DFS shrugs off rights loss 'disappointment'
Hong Kong-built industry monolith Duty Free Shoppers (DFS) has made its first formal comments since missing out on the lucrative rights to sell a variety of duty free goods at the Chek Lap Kok airport, claiming it is a 'disappointment' but not a major impediment to its growth in the territory.
The group has also claimed it is channelling a greater proportion of its efforts into specialty retailing.
In a surprise decision on Monday, the two major licences for selling duty free goods at the new airport - one for alcohol and tobacco, the other covering perfumes, cosmetics and general merchandise - went to joint ventures.
A Lai Sun-New World joint venture won the prized alcohol and tobacco rights, and Nuance-Watson (HK) snared the perfume and cosmetics rights.
The DFS empire, founded by Robert Miller and Charles Feeney, opened its first airport duty free outlet at Kai Tak airport in the early 1960s. The territory remains the company's second-largest revenue generator after Hawaii.
Questions have been raised about the strength of its position in Hong Kong following the decision, as a significant proportion of its revenue in the territory has been airport-driven.
However, industry analysts have said the fact DFS did not win either concession may be a sign it would not pay more than what it saw as a reasonable price to operate at the new airport.
A spokesman for DFS said yesterday: 'We are naturally disappointed that we were not awarded the liquor and tobacco licence at the new airport.' DFS had bid 'a realistic price given our knowledge of the business', the spokesman said.
This price had taken into account 'the changes occurring in the travel retail market, especially the liquor and tobacco, and cosmetics and fragrance sectors'.
These changes were seeing an alteration in the direction of the company's business.
'Our business in Hong Kong has, over the years, evolved into downtown travel retail shopping and specialty retailing,' the spokesman said.
He added that DFS continued to see growth in this sector.
The duty free operator has just opened a new outlet in Peking Road, Tsim Sha Tsui, and says it hopes to continue to expand in key areas that cater to tourists.