Building for the future
DFS is arguably one of the most successful retailers in the industry and they have showed time and again their commitment to innovation and improvement of shopping conditions. Marek Kolasinski finds out more about where the group is headed
It has been a busy couple of years for the Hong Kong-based retailer, filled with re-designed stores – including Hong Kong, Guam, Hawaii and Singapore amongst others – new locations – the much-awaited DFS Galleria is due to open this summer; and ambitious projects with operations to be added in Vietnam and Mumbai. DFS Also refreshes the brands it lists in its many locations in Asia and North America, making sure to always give a fresh look to the way the brands are presented so as to avoid looking tired and in order to always remain attractive to customers. And this extends to a constant drive to improve on both promotion and marketing.
This is not to mean that the task is an easy one. On the contrary, the challenges are many, and include, as identified by Ed Brennan (pictured right), chairman and CEO of the DFS Group, for Frontier: “Managing in an environment of ever-changing currency valuations; finding appropriate talent to fit our plans for growing the business; and balancing the needs of existing stores with the needs of new stores we’re adding.”
With operations spanning across the globe, currency variations certainly represent somewhat of a headache, particularly when some of the biggest operations the group has are situated in North America where the weaker dollar represent both a headache and a boon. Headache because of the smaller purchasing power afforded to the operations there. But of course, it is never straightforward. “There are many, many variables in our business,” Brennan says. “Right now, propelled by a weak dollar, our US airport businesses are very strong as foreign visitors come to the US with their strong currencies. However, the strongest potential market in the world is the People’s Republic of China, and we are continually focusing on serving that market, especially in Hong Kong and Macau.”
And to be successful in what certainly is an ever more challenging environment, a retailer certainly has to be adaptable to the varying circumstances, some of which there is little he can do about – such as currency fluctuations, although by remaining flexible some of the impact can be absorbed – while others are more controllable, such as the attention paid to travellers’ needs and how the merchandise is presented to customers.
And although beauty remains one of the strongest categories and liquor has experienced something of a resurgence, according to Brennan, there is one field which DFS has identified has having a particular potential for growth: luxury. “Our focus is on luxury,” he says, “and we see a continuing demand for luxury products in the travel-retail environment.”
The group’s commitment to luxury is certainly proven by its upcoming opening of the DFS Galleria in Macau, which will be its first ‘all-luxury’ store with only branded luxury rather than duty-free products and a focus on high-end goods, including exclusive items specifically created for the opening of the store, which is destined to cater for visitors to Macau from Hong Kong, mainland China, South Korea and other Asian countries.
It might seem strange for a duty-free specialist to branch out into non-duty-free ventures, but it falls into the company’s strategy to satisfy customer demand, whatever that may be. “We believe it is, as always, critical to give customers what they want and need,” Brennan explains. “In an airport environment that means quick and easy service, easily accessible products and very well-trained staff. In a downtown environment, with more dwell time and a larger selling area, we place more emphasis on interactivity and luxury selling including makeover sections in beauty, product experts in such areas as Watchmaker brands, and brand-partnered promotions and events.”
As for the future, the DFS Group is still intent on continuing to grow, whether organically or by acquisition. The recent addition of Vietnam and Mumbai to its operations and also the upcoming Abu Dhabi opportunity will give them a lot to digest in terms of new business, but it will probably not be long before the group sets its sights on new targets again.
Optimism certainly seems to be behind much of Brennan’s objectives and opinions, and even faced with the potential for global economic downturn and credit crunches he does not miss a beat: “We have survived for more than 40 years through many ups and downs and we feel sufficiently geographically diversified to handle any downturns be they the result of economic downturns, natural disasters or other dramatic changes in the business environment.”
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