DFS PLANS DUTY-FREE UNIT IN JFK

Byline: Vicki M. Young

NEW YORK — The DFS Group Ltd. has won a key bid to operate a duty-free outlet at the new Terminal 4 in JFK International Airport.
The concession represents the third leg in the San Francisco-based company’s four-pronged geographic initiative to expand its consumer base and enter new markets. DFS, which is majority-owned by Paris-based LVMH Moet Hennessy Louis Vuitton, must finalize its lease with JFK for the 12,000-square-foot space. DFS will pay a fixed price per square foot plus a percentage of the proceeds. The concession is for five years, with two one-year options.
Ed Brennan, DFS president and chief executive officer, told WWD, “The duty-free store in JFK is a critical element in DFS’s North American strategy. JFK is an important gateway to Europe. It represents an opportunity for us to focus on diversifying our strategy to include a concentration on the European consumer.”
DFS already operates concessions in airport terminals at San Francisco International and Los Angeles International. Both West Coast airports have a high concentration of Asian travelers.
As for the fourth prong of its initiative, Brennan disclosed that the company is eyeing Miami International Airport. “There are eight million international passengers who pass through Miami annually, and it’s an important gateway to Central and South America,” Brennan pointed out.
DFS doesn’t have any operations in Latin America or Miami. A presence would enable the duty-free shop operator to take a significant step forward in capturing the consumer market from the Latin American continent.
“In order to move into the market, you need to have control of the airport first,” Brennan noted.
Negotiations have yet to begin, but DFS is already making plans and conducting market research. According to Brennan, the company has been diversifying its product mix at its seven stores in L.A. International, four of which are duty-free shops.
Keeping tabs on what sells to the Latin American consumer will enable the company to hit the ground running whenever the appropriate Miami site is secured.
JFK’s new Terminal 4, a $1.2 billion project incorporating 100,000 square feet of retail space, is expected to open sometime in 2001 and replace the existing Terminal 4. DFS once had a concession at JFK, when Terminal 4 was known as the International Arrival Building.
DFS outbid International Shoppes, which operates the existing duty-free shop in Terminal 4, and Nuance Global Traders.
Helen Deknatel, commercial director for Terminal 4 at JFK, said, “We chose DFS because it met JFK’s objective to provide the best merchandise mix, innovative promotion and marketing while generating the highest sales volume and level of return for JFK.”
She added, “With over 180 shops worldwide, DFS showed us it knew exactly by country the shopping preferences of our international travellers.”
The operation is expected to be a lucrative one for both DFS and JFK. “JFK forecasts annual duty-free sales volume in excess of $20 million,” Deknatel said. That’s a figure that’s substantially higher than the current volume, in large part due to the 60,000-square-feet increase in retail space. The current retail space is 40,000 square feet, and the existing duty-free shop occupies only 6,000 square feet of retail space.

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