CEO Jerome Falic says DFA Macau increased sales in 2020
Duty Free Americas (DFA) is well known as a travel retailer in the Americas. In the US, the retailer operates many stores along both the north and south borders and has a strong presence within a number of major airports. The company has extended its root system throughout the entire region, with a myriad of stores operating in the Caribbean and South America.
Outside of the Americas, DFA is established in Macau, where it has been operating a large store for over 12 years. “Since our opening, we have expanded our footprint in the current location a couple of times,” says Jerome Falic, CEO of DFA. “We have also continuously renovated and launched several new brands in Macau.”
The store is located at the Venetian Macau Resort Hotel. It is the number-one location in Macau. Over 30 million people pass through this store each year, according to 2019 numbers. Falic adds, “More traffic passes through our shop than any other location in Macau.”
The focus these days by the Chinese government and by the luxury goods sector as a whole might be Hainan, but Falic says Macau offers gambling, high-end dining and shows, making it an equally desirable destination.
Strength in difficult times
In Macau, DFA managed to get through the entire pandemic without laying off one of its 120 staff members who work in the office, shop and warehouse. In fact, against all odds, DFA ended up having a very good year in Macau in 2020, with sales slightly higher than those of 2019, despite the fact that a great portion of its normal client base was unable to travel there.
Before the pandemic, the store’s customers were multi-national, made up mainly of people from Mainland China, India and elsewhere in Asia. The closed borders due to COVID meant the customers were made up entirely of Mainland Chinese, but Falic says despite this 2020 was a year of promotions, which helped to maintain sales.
While the promotions are no longer being offered to the same degree, Falic states sales for 2021 will continue on a positive trajectory, as Macau has eased its quarantine rules for those entering from China.
Even before this restriction had been lifted, the store was doing well this year. Despite COVID rules requiring only limited numbers of people in the store at any given time, plus the fact that Macau is exceptionally service oriented — which can be more challenging with mask wearing by staff and other restrictions — the holiday season was a good one.
Getting through this time successfully has been aided by the beauty brands, which were quick to create new ways of testing. It’s not an easy thing to choose a color based on a tiny dot; historically, customers would use shared samples. However, with this no longer possible, companies quickly introduced new ways customers can see what they are buying.
Beauty above all else
For a company established in the Americas, the major difference seen with Macau is in category sales. Skin care and cosmetics, or “treatment and color,” are by far the biggest sellers in Macau, almost to the point of exclusion of other categories. Fragrance is growing, however, and DFA is in the process of dedicating more space to this usually popular category; it will end up with approximately 20% of the floor space. “We are currently expanding our current footprint again,” says Falic. “Around the end of the year we will be adding several fragrances to our offering. The category is growing and there is new demand for high-end brands. We are finalizing the space for these and are excited to introduce them in our expansion.”
Despite the growing Fragrance category, Beauty currently represents approximately 90% of sales at the store, with some liquor and confection as well.
Though Japanese brands Decorte, POLA, Clé de Peau and of course Shiseido are all performing well at DFA Macau, most of the top brands are western: Lancôme, Dior, SK-II and Clarins. This is in part because of luxury brand association and in part because of sheer marketing spend, though there are also some strong Asian brands. “We have identified a few brands that we currently carry in Macau that we can definitely introduce in our shops in the Americas,” explains Falic. “We are currently discussing these opportunities with those brands and will hopefully launch them within the next 12 months in the US.”
In the 12 years that the Macau store has been open, there has been a clear trend toward younger shoppers. Falic says these shoppers are always shopping for staples and looking for the top brand, but also tend to seek out the latest hot brands.
Lately, China has become the epicenter of global travel retail. Chinese companies are seeking out western operators to partner with, and Falic confirms DFA is no exception, having been contacted to discuss partnerships. At this point, DFA has not yet chosen to go this route, although the company does have aspirations to expand in region. “We are always looking for more locations in Asia and have some plans to open more,” says Falic. “We will be able to announce something later this year.”
The company will be logistically ready for this expansion. “We currently have a warehouse plus additional storage spaces at the Venetian Resort. Our warehouse is large enough to be able to handle additional stores in the region. Same as our offices there. We have all departments for Asia based in Macau — buyers, finance, human resources and everything else needed to expand in the region,” concludes Falic.