As the dust settles from Swiss travel retail operator Dufry’s $1.7 billion acquisition of Nuance, there’s no better time to re-examine the structure of the travel retail market and how it will evolve in the future. Certainly, industry observers have been quick to point out the fragmented nature of the industry and the need for change. Swallowing Nuance will elevate Dufry to become the global leader in airport retail with a 15% share of the worldwide market and a presence in 63 countries and 239 airports with close to 1,750 shops. Nuance’s geographic presence strengthens Dufry’s position in key strategic markets across the Mediterranean, North and Central Europe, Asia, the US and Canada.
Beauty will account for 33% of the combined company’s estimated $6 billion in sales, the biggest slice of the pie. Thoughts on where and how consolidation will continue are mixed, but Dufry anticipates further acquisitions. “Size and scale will drive further consolidation of the highly fragmented airport retail market,” the company noted in a recent presentation. World Duty Free Group also recently indicated that it is considering acquisitions.
President and founder of market research agency Horizon Consumer Science, Ian Cesa, anticipates that consolidation will continue as a means of growth because the cost of entering a new market with no existing infrastructure will be too high for most.
However, Puig Global Travel Retail Managing Director, Patrick Bouchard, thinks that this will now be a more reflective time, when travel retailers will take stock and assess their own internal structures and strategies. He says, “Due to the size of the Dufry/Nuance deal, the retail environment will remain stable for the next [few] years. Most big players have a clear strategy and need to consolidate their own business and structure. But we will see.”
To read BW Confidential’s full report on consolidation in travel retail click here.