Tuesday, 22 December 2015

Heinemann co-owner speaks of Chinese spending boom

Claus Heinemann has a passion for retail. As co-owner of powerful German travel retailer Gebr. Heinemann, he has worked in the industry for more than 35 years, distributing premium products and operating stores across the world. He is the fourth generation of the family to run the 136-year-old travel retail business, so the passion is in his blood.

Claus Heinemann, co-owner of travel retailer Gebr. Heinemann

The biggest Duty Free shop in Germany

Heinemann spoke to MJ Rabbit on December 14 at the opening of the new Davidoff of Geneva walk-in cigar humidor at Frankfurt Airport Terminal 1, where Gebr Heinemann operates the impressive multi-brand Duty Free shop, calling it “the biggest Duty Free shop in Germany”. With the opening event, Gebr Heinemann also celebrated its 45-year business partnership with Oettinger Davidoff AG, the Basel-based maker of premium cigars.

Asked about how trading had performed this year, Heinemann began by acknowledging the business challenges. “We operate in so many different areas and we have undertaken so variable developments this year, especially when it comes to currency fluctuations. In Western Europe, the euro rate is very favourable for Americans and Chinese. In places like Copenhagen, Vienna, Frankfurt and Amsterdam we are all over-budget. Our most important area is Turkey, at Istanbul Airport, where there has been a strong increase of our business.” Concurrently, he has observed an “enormous” boost in sales to Americans, thanks to the strong US dollar.

Heinemann noted the recent downing of a Russian jet by Turkey, which has had a profoundly negative effect on Russian travel numbers to Istanbul, where Russians make up 8% of Heinemann’s total business. He also cited the volatile rouble. “The Russians are normally big spenders, but now they pay more attention to the product's price.” He added that Heinemann’s operations at Russian airports had been hit substantially. Faced with these challenges, compounded by poor trading in Egypt and Tunisia, he described the general political environment as uncertain.

Gebr. Heinemann's Duty Free shop at Frankfurt Airport Terminal 1

Chinese travellers love German products

Turning to the Chinese traveller, Heinemann emphasised their importance to the company’s global operations. “The Chinese traveller is very important to Heinemann Duty Free,” he said, adding that 16% of the operator’s sales at Frankfurt Airport are made by people from Chinese destinations.

“They love local German products, which they buy for souvenirs,” he said. “Furthermore they like exclusive and expensive products in categories such as accessories, perfumes, chocolates and cigars… In the Cognac and whiskies category, they choose the most prestigious products as a gift.”

Heinemann said he was pleased with the current level of Chinese per-capita spend, which had increased dramatically over the past years. This year, the company has seen a 25% upswing in sales among Chinese travellers.

In the run-up to the 2015 holiday season, Frankfurt Airport was offering a wide range of festive activities: Christmas decorations, Christmas gift wrapping, shopping coupons, and special offers.

Knowing that today’s retail environment demands newness, Heinemann said the company is always open to looking at new brands that are well-known in the market and had a marketing research department that identified what customers wanted to buy.