Normal service resumed in Colombo

While Alpha Asia Managing Director Paul Topping and his
team have volunteered countless hours on the Travel Retail
Village project, it has been business as normal for Alpha?s
duty free activities in Sri Lanka. ?The latest big story for us
is the departures store [at Colombo Bandaranaika Airport],?
says Topping. ?We?ve been waiting for nine months and
finally moved into a 100% visibility site three weeks ago.
?Since then we?ve seen penetration growth of around
+8%. We?ve seen a strong increase in spend per passenger
and transaction per customer. In transaction spend,
excluding transit passengers, we?re at about US$47, versus
US$43 last year.? The new store offers 3,050sq ft of
space with two frontages: one of them to a main escalator
which all non-transit passengers use, exposing everyone to
the shop. ?It?s a very nice oblong, not too deep, so it?s a
case of better location, better shape and more signage.?
The airport authority has just given notice to almost all
other retailers that they must retender for space (all have
been on monthly contracts during the airport development).
?We?ve been asking for more space ever since I?ve
been here,? says Topping, noting the opportunity. ?We
would like, for example, to develop a serious stand-alone
perfumes offer. And we?d like a shop to cater for transit
passengers, especially non-liquor buyers who have problems
coming into shops that look dominated by liquor.?
The strongest-growing categories are perfumes and confectionery.
A range of destination products has been developed
which should do well if summer tourism takes off.
?The most disappointing area is tobacco,? Topping says.
?That?s because we had a substantial price increase from
tobacco companies who are repositioning their pricing in
parts of Asia, especially the sub-continent, and withdrawing
support from an area that they historically worked
hard to build. We?ve become much less competitive with
the Middle East and Singapore.? And it?s hurting other
categories. ?Tobacco is a benchmark. If people want to
look at airport pricing, a pack of 200 Marlboro is about the
easiest way to get a benchmark. But tobacco is putting in
unrealistic price increases against other categories.?
Topping?s irritation with certain key tobacco houses is
clear, especially as Alpha is a strictly legitimate business
with each carton being sold where it should be sold.
From his office window overlooking the port he can see
?container loads? of cigarettes from unofficial sources.
?That seems to continue while straight trading through
the normal channels is under pressure,? he notes wryly.
Tourism growth, encouraging in recent months, has
slowed in the wake of the assassination of the Foreign
Minister Lakshman Kadirgamar on 14 August. As a result
arrivals over the past few weeks have been running at
around +5% up on 2004, lower than hoped for. But,
given the calamity that struck the country, any growth is
welcome. Alpha has bounced back in style and no-one
would begrudge them their success. ?
Cochin?s crown jewel
Alpha recently inaugurated a 6,000sq ft arrivals
shop in a prime location at India?s Cochin Airport,
and is already noting the benefits. Prior to the store
opening, spend per passenger was running at
around US$4.50 compared with an industry average
in India of around US$1.50?2.00. ?And ours is
genuine spend ? not a case of, as is the norm in
India, utilising bulk purchases back into the domestic
market,? says Alpha Asia Managing Director
Paul Topping.
Cochin?s sales were already outpacing passenger
growth and the new store is certain to build penetration
and spend. ?In August we saw a +10% rise
in passenger numbers while sales grew +28%,?
Topping says. ?The new shop will be the largest
arrivals store in India, and possibly the biggest duty
free shop of any kind. The old one was a stunning
shop but this is the jewel in the crown.?
The retailer has ?an absolute policy? of pricing
cheaper than the Middle East. ?People are starting
to say that they know that Cochin will have the
goods they need, such as Tang and Nido. They also
know they will be cheaper and they won?t have to
carry them. That?s the big message we?re pushing
out as there?s so much scope ? 95% of passengers
are returning Indians.?
Cochin is likely to see European flights soon, meaning
an incremental duty free spend from western
tourists. ?We don?t see them at present as they?re
using domestic routes from Delhi or Bombay,? notes
Topping. ?The airport authority has announced
ambitious plans to maximise non-aeronautical
revenues.? Alpha will be leading that charge.