James Richardson comeback spells power shift in Australian duty free market – 17/08/05

AUSTRALIA. James Richardson’s return to the Australian duty free market after a ten-year absence will mean big changes for the off-airport retail sector – and possibly the airport business.

As revealed by The Moodie Report yesterday, James Richardson – the private company headed by Chairman David Mandie – is opening three new downtown stores by year-end: in , and .

The Melbourne and Perth stores are in premises currently occupied by The Nuance Group-owned Downtown Duty Free. But until 1995 they were the off-airport locations for City International Duty Free, the James Richardson chain sold to Swissair that year (and which eventually became part of The Nuance Group, along with Allders International and Downtown Duty Free).

James Richardson’s re-emergence means Nuance will be vacating the Melbourne and Perth premises. The Moodie Report understands Nuance is effectively pulling out of the Australian downtown (off-airport) sector as leases expire – unless a downtown store is required under the terms of an airport contract. However it may extend its Adelaide downtown lease, having lost the airport contract to Duty Free Stores Wellington (Duty Free Stores ) for the new terminal that opens next month.

Downtown conditions have changed radically since the mid-1990s. The sector probably accounted for 50% of the Australian market a decade ago but for big airport retailers such as Nuance the airport business now accounts for the overwhelming majority of sales.

Noted one retailer: “The off-airport duty free trade in is languishing at the moment, and I doubt it will get much better. It is an entirely different game now than when James Richardson sold out. There has been a steady decline in trade since GST was introduced and with increased competition from the domestic market, aggressive airport shops, a high value Australian Dollar affecting inbound purchases, and lower duties and taxes on goods it’s tough out here.”

But James Richardson, which will trade as JR Duty Free, is quietly confident it can make the business work. It believes it understands the channel intimately and that a dedicated focus will pay off. As Garry Stock, Executive Chairman of the JR Duty Free Division, told The Moodie Report earlier this week: “We realise we can’t just walk back in and turn on the light. There are new circumstances and we will have to adapt.”

Few doubt that the company’s re-entry to the off-airport channel also signals a serious assault on the airport business. Stock confirmed to The Moodie Report that JR Duty Free will examine any airport retail opportunities that arise in Australia or New Zealand. Airport, currently held by Nuance, seems certain to be a key target when it comes up for tender. The contract of The Nuance Group, the incumbent, expires in October 2006, though no final decision has been reached on the fate of the business.

Noted another rival: “This [the downtown initiative] is clearly a positioning statement by them prior to bidding for any airport contracts that come up in Australia in the next couple of years. They can claim to be an Australian operator but also draw on their Tel Aviv critical mass [James Richardson runs a highly-successful Israeli duty free business, including the duty free contract at the new Tel Aviv Ben Gurion 2000 terminal – Ed].

MORE ON JAMES RICHARDSON AND THE NUANCE GROUP Nuance offers a taste of Denmark with first-ever Anthon Berg airport shop – 16/08/05

The Nuance Group Denmark appoints new Managing Director with top department store background – 05/08/05

James Richardson goes hi-tech to boost sales – 26/07/05

Nuance and Copenhagen Airport unveil ‘dazzling’ new-look duty free store – 24/06/05

James Richardson and MGS International secure Ben Gurion sporting goods contract – 02/02/04

Richardson heads off Sakal Bros challenge to secure big Tel Aviv airport bid – 11/12/03