The Heinemann view – Reimagining the assortment and progress through partnerships

We feature further talking points from Gebr. Heinemann’s recent press conference in Hamburg, at which Co-CEOs Max Heinemann and Raoul Spanger and Chief Commercial Officer Inken Callsen discussed 2024 performance (sales climbed above €4 billion for the first time), company growth plans and their views on regional and global markets.

Click here for part one of our take-outs from the event. More will follow. 

Talking Point 4 – Category performance

The Gebr. Heinemann board members addressed the shifts in category performance during the year at the annual media day.

In summary, liquor, tobacco & confectionery (LTC) grew by +17% compared to the previous year and accounted for 46% of turnover, while the beauty category increased by +24%, accounting for 42% of turnover. Fashion & accessories sales climbed by +28%, accounting for 8% of turnover.

Within beauty, niche fragrances continue to be a driver, with a +29% increase for B2C sales compared to 2023. Niche fragrance concepts have been implemented in Vienna, Istanbul and Copenhagen airports and aboard the AROYA cruise ship, with plans to expand these to Jeddah and Antalya airports in 2025. The fragrances sub-category as a whole, which already accounts for around 70% of beauty sales, still has further room to grow, said the retailer.

Inken Callsen said: “Niche beauty and luxury perfumes plus entry price point items are key – while the middle of the market has suffered.” She added that skincare and colour cosmetics have declined since Covid, but growth continues from new on-trend brands that lean on the power of social media and connection. This in turns fuels the need to turn more space over for emerging brands.

Within LTC, spirits showed below-average growth of +5% last year as consumption fell. But there were some bright spots such as tequila, up +42%.

The company said it is considering whether the wine assortment is too wide and overwhelming for consumers today. “We want to offer choice but can it be too much?” said Callsen. In Champagne the opening of the new Cave de Champagnes with Moët Hennessy in Istanbul, offering all brands, shows “the power of collaboration with a category eye”, she said.

Heinemann also highlighted the power of promotions supported by celebrity and social media, with Rod Stewart’s Wolfie’s Whisky a notable example. In conjunction with his Hamburg concert last year, Gebr. Heinemann showcased signed golden LPs and exclusive memorabilia at Hamburg Airport, which Rod Stewart shared on Instagram, gathering 1.9 million views.

A +10% rise in confectionery turnover reflected a mix of dynamics, from the surge in Dubai Chocolate sales but also the complexity of a sector that has faced impact from higher cocoa prices.

Tobacco grew +22% in turnover terms last year, buoyed by the broad cigar portfolio and partnerships with brand leaders such as Davidoff, plus an early move into New Generation Products from the tobacco brands.

In the wide fashion & accessories sector, the company saluted the success of brand boutiques from Cartier and Hermès in Istanbul. It also hailed the solutions and concepts that Swarovski has put forward for travel retail, which helped deliver double-digit growth for the brand with Gebr. Heinemann.

Talking Point 5 – Rethinking assortments

As Gebr. Heinemann considers how the store of tomorrow will be a place for experience, convenience and innovation, the company is shining a light on the assortment, its size and how it is presented.

In aiming to set a benchmark in the industry, Gebr. Heinemann has launched a global assortment project led by Clara Heinemann (one of the fifth Heinemann generation). This includes a data-driven approach to define and manage the assortment more effectively and with greater impact.

Highlighting the importance of brand collaboration in store transformation, Inken Callsen said: “It is our shared goal to turn more travellers into shoppers and increase the conversion rate as well as the average basket size by closely working together. Consumers have to be excited by our offer. The mid-range assortment is not going to inspire travellers. We focus on luxury products, niche selections, travel retail and Heinemann exclusives, as well as entry-level options.”

Elaborating, Callsen said: “In our stores today we offer a little bit of everything and it is not always super clear which consumer we are targeting.

“We need to be more focused on those things that really make the difference. People look for experience, they look for luxury or else they are seeking value and entry prices. We serve those two extremes but also everything in between. So our new assortments will be clearer, will be turned around faster and will be more profitable.

“We will reduce assortments where we have been too democratic in the past. In some cases the choice is simply too wide and confuses the customer.

“But we also need innovation and to move products in and out faster. New brands will attract people in and lift penetration. So we will have a lower number of SKUs, but with newness and innovation.”

Gebr. Heinemann aims to enhance its global strength by consolidating its negotiating power, she added, with a focus on more efficient partnerships and taking a long-term strategic approach to grow business.

Callsen said: “We will talk about three-year plans with the industry where we can have a vision for growth together.”

Gebr. Heinemann said that “engine-based, location-specific and differentiated B2C pricing is the new standard across all categories and locations”.

Talking point 6 – The evolution of partnerships

Max Heinemann said that unlocking potential in the industry “requires collaboration on many different levels and across company boundaries, which we actively promote”.

He said that non-aeronautical revenue becoming ever more relevant to airport incomes spells opportunity (for growth) but also threat, with increasing pressure on commercial to finance airport expansion.

Crucially he said, “That dynamic is also being met with contractual set-ups from the 20^th century when we are now in a 21^st century, post-pandemic world. To meet travellers’ expectations we have to realign the contractual model too. The uncertainties are higher, and this cannot be reflected in the current reality of contracts.”

Raoul Spanger added: “We talk to all airports about these pre-Covid contracts. If Chinese are spending half what they used to, we cannot compensate. We have to talk about this.”

More broadly Spanger said: “We want partnerships that are equal and at eye level. We want to create even more than ever a group of companies with independent companies supported by headquarters, and we see this is a USP for Heinemann.”

Fostering partnerships that span the aviation eco-system, beyond travel retail, must also be pursued to realise the industry’s full potential, said Heinemann.

“If you have the full view of how people arrive to the airport and how they pass through the airport, it helps. We understand the eco-system, we know where our expertise lies, but also we can cross over into the wider airport system, which is where our innovation platform comes in. We can open up conversations that go beyond duty free, which means sharing data and expertise. We want to be part of that wider eco-system.”

*More key takeaways from the Gebr. Heinemann annual results announcement will follow.