At the beginning of 2021, already with a clear idea about the pandemic’s effect on the Travel Retail business and able to foresee the short and mid-term future, we decided to put forward a two-year plan that would reflect a picture of the Company’s path leading through the end of 2023.
Always a step ahead of market needs and keenly aware of consumer trends, we have become a key partner for global brands and travel retail operators.
Our widely recognized expertise, integrity and commitment, as well as our solid long-term relationships and multicultural networking capabilities, were instrumental factors in the strategic design of our roadmap to 2023. The pillars of this Master Plan are the initiatives described below.
We conceived a business model that focuses on non-core product categories such as lifestyle and fashion accessories. These include watches, handbags, small leather goods, sunglasses, writing instruments, footwear, apparel, outdoor, toys, electronics and vitamins. In the beginning, we envisioned this opportunity based on the fact that these categories were being either under-exploited or not exploited at all within the channel. Having successfully recognized this gap, we turned into an enabler for the introduction of these categories in the TR segment. Going forward, we will continue to develop the brand lineup within the active categories, while also incorporating new ones. Additionally, we are planning to gradually get immersed in the TR core categories, starting with fragrance and cosmetics.
When DFD started the business in 2015, we were initially localized in Latin America and the Caribbean to later include North America, in order to achieve vertical coverage for the Americas. The plan for the next couple of years—while consolidating our business throughout the Continent—is to initiate a global expansion process, anticipating to debut in EMEA at the beginning of 2022 from our recently inaugurated office in Barcelona and to reach APAC in 2023. This will be accomplished utilizing DFD’s global operational infrastructure and our proprietary technological tools.
The last and perhaps most relevant initiative, is that we will be re-directing our business model. So far, the Company has been a wholesale distributor with very significant value-added proposition.
Going forward though, DFD will be re-positioning itself as a commercializer of retail concepts: turn-key business models for brands that would be sustainable within a mono-brand retail environment. This will be done primarily through associations with our most solid existing business partners who will be given priority as such, and complemented with new ones, subject to satisfactory knowledge, experience and resources necessary for the long-term sustainability of this specific business model. We will have a much more active role in the formulation of this new business concept. For this purpose, we have already begun to establish different types of joint ventures with our partners.
Nicolas Dobry, DFD’s CEO commented:
“I am so very proud of our Company’s progress ever since inception seven years ago. I remember when we started our operations, it was only five of us, myself included; presently, our global headcount is up to 60 associates. When we started this journey, we did it with only one category (watches), one brand (Guess) and our distribution coverage was limited to Latin America and the Caribbean. Later on, we extended it to North America to cover the entire Continent.
Presently, DFD commercializes 10 product categories represented by about 30 brands; we anticipate to expand our portfolio in the next 2 years to twice as many brands.
The decision to globalize our operations generated from the brands we represent which, after being greatly benefited by DFD’s performance shown in the Americas, requested that we propose a global solution consistent with that level of efficiency. Furthermore, our partner operators also reached out to us stating the same, namely the ones with worldwide presence.
The effects of the pandemic accentuated even more their need to count on a partner like DFD. As part of their recovery process, many of the global and regional operators decided to apply the “Pareto Principle” to some aspects of their business, for instance: to focus on the smallest areas of their Points-of-Sale network that contributes the largest portion of their profits and on a segment of their sku count that generates the bulk of the results. This formula derived in a willingness among operators to streamline their focus on core categories. The non-core categories are the traffic drivers in their stores and most of them offer the greatest opportunity for growth. In this context, they realized that a partner like DFD would be like “hand and glove” because it would allow them to obtain the benefits of the Pareto strategy, without the side effects.
It has been proven that the mono-brand models in Travel Retail significantly increase customer engagement, consequently leading to a high increment in sales conversion levels. In function of this, at DFD, we decided to re-position our DNA, shifting from being a wholesale distributor of products, to become a turn-key commercializer of global brand concepts where, paradoxically, the product itself remains in an almost secondary role.
This new format was very well received by the market. We can anticipate that you will be consistently getting exciting news from us.
Duty Free Dynamics is looking to assume a much more relevant role in the TR value chain. I am convinced that we have everything we would need to accomplish it, especially our human factor, our most important asset, no doubt!”