Tough battle for Changi Airport's 2 retail licences

Tenders draw global heavyweights from Europe, Asia

Global airport retail heavyweights have landed at Changi to battle it out for two of the industry's most coveted contracts.

At stake: more than $800 million a year from the sale of duty-free liquor and tobacco, as well as cosmetics and perfumes.

The bids are in for the two separate licences and will be evaluated over the next few months, said Changi Airport Group's spokesman Ivan Tan.

Apart from incumbents Nuance-Watson (cosmetics and perfumes licence) and DFS group (liquor and tobacco licence), the contest has attracted other bigwigs.

They include South Korea's Lotte Duty Free, Europe's World Duty Free Group and King Power Group Hong Kong.

Mr Martin Moodie, chairman of business publication The Moodie Report which focuses on airport commercial services, said: "It's no surprise that the two Changi Airport tenders have each attracted world-class fields.

"At stake is over $800 million worth of business, but just as importantly, Changi is considered one of the world's blue-riband airports and its retail offer among the best."

Last year, Changi's retail business raked in a record $1.75 billion in total sales - the fourth highest in the world. In the top three were airports in South Korea, Dubai and London.

Airports in Asia that are showing the strongest growth in passenger traffic can expect retail takings to keep heading north, industry watchers said.

Research firm Generation estimates that the global airport retail business, which was worth about US$30 billion (S$38 billion) last year, will grow by an average of 10 per cent a year until 2020.

About a third of the business will go to Asia-Pacific airports.

Changi expects to award the two contracts by the year end, said Mr Tan. The contracts will cover the three main terminals as well as Terminal 4 which will open in 2017.

Assessment criteria include the retail concept, financials of the proposal, the operator's track record, brands representation and product range, and customer service strategies, he said.

In a break from tradition, Changi will award each contract for six years, instead of the usual three years with an option to extend by another two. This is to give firms more time to recoup expenses and, in turn, encourage investment, Mr Tan said.

Nuance-Watson, which has held Changi Airport's cosmetics and perfumes licence for more than a decade, has big plans if it is selected again, said managing director Ken Tse.

Existing shops will get a makeover and travellers will benefit from new and exciting offerings at the future Terminal 4 as well, he said without divulging details.

Mr Tse said: "We have worked well with the airport all these years and grown our sales every year from Day One. The competition is fierce but we are hopeful."

While it may be tough for retailers, the consumer will benefit.

Said Mr Moodie: "Given the strength of the bidding line-ups, we expect very significant financial offers to be tabled, linked to some of the most creative retail packages the airport industry has yet seen - and that's good news for Changi travellers."