Page 60 - IAADFS Summit 2023 Special Edition

INSIDER

Photo by David Gilbert

How duty free retailers are tackling the supply-chain crisis

Keeping shelves restocked with wines and spirits has been a constant challenge for operators in the Americas.
Joe Bates reports on a complex, post-COVID-19 issue.

It is the post-pandemic business The just-in-time business models after most Canadian border COVID-19
headache that won’t go away. The global favored by modern retailers, which in entry restrictions were lifted in October last
supply-chain crisis has affected almost normal times avoid stockpiling products year. “As business ramped up in 2022, we
every industry, the duty free liquor to keep costs low and boost profitability, found new issues to deal with– primarily,
business included. A complex network have buckled under the strain. Since the supply chain was disrupted to such
of interconnected factors is to blame–an international travel rebounded after a degree that many products were not
unexpectedly strong surge in consumer COVID, duty free retailers in the Americas available or short-shipped,” recalls Steve
demand after COVID-19, a shortage of have suffered repeated out-of-stocks, rising Richardson, general manager of Ontario-
shipping containers, port congestion, labor prices, longer delivery wait times and an based Niagara Duty Free. “As the year
shortages, extreme weather events, raw intensified level of uncertainty. went on, it became clear this problem was
material shortages and the war in Ukraine “Globally, we suffered from a crisis at going to take longer to correct itself than
have all played their damaging part. the supply chain and procurement level,” anticipated. Some categories suffered
admits Cyril Letocart, CEO Lagardère immensely such as fragrance, cosmetics
Travel Retail Peru, which started a 13-year and liquor.
duty free concession at Lima airport in “We have very little opportunity
January last year. “On the spirits and wine to influence fragrance and cosmetic
side, the impact was huge due to a lack sales by bringing in local brands which
of raw materials such as glass and carton are not recognized by the international
boxes. To compensate potential loss due to traveler,” he adds. “However, in our liquor
a lack of products, we had to adapt quickly department, we have had great success in
and this has been very tough as we were supplementing the brands we offer. The
still in a start-up phase.” consumer is more open to entertaining
offerings from the smaller distilleries and
Canadian border operators highlight the Niagara Region has seen many new
local craft products local distillers come online over the last
Long-suffering Canadian border store few years.”
retailers have also run into supply-chain Fellow Ontario border operator
issues now that they are open for business Ambassador Duty Free Store liquor &
tobacco category manager Mike Maskery
Ontario border duty free operators turned reports supply-chain issues have eased
to local crafts spirits to fill the gap left by in the first quarter of 2023 but there are
supply chain issues as seen in this display at still problems with both domestic and
Ambassador Duty Free. imported lines. “There are lots of products

Summit of the Americas April 2023 60