In this exclusive extract from our Fashion Beauty Report 2024, travel retailer Heinemann reveals its key plans ahead in the Australian and New Zealand market.
Airport retailing is booming once again after a disruptive few years, and Heinemann is not wasting any time in the Oceania region. In the last year alone, the duty-free retailer re-opened an expanded retail footprint in Sydney Airport’s international terminal and constructed two new retail stores in its T2 and T3 domestic terminals.
But now, after building more than 14,000 square metres of retail floor space in Australia across nine different stores - including in Gold Coast Airport - Heinemann has secured an official entry into the New Zealand market. And after a few pen strokes, Heinemann Australia has become Heinemann Oceania.
Managing director George Tsoukalas says the business will open a luxury timepiece boutique at Auckland Airport in May, with a fashion boutique launching in June.
As part of its entry, Tsoukalas says he and the Heinemann team spent the last two years conversing with Auckland Airport, learning its retail strategies and goals.
“We don’t just enter markets; we partner with them on a journey,” Tsoukalas says.
“We’re working in five and ten-year timeframes with airports. We have tenders and businesses in Europe that we’ve had for 20, 30 and 40 years. For us, it’s a long-term play.”
Tsoukalas says the initial opening phase will be a test run of what brands work in the local New Zealand market. This will be backed by market research, which shows that Auckland Airport isn’t ready for the luxe offer that Sydney currently has. Sydney’s international terminal now includes high-end brands such as Balenciaga, Bottega Veneta, Burberry, Bvlgari, Hermès, Loewe, Moncler, Prada, Rolex and Saint Laurent.
“But [Auckland Airport] knows that there’s a consumer - both Chinese and local - that wants a bit of luxury,” Tsoukalas says.
“So we’re not opening a Chloé boutique or a Stella McCartney Boutique, we’re opening what we call a ‘Haus of Luxe’, which will have five brands not seen before in the New Zealand market.”
Tsoukalas then acknowledges the need for adaptability.
“The New Zealand market is different from the Australian market,” he says. “Their expectations are distinct, particularly with a preference for supporting local brands.
“So we are also working on a few other initiatives from a stores perspective in New Zealand, where we will probably go less luxe, but more in that premium space, where we will look to introduce some premium New Zealand brands into that overall offer.”
This product localisation strategy in New Zealand isn’t a first for Tsoukalas and the Heinemann business. Amid the COVID-19 pandemic, when the only consumers available to Heinemann were locals, the duty-free retailer shifted merchandising.
“So in Australia, Chinese tourism is a big part of our turnover,” Tsoukalas says. “We knew at some point in 2020 that it was going to take a while for the Chinese consumers to come back.
“We refocused and made sure we were offering Australian and New Zealand consumers what they wanted to purchase at a duty-free store. And interestingly enough, we haven’t deviated too much from that today.”
Sydney Airport’s latest traffic data shows that Chinese passengers are the second-highest in volume, behind Australians and ahead of New Zealanders. However, the volume of Chinese travellers is 17.6 per cent below 2019 levels.
Meanwhile, the capacity on direct routes to and from mainland China and New Zealand increased by 144 per cent in March 2024 compared to the prior year with five airlines operating to six Chinese destinations. Total passengers to and from mainland China were up by 169 per cent over the same period Tsoukalas says the Chinese consumer is one of the biggest spenders in luxury goods globally, whereas most Australians shop within the mainstream brand mix. He says this requires a delicate balancing act.
“We could have very easily opened up international brands in those terminals, but we really believe that the biggest opportunity from a revenue perspective is making sure that we’ve got what Aussies want,” He says. “We also want to support Australian fashion brands.”
Tsoukalas says the variety feeds into the way the luxury consumer shops today compared to historically.
“The new luxury consumer isn’t as loyal as the consumer was many, many years ago. So they’re not going into Dior and shopping from top to bottom. They might be going to Dior for a pair of sneakers or a saddlebag, but they might be coming to us to buy a Vetements t-shirt, or a Chloé tote for the beach.”
Alongside its retail expansion in Oceania, Heinemann also understands the value of online in the retail space - particularly travel retail. Tsoukalas says the company has worked hard to launch a new domestic website this year that allows shoppers to buy product 90 days out from either their departure date or return date in Sydney. It will also include local home delivery.
The new website and functionality were influenced by the business’ international online presence, according to Tsoukalas.
“So what we’re doing online, from an international perspective is ensuring we’ve got a billboard of brands that are available in-store, but also the ability for you to transact in those core categories like liquor, and chocolates and fragrance and skincare and makeup,” Tsoukalas says.
The new local website is also expected to drive revenue through the retailer’s global loyalty program Heinemann x Me, with Tsoukalas noting that loyalty members shopping on its new website are 2.7 times more likely to spend than just a guest.
He adds that Heinemann isn’t looking at those domestic benchmarks where an online platform needs to represent between 10 and 15 per cent of a company’s total turnover. To him and his team, it’s about tapping into the journey of the customer.
“From a marketing perspective, we’re doing a whole lot of stuff, starting our interaction with passengers way before they get to the airport. So when you click on TripAdvisor, when you click on Flight Centre, we will be present. How do we become part of your holiday process prior to you coming into the physical store and standing there?
“We want to make sure that we are sharing with you content that inspires you to purchase stuff that you either want or need, but stuff maybe that you didn’t think you wanted or needed when you’re in store.”