of Tamil Nadu to pay sales taxes of INR52.7 million (US$1.2 million).
POLAND. In late breaking news Inflight Service has expanded its operations in Poland with the opening of a shop at Wroclaw Copernicus Airport. The 40sq m fragrances and cosmetics outlet opened to passengers last week, with an official opening planned for next Monday. The airport caters to a rapidly growing number of low-cost passengers. Inflight Service Managing Director Peter Candell told The Moodie Report: “It’s a small shop but the location has a lot of potential. It’s a very interesting and dynamic region.” See www.TheMoodieReport.com for full story
RUSSIA. Lenrianta, the Aer Rianta International and Pulkovo Aviation joint venture in St Petersburg, opened a new duty free store at St Petersburg-Pulkovo Airport last Friday. The 149.5sq m store is located in the international section of the sprawling Terminal One, complementing the main existing store. The international area serves CIS routes and a number of charter flights to destinations such as Turkey, Greece, Israel, Cyprus and Dubai.
Lenrianta also operates the main duty free store in T2, plus a number of smaller duty free and duty paid stores across both terminals. The new outlet, located upstairs, will bolster the main T1 store, which is currently dominated by a strong perfumes and cosmetics offer as well as a stand-alone Swarovski unit and limited amounts of liquor, confec- tionery, tobacco and other items. The new store will sell all items except fragrances & cosmetics – and it has good prospects, General Manager Liam Flood told The Moodie Report. “This terminal has real potential to grow,” he said. “The charter business is growing and the CIS business is growing.” Note: Lenrianta is the subject of a major profile by The Moodie Report.com, coming soon.
RUSSIA. In other Russian news, travel retailers are preparing for the implementation of changes to product labelling that have far-reaching implications for the business. From the summer of 2005 an exemption for duty free products from revised domestic market labelling requirements for items containing alcohol was removed. In theory that meant that all duty free products containing alcohol – including fragrances – must contain special back labels on the bottle or pack. These include a range of consumer safeguard information in Russian script, including country of origin, ingredi- ents, health-related details, date of manufacture and sell-by date.
Duty free retailers across Russia are formulating different responses to the challenge. Aer Rianta International, for example, is asking its suppliers to apply labels to all bottles or packaging as appropriate in advance. It would like to see a 1 July implementation but acknowledges there cannot be a hard and fast date for such complex changes. Gebr Heinemann told The Moodie Report it is planning to produce and apply the labels itself but is not working to a specific cut-off point. Head of CIS Sales Department Pierre Viarnaud said: “The law passed last summer now applies to duty free and will be applied by us as soon as possible but with no defined deadline.”
Liam Flood, General Manager of Lenrianta, Aer Rianta International’s joint venture in St Petersburg, told The Moodie Report: “Long term we would see it as the suppliers’ responsibility to produce the labels for duty free. Many suppliers are already doing this for the domestic Russian market and the information provided on these labels is essen- tially the same. However, it devolves on us to tell all our suppliers the precise labelling requirements to comply with the legislation.
“While we are working to a date of 1 July, it is doubtful whether all suppliers will be ready by that date. We’ll possibly have to rely on the authorities to give us some leeway.” He said some suppliers, such as Pernod Ricard and Diageo, are close to being able to produce the duty free labels on behalf of retailers.
SOUTH AFRICA/BARBADOS. Tourvest has acquired a 60% interest in Ganzee, a leading souvenir store operator in Barbados, for R13 million (US$2 million), subject to regulatory approval. Tourvest, a powerful and diverse South African duty free-to-tour group company, said this is the first step in the planned international expansion of its destination retail business.
Ganzee (Caribbean slang for T-shirt) has 13 stores in Barbados, including outlets at the cruise ship terminal and the international airport, as well as two outlets in Granada and one in Tortolla. It was previously owned by the Cave Shepherd group, one of the largest travel and duty free retailers in the Caribbean, which remains a shareholder and will play an active part in the development Tourvest plans for Ganzee.
Eric de Jager, Managing Director of Tourvest’s Retail Merchandising Division, said that Tourvest was acquiring not just a successful business in Barbados but a “beachhead into the entire Caribbean”, one of the world’s premier tourism destinations. The region attracted 36.5 million visitors in 2005, many times the South African figure of 7 million for the year, Tourvest said.
“We see the Caribbean as a single market in terms of the retail potential opportunity,” de Jager said. “Ganzee has a good infrastructure with effective logistics, IT, personnel and financial management, and this will serve as a solid base for the rapid expansion we have in mind. Our aim is ultimately to grow into the leading destination retailer in the Caribbean.”
De Jager noted that Tourvest was already Southern Africa’s dominant destination retailer, with 60 specialist stores located at all key tourism hubs from Cape Point to the Victoria Falls. The Caribbean is a major tourist shopping destination, but the current destination merchandise offering is largely undifferentiated, with most of it being sourced from the same US wholesaler, he said. Tourvest will offer consumers a wider choice and provide those who visit a number of islands with differentiated products. “Another area in which we can add considerable value to Ganzee is in the development of distinctively attractive store design themes,” de Jager said.
“Our first priorities will be to introduce new ranges of merchandise – with a strong emphasis on the current interna- tional trend to lifestyle gifting and homewares – into the existing stores and to develop an expansion strategy in con- junction with our partners Cave Shepherd. At this stage our intention is to grow the store network from 16 to 35 within five years.”
Editor’s note: Elsewhere Tourvest is one of five companies believed to be bidding for the Singapore Airlines duty free concession. The carrier has not made a final decision whether to outsource but, as reported, The Moodie Report believes five companies – Tourvest, King Power Traveler, Inflight Sales Group, Nuance-Watson (Singapore) and DFASS – are being considered.
UAE. Dubai Duty Free has chosen Oracle Retail Warehouse Manage- ment System to streamline its back office IT functions and the movement of merchandise and data. The system will be deployed in the 27,000sq m semi-automated Distribution Centre being built by the retailer to sup- port its growing retail business at Dubai International Airport.
Dubai Duty Free said the move would support its drive towards this year’s target of US$670 million in sales, a projected rise of +13.5% on 2005 figures. Dubai Duty Free Managing Director Colm McLoughlin said: “Delivering uninterrupted growth has been an important part of our success so far, and using the power of technology has been a key element of this success.”
The Oracle Retail Warehouse Management System coordinates the movement of goods through the warehouse and ensures supply issues are dealt with before they result in gaps on the shelves. “With over 20,000 unique items of merchandise, the new system will be critical in accelerating and optimising the flow of goods from store to shelf, reducing lead times, freeing up people to focus on other areas, and ultimately eliminating lost sales due to out-of-stock situations,” said Deputy Managing Director George Horan.
Thursday 15 June 2006The Moodie Report
Page 6The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]
Thursday 15 June 2006The Moodie Report
Page 7The Moodie Report© is published by Moodie International. All rights reserved. Please send any comments or stories to [email protected]
THE MOODIE REPORT TENDER & CONTRACT NEWS
RUSSIA. Sheremetyevo International Airport Company has called a tender for new and additional space at Sheremetyevo Airport Terminal One. Bids close on 19 June. The space is in a new terminal area, and will provide an additional retail offer to that of the three existing duty free operations run by Aer Rianta International joint venture Aerofirst (trading as Moscow Duty Free), Regstaer and Port Alliance, the latter two supplied by Gebr Heinemann. Aer Rianta International Retail Operations Director Bill Maxwell confirmed to The Moodie Report that Aerofirst would be bidding for the new business.
Sheremetyevo was opened in 1959 and T1 opened in 1964. It serves international and domestic routes. Sheremetyevo 2 houses the main duty free operations, including the pioneering Moscow Duty Free store which opened to great acclaim in the late 1980s. The construction of the long-awaited Sheremetyevo 3 terminal is set for completion by 2007. No final decision has yet been reached on duty free operations there, though Aerofirst is certain to have a strong position given that one of its shareholders, Aeroflot, will control the new facility.
UK. Tourvest Duty Free has added BMed Airlines to its list of inflight sales concessions. BMed operates out of Lon- don Heathrow Airport and is a franchise partner to British Airways. The planned launch date for the first programme is believed to be 1 October. More details next week.
UK. Alpha Airports Group has significantly enhanced its World News offer at London Heathrow Airport, increasing floor space in its Terminal Three store by more than +20%. The new-look store, opened on 19 May following a complete redesign, has expanded from 2,291sq ft to 2,790sq ft. In partnership with airport owner BAA, £400,000 has been invested into refreshing the look and feel of the store and improving the shopping experience for passengers.
A major development has been the introduction of ‘World News Airplay’, an instore plasma screen network which runs continuous promotional messages and flight departure information on screens positioned in key locations throughout the store, including the entrance, cash desk and shelving areas.
The store’s core category ranges of books and newspapers/magazines have benefited from redesigned shelving and a simplified layout, allowing increased stockholding capacity. Almost 30% of the store is now dedicated to books; the additional floor space has also enabled World News to offer a more comprehensive product range including souvenirs, travel accessories, stationery and greeting cards.
Tills now operate with an electronic call forward system which, in conjunction with the store’s newly installed IRIS EPOS system, is expected to increase customer through-put speed significantly. For full story see www.TheMoodieReport.com
UK. BAA Retail/World Duty Free has turned to British celebrities in a new summer online campaign to promote airport shopping. Three films went live this week on www.baa.com/shopping featuring British celebrities. Readers can view all of them at www.TheMoodieReport.com – go to ‘Features’.
“The films are designed to be an engaging visual experience around airport shopping, encouraging customers to become (a) inspired (b) intrigued and (c) more likely to spend money airside pre-travel,” said BAA Marketing Commu- nications Manager Mark Aldridge. Among the celebrities taking part in the films are Colin Mcallister and Justin Ryan, who are the faces of UK television’s Channel Five and star in popular TV programme How Not To Decorate. The duo were selected for their style, enthusiasm and bantering approach, according to BAA.
Other celebrities endorsing airport shopping include supermodel Jodie Kidd and TV presenter Gabby Logan. Each film will carry the BAA logo on the opening and closing frames and throughout the content both the BAA and World Duty Free brands will be prominent.
In addition supporting advertorials, webchats, radio interviews and online media are designed to drive people to www.baa.com to explore all services, directing them to the shopping pages to download each film. The discount vouch- ers available on the site will help promote the World Duty Free brand, according to Aldridge.
“We are supporting the launch date with radio and webchat broadcasts. Colin and Justin will be syndicated to over 120 radio stations and ten key websites for webchats and interviews,” said Aldridge. “The webchats and online interviews can remain on a website for up to a month with pre-promotion commencing up to a week before.”
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US. The State of Hawaii is preparing to re-bid the DFS-operated Statewide In-Bond Concession for Hawaii’s air- ports. The retailer this month began a one-year extension of its current contract, which will take it to 31 May 2007. A spokesman for the State of Hawaii Department of Transportation Airports Division told The Moodie Report: “The State of Hawaii exercised its rights under the holdover provision of the Statewide In-Bond Concession Agreement to extend the term of that contract for a single year.
“The State felt this was appropriate as DFS opened its new 10,000sq ft main store at Honolulu Airport in January 2005 and to offer a contract for bid six months or so later would not give potential bidders much of a track record to evaluate the impact of the new store. The holdover provision ends May 31, 2007. We are hoping to have documents ready shortly for a new contract to begin on 1 June 2007.” In 2003, when its contract was re-tendered, DFS struck a 32- month deal with the State of Hawaii after it was the sole bidder for the business.
Gross sales for calendar year 2005 under the duty free concession were US$36.6 million on-airport and US$149.4 million off-airport. DFS has a separate master retail contract at Honolulu International Airport, which it extended for three years in March, taking it to March 2009. Under the new three-year deal DFS will pay a monthly guarantee of US$829,166 or 20% of gross receipts.
At Jorge Chavez International Airport, Lima, Peru
Lima Airport Partners, one of the world’s most ambitious airport companies, is seeking brands and commercial partners to maximise the revenue opportunities from this pioneering concept.
For full details see the exciting story at www.TheMoodieReport.com; or contact Jan Laufs at [email protected]
ANNOUNCING A NEW CONCEPT IN AIRPORT VIP SERVICE LOUNGES
THE VIP CLUB
THE MOODIE REPORT FOOD & BEVERAGE AND OTHER COMMERCIAL REVENUES
CANADA. Autogrill Group, through its US subsidiary HMSHost Corporation, has agreed to buy the airport operations arm of Cara, a leading Canadian food & beverage services group. The company will buy Cara’s Airport Terminal Restaurant Division (ATR), which operates travel concessions in North America, at an enterprise value of about C$62 million (US$55 million) – between six and seven times EBITDA. Closure of the deal, subject to anti-trust approval, is expected in the second half of 2006.
Under the terms of the agreement HMSHost (through its subsidiary, Host International of Canada) will acquire ATR contracts at nine airports: Calgary, Edmonton, Kamloops, Montréal, Ottawa, Saskatoon, Toronto, Vancouver and Winnipeg. The ATR contracts, which cover 90 retail outlets, generate C$74 million (US$66 million) in sales and more
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THE MOODIE REPORT GENERAL NEWS
than C$9 million (US$8 million) in EBITDA. The main licensed brands include Sbarro’s, ToAst!, Second Cup and Tim Horton’s. The best known proprietary brands include Kelsey’s, Milestone’s, Swiss Chalet and Harvey’s. HMSHost will enter three of Canada’s main airports – Ottawa, Edmonton and Winnipeg – which it said would generate “powerful synergy” with its existing operations in Calgary, Montréal, Toronto and Vancouver, bringing the total of its Canadian airports to ten.
With around 90 million passengers in 2005, 40% of them on international flights, Canadian airports are forecasting annual traffic increases in the medium to long term (until 2018) of +3–4%, in line with GDP growth. The biggest increases are expected in the three main airports of Toronto, Vancouver and Montréal.
PERU. Lima Airport Partners (LAP) and its lounge operator Inversiones FISA are launching a unique and ambitious VIP Service Lounge called The VIP Club at Lima’s Jorge Chavez International Airport (JCIA) – and it has repeated a call for commercial partners through The Moodie Report.
Jorge Chavez International is one of South America’s fastest-growing and most ambitious airports. It handled almost 5.7 million passengers last year, of which nearly 3.3 million were international. This year has seen an acceleration of recent growth with +5.9% and 5.2% year-on-year increases for international passengers in January and February respectively.
Lima Airport Partners Commercial Manager Jan Laufs told The Moodie Report: “We are looking for a dynamic partnership with brands who would like to use the lounge platform to promote their products. The presentation form can be via fixed materials but preferably through events – tastings, happenings etc. And of course there is the possibility to have cross promotions with existing operators selling the brand, such as duty free retailer Aldeasa or food & bever- age and destination merchandise specialist Cafe Britt.” For details type in ‘Lima’ into the Advanced Search Engine at www.TheMoodieReport.com or e-mail Jan Laufs at [email protected]
UK. SSP has opened a new real food company outlet at Newcastle International Airport. It serves a wide range of foods and drinks, with an emphasis on freshness. An on-site bakery prepares freshly baked cakes and muffins, the deli counter serves fresh salads and sandwiches, freshly cooked meat is on offer at the carvery, while a juice bar, serving freshly squeezed orange, adds a touch of theatre. A chocolate fountain for dipping fruit kebabs or croissants is described as “a must for chocoholics”. The hot drinks section is situated after the till point, so customers can choose a hot drink at their leisure, and refills are free.
The food service areas are split into six instantly identifiable sections to make selection easier and to improve speed of service: n grab.me – a selection of ready prepared sandwiches, salads, drinks and snacks for customers looking to ‘grab and go’ n bake.me – a selection of freshly baked cakes, pastries and muffins nmake.me – a deli bar with a selection of fresh salads and sandwiches n hot, hot, hot – hot foods including a traditional cooked breakfast, freshly cooked meats and beer battered cod served
with potato wedges n juice.me – the theatre of the real food company where staff squeeze fresh orange juice and smoothies for customers n cork.me – a selection of wines from around the world
Newcastle International Airport Head of Commercial Nicola Boulter said: “We are delighted with the arrival of the real food company, it has brought the concept of fresh, high quality food into a new league at the airport’s departure lounge.”
FINLAND/ESTONIA. The Tallink Group has reached an agreement with Sea Containers Ltd to buy the stock of Silja Line for €450 million and 5 million Tallink shares. Tallink Board Chairman Enn Pant said that Tallink and Silja would together create the leading shipping company in the Baltic Sea area.
Tallink’s strength lies in routes between Estonia and Finland, Estonia and Sweden and Latvia and Sweden. Silja has a leading position between Finland and Sweden. The integrated company will be the leader in the cruise and passenger travel market on routes between Estonia, Finland, Germany, Latvia and Sweden.
Travel onboard Tallink, Superfast and Silja ferries will continue as usual. There are no changes planned in schedules or routes. The vessels will sail under their current flags. The transaction will not include the SuperSeaCat fast ferry services between Helsinki and Tallinn, which will continue to be operated by Sea Containers.
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Silja has struggled to replace the portion of duty free sales lost through intra-EU duty free abolition. Retail revenue has been hit by a drop in revenue from the key spirits sector in particular. Inflight Service operates a purchasing pool that serves both ferry companies with travel retail goods.
Tallink operates 15 vessels in the Baltic Sea region. The company carried 3.2 million passengers in the financial year ending August 2005. Silja, including SeaWind Line, operates six vessels between Finland and Sweden. The passenger volume on these routes was 3.4 million last year.
HONG KONG. Search Investment Group, owned by DFS Group co-founder Robert Miller, said last week that it plans to raise a US$200 million fund to invest in Asian private equity funds. Miller still owns 38.75% of DFS, the world’s leading duty free retailer. Search Investment will put in US$40 million to the new fund and raise the rest from institutions and endowments, Dow Jones reported.
Miller, who founded DFS – then Duty Free Shoppers – with Charles Feeney in the early 1960s, established the Search Investment Group in the early 1970s. It seeks “superior, risk-adjusted returns in alternative strategy investments, private equity funds, special situations and direct investments”.
HONG KONG. Cathay Pacific Airways is to pay US$1.58 billion to buy rival Hong Kong carrier Dragonair and double its stake in Air China, adding 21 routes in the world’s second-largest aviation market. Asia’s second most prof- itable airline will buy the 82% stake in Dragonair it does not already own for HK$8.22 billion (US$1.1 billion) in cash and stock and pay HK$4.07 billion to increase its Air China stake to 20%, the airlines said. Air China will pay HK$5.39 billion for 10.2% of Cathay Pacific.
Cathay will gain access to cities such as Shanghai and Tianjin, making it the dominant non-Mainland controlled airline in China. Cathay Chairman Christopher Pratt told reporters in Hong Kong: “We badly wanted a significant presence in mainland China.” Dragonair’s network “fits very, very well,” he said.
Air China, based in Beijing, is facing more competition as China Southern sets up a hub in the Chinese capital. British Airways is among international carriers that are adding flights to China as the country opens up its aviation market. The World Tourism Organization forecasts that 100 million Chinese people will travel abroad each year by 2020, up from about 20.2 million in 2003.
PEOPLE, EVENTS & NOTICESTHE MOODIE REPORT
AUSTRALIA. Bacardi Lion, the premium spirits joint venture between Bacardi Martini and Lion Nathan in Australia, has announced a number of senior appointments. Fernando Navarro has joined the company as Senior Brand Manager, and Suzie MacDermott replaces Trent Russell as Marketing Manager. Russell has started a new role as Marketing Director of Bacardi Martini, China, based in Shanghai.
FRANCE. L’Oréal has announced two important new appointments within the L’Oréal Luxury Products Division. Odile Roujol has been appointed to head Lancôme International, replacing Marc Dubrule, who is now in charge of the newly-created Strategic Development Department.
Roujol joined Lancôme in 1996. Appointed General Manager of Lancôme France in 2001 and Deputy General Manag- er of Lancôme USA in 2003, she has gained operational business experience in two highly competitive markets. Since early 2005, she has been Deputy General Manager of Lancôme International to Dubrule.
The Strategic Development Department, part of the Luxury Products Division, will have three main tasks: prospective, potential acquisitions strategy and advice and assistance to the company’s two Asian brands, Shu Uemura and Yue Sai. Dubrule joined the L’Oréal group in 1986. From 1997 to 2000, he ran the L’Oréal Luxury Products Division in South Korea before taking over the General Management of Biotherm International and that of Lancôme International since May 2002.
HONG KONG. Dr David Pang, Chief Executive of Airport Authority Hong Kong, is to leave the role after his second three-year term expires. He has opted not to seek a renewal of his contract. Airport Authority Hong Kong Chairman Dr Victor Fung is to head a committee charged with a global search for a replacement. Fung said: “David has built a solid process-driven organisation, which has led Hong Kong International Airport (HKIA) to consistently improve its financial and operational performance.
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“Under the guidance of the Board and with the support of the management team, David has re-defined HKIA’s busi- ness, market and product, creating a very strong foundation for our airport to achieve long-term sustainable growth.” Pang was the driving force behind HKIA’s recent development – including the new SkyPlaza complex – and a key influence on the commercial growth of the airport. During his tenure he made it a priority to grow the non-aeronauti- cal portion of HKIA’s revenues.
INTERNATIONAL. The Moodie Report.com has smashed its previous weekly and monthly visitor traffic figures. In May a record 87,994 page views (the number of individual pages looked at on the site by the worldwide readership) were recorded, an extraordinary 12,710 higher than the previous high set in March 2006. Visits also reached an all-time monthly high of 22,539 as did unique users (8,113).
The week commencing 5 June was another record-breaker. Page views hit a record 20,817 in the seven day period, beating the previous high of 20,398 set in April. Visits reached 5,291 and total users were 2,702. All The Moodie Report.com’s visitor traffic figures are independently produced and available to any business partner.
INTERNATIONAL. The airport industry’s most important commercial revenues conference, the ACI Business & Trinity Forum, a pioneering partnership between Airports Council International (World) and The Moodie Report, will he held in Dubai on 11–13 March, 2007. The event will include film, workshops and a Gala Dinner in which the Airport Service Quality (formerly AETRA) awards will be presented. An extraordinary and ambitious programme – “not just another conference” – is promised. Please reserve the dates now.
INTERNATIONAL. Time is running out to vote in the Frontier Awards, the travel retail industry’s own ‘Oscars’. For the first time this year, the organisers, Frontier magazine, are using a popular vote to draw up a shortlist for the top award, the Airport/Land-Based Retailer of the Year. Voting is being conducted through a link on the home page of The Moodie Report.com
The merits of the shortlist will then be considered by a high-quality jury consisting of: Luxottica Group Duty Free Manager Martha Rosas; Korean Air Vice President Inflight Sales Division Heather Cho; Aldeasa Jordan CEO Pedro Castro; Altadis Global Travel Retail Manager Jean-Philippe Aucher; William Grant & Sons Duty Free Director Ylva Binder; and The Nuance Group Vice-President Business Development Carlo Bernasconi. The voting deadline is 23 June and anyone in the industry is entitled to a single vote, selecting their top three operations.
SOUTH AMERICA. ASUTIL, the South American Duty Free Association, has unveiled a strong programme for its annual conference due to take place in Chile on 6–9 September.
Highlights include the results of a specially-commissioned study of perfumes and cosmetics consumers across Argentina, Brazil, Chile and Uruguay. Kenzo, P&G, Estée Lauder, Essence Corp and Parbel will each offer their preliminary conclusions on the findings. José Luis Hermoso, Senior Analyst of London-based International Wine & Spirit Record, will examine the future of the category in Latin America domestic and duty free markets. InterBaires President and CEO Enrique Urioste will examine the walkthrough duty free store concept and ask where it is headed next.
DUBAI, UNITED ARAB EMIRATES 11-13 MARCH 2007
The world’s most ambitous airport commercial revenues conference
Top representatives from the ‘Trinity’ - airports, concessionaires, brands



For details please contact ACI’s Andreas Schimm at [email protected] or The Moodie Report’s
Martin Moodie at [email protected]
The Moodie Report: Nationality of visitors to website May 2006
Rank Country Rank Country
1 UK 2 US 3 France 4 Switzerland 5 Australia 6 Spain 7 Singapore 8 Hong Kong 9 Canada 10 Germany
11 UAE 12 Netherlands 13 Ireland 14 Japan 15 Italy 16 Belgium 17 India 18 South Korea 19 Sweden 20 Cyprus
Source: ©The Moodie Report
The Moodie Report: Website traffic May 2003–May 2006
Statistic May ’03 May ’04 May ’05 May ’06
Page views 13,636 36,714 58,880 87,994 Visits 2,645 6,828 14,501 22,539 Unique users 1,260 2,891 5,063 8,113
Source: ©The Moodie Report
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DESERT ISLAND DUTY FREETHE MOODIE REPORT
To set the scene: The Moodie Report is by definition a ‘serious’ read – but in an industry full of personalities it’s nice also to sometimes touch on the human and lighter sides of the business. So in the spirit of the popular UK radio programme ‘Desert Island Discs’ in which interviewees select the music they would take with them to that island, The Moodie Report has unveiled its own ver- sion as our signature sign-off to each issue. But instead of music, our guests have to choose one item in various duty free categories.
This week’s island castaway is Rémy Cointreau Global Travel Retail Director Peter Sant, a highly popular figure never usually short of company. But on the island he may be – once again, though, the duty free industry comes to the rescue… Accessory: Sony portable TV to watch England lose the 2006 World Cup and win the real one [rugby, and no comment – Ed…] in 2007. Book: ‘1001 Things To Do On A Desert Island’ by R. Crusoe. Confectionery: Orange After Eights and a box of Celebrations, allowing me on my island to a) take out the After Eights and leave the wrappers in the box and b) choose my favourite Celebrations without competition. Cosmetics: D Stress by Biotherm - because I'm worth it. DVD: Anything by Quentin Tarantino. Fashion item: It is tough being such a fashion icon and having my industry colleagues wanting me to don their latest creations. I guess I would need to mix a little here and go for Boss, Zegna and Zilli, sporting a combination of shoes, shirts, suits and ties. Will always need to look smart in case someone drops by! Fragrance: Allure Sport by Chanel. I wear it once a day, not just because it smells great, but also because it's important to do sport and exercise regularly at my age. Spirits: Absolutely no question here; a bottle of Rémy Martin Louis XIII Cognac, the world's finest spirit in my humble opinion. Tobacco: Havana cigars to go with my Rémy Martin Louis XIII. Wine and/or beer: A mixed case of (’88, ’89 or ’90) Château La Lagune and Château Lagrange, both third growth Bordeaux, excellent value for money. Watch: A Suunto diving watch for obvious reasons.
Thank you for your readership and support of The Moodie Report.
Martin Moodie, Editor
There is much, much more – it’s an excellent line-up put together by the ASUTIL board – and the complete pro- gramme can be found at www.TheMoodieReport.com. Any queries should be addressed to ASUTIL General Secretary José Luis Donagaray at [email protected] or visit www.ASUTIL.org
SWITZERLAND. Nigel Keal has commenced his role of Procurement Director at Dufry as of 12 June, after serving six months’ garden leave at his former company World Duty Free. Keal, 46, has almost 20 years’ experience in the travel retail industry. He held several management positions with Allders International for 13 years before moving to BAA- owned World Duty Free, where he achieved excellent results as Head of Category for perfumes and cosmetics. “One of Nigel Keal’s main attributes in his new role will be his good relationships with suppliers,” said Dufry in a statement.
UAE. Niveen Ibrahim has been named General Manager of Abu Dhabi Duty Free. A long-serving and respected executive of the company, she was formerly Business Development & Marketing Manager of Abu Dhabi Duty Free Airport Catering & Duty Free. Paul Hines has been named General Manager of Inflight Catering. Both will report to Managing Director Mohamed Mounib.
Other changes see James McLean, formerly Manager Operations Analysis & Yield Management, promoted to Com- mercial Manager and Karen Fairman promoted to Buying and Merchandising Manager. Richard Isaac is named Retail Development Manager. Public Relations Manager Angela Bothma is promoted to support Niveen Ibrahim in the marketing function.