Max Heinemann and Raoul Spanger: Profiteers from the travel chaos: Gebr. Heinemann is selling more duty-free goods again
Dusseldorf Long queues, canceled flights, lost luggage: There are only a few people who can enjoy the chaotic conditions at the airports. One of them might be Max Heinemann, head of the family company Gebr. Heinemann. With hundreds of airport shops between Oslo and Sydney, Hamburg is one of the market leaders in airport shopping.
“The long waiting times are not having a negative effect on buying behavior at the moment,” says Heinemann. “We benefit from the idea of freedom that people have after the corona restrictions.” This is also reflected on the receipt: On average, a buyer would spend just 20 percent more than before the pandemic, reports Co-CEO Raoul Spanger: “The travelers obviously want to treat themselves to something on vacation and business trips – despite the inflation.”
The duty-free retailer, which was founded in 1879, has the “toughest two years in the company’s history” behind it, as Heinemann puts it. Shortly after the outbreak of the pandemic in spring 2020, there was practically no more travel – and nobody shopping at airports.
Sales at Gebr. Heinemann collapsed in March 2020 to five percent of the same month last year. In 2020 as a whole, revenues were 33 percent of the pre-crisis level, and 44 percent in 2021. In the record year of 2019, the company still achieved sales of 3.6 billion euros, most of it in Europe.
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The Hamburg business is recovering as a result of the corona easing, because people are increasingly flying on vacation and business trips again. The airport association ADV counted five times as many passengers in May as in the same month last year. In June there should be even more, as evidenced by the current chaos pictures from the airports. Heinemann hopes to achieve 75 percent of the pre-crisis revenues again this year. Sales picked up in the second quarter in particular.
Passengers from Asia are missing
Spanger does not expect to return to pre-crisis levels until 2024. At the moment, the passengers from Russia are missing due to the war, but above all the affluent and free-spending customers from Asia. They spend about three times as much money in duty-free shops as Europeans, he reports. But in many Asian countries there are still strict travel restrictions. As a result, many passengers stay away from there – and for Gebr. Heinemann, especially at the large locations in Amsterdam and Frankfurt, the turnover.
>> Read more: Why aviation fails due to its complexity – and why airports are thrown into chaos
But the company headquarters in Hamburg’s HafenCity has become more modest after a historic loss of 328 million euros was on the books in 2020, according to the Federal Gazette. In the pandemic, the family business had to part with a third of its employees worldwide, currently there are still 6700.
The company was able to avoid redundancies in this country, instead fixed-term contracts were allowed to expire and there was a volunteer program. “In Germany, short-time work has saved many jobs,” says Heinemann.
Range streamlined by 30 percent
The family business tried to reduce costs with shorter opening hours, and there were also rental negotiations with the airports. During the pandemic, Gebr. Heinemann also streamlined its range by 30 percent. This enabled the company to save on litigation costs, for example.
Articles that accounted for only a small proportion of sales were eliminated, such as less well-known cigarette brands. Overall, there are now more high-quality and more exclusive products than before. Medium brands, which can often also be bought in retail outlets, have become less important. “When it comes to existence, you look at everything much more closely,” says co-CEO Spanger.
The company generates more than half of its turnover with sales of alcohol, tobacco or confectionery. Perfume and cosmetics account for a third of sales, while fashion, watches and jewelery account for ten percent. Perfumes with scents or in sizes that are not available in drugstores are often on the shelves, and increasingly regional products. This is how you want to differentiate yourself from the trade.
Luxury brands such as Hermès or Chanel are considered to be particularly strong. The luxury cosmetics from L’Oréal, Shiseido and the Beiersdorf brand La Prairie are also in demand. The airport business is an important sales channel for these companies.
La Prairie generates a quarter of its total sales at airports. “The airport business offers a window on the world,” says Beiersdorf board member Patrick Rasquinet. As a result, many potential customers could be addressed and won.
New shops away from the airport
Especially since the pandemic, Gebr. Heinemann has been faced with the question of what airport business should look like in the future. With a share of 73 percent, it is the family company’s most important revenue channel. Businesses at border crossings and on cruises follow at a great distance.
However, the family business does not reach 80 percent of travelers across the entire travel industry with its offers, says Heinemann. This applies in particular to younger generations.
In order to develop this customer group, the family business has started a joint venture with the media brand Highsnobiety. The company, which started as an online blog in Berlin, now has an online shop and a creative consultancy, and is an influential voice in the fashion sector, especially for young customers. The companies have opened a joint shop at Copenhagen Airport.
Heinemann is also considering penetrating travel markets outside of the airport. For example, the company recently opened a shop in a hotel complex in Macau. “For historical reasons, we are not yet on the road in many fields. The crisis has shown that we should rethink that,” says Heinemann. Younger travelers in particular avoid flying for ecological reasons – and are not even in the airport shops.
The 39-year-old Heinemann represents the fifth generation of owners. He took over the management of the company in autumn 2018 from his father Gunnar and his uncle Claus, who are both on the board of directors of the family business today.
Since the beginning of July, Max Heinemann has been supported by non-family manager Raoul Spanger as Co-CEO. The 61-year-old has been with the company for over 30 years. In the new dual leadership, Spanger is primarily responsible for the operational core business. Heinemann himself wants to look for sources of revenue away from the classic duty-free business and promote new partnerships.
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