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DFS to close Changi Airport liquor, tobacco stores; some 500 affected staff offered options

Changi Airport’s longtime tenant, DFS Group, is exiting its duty-free liquor and tobacco concession operations in June 2020 to make way for a new operator after nearly 40 years of business there.

CHANGI Airport’s longtime tenant, DFS Group, is exiting its duty-free liquor and tobacco concession operations in June 2020 to make way for a new operator after nearly 40 years of business there.

It will shutter the stores once the concession expires. A DFS spokesperson told The Business Times (BT) on Tuesday that earlier reports by media publications had been erroneous in stating there will be widespread layoffs as a result.

About 500 people are directly employed to service DFS's liquor and tobacco operations at the airport, and the company will "work closely" with these staff to ensure a smooth handover after the new operator is announced around November, the spokesperson said.

"As with all airport concession handovers, a number of options are available to staff. These include working with the new operator depending on their aspirations and needs, and working with other operators in the airport community," the spokesperson told BT.

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The company may also offer to deploy these employees at DFS's luxury concessions at Changi Airport, its downtown operations at T Galleria by DFS, Singapore, or the Singapore Cruise Centre business – all of which will operate as usual and are unaffected by DFS's withdrawal from the liquor and tobacco concession.

In a surprising turn of events, DFS had declined to bid in Changi Airport Group's (CAG) tender exercise for the new liquor and tobacco concession, amid tighter regulations and geopolitical uncertainty. The tender closed on Monday.

The tenancy for the new operator is for a six-year period from June 9, 2020, to June 8, 2026, covering 18 stores spanning over 8,000 square metres of retail space across Changi Airport’s four terminals.

CAG is currently evaluating the proposals and expects to award the tender by the end of this year, Teo Chew Hoon, group senior vice-president for airside concessions at CAG, told BT on Tuesday.

“We are disappointed that DFS has opted not to participate in this tender, but we will work closely with them to ensure a smooth transition to the new operator,” Mr Teo said.

For the tender, bids were submitted from three retailers – Lotte Duty Free and The Shilla Duty Free of South Korea, and Gebr Heinemann of Germany – according to a report on Monday by travel retail industry publication The Moodie Davitt Report.

In a statement obtained by BT, DFS chairman and chief executive Ed Brennan said that staying in Changi “was not a financially viable option” because of changing regulations concerning the sale of liquor and tobacco, against a global context of geopolitical uncertainty.

“Although this decision is the right one for our business, it was not taken lightly,” Mr Brennan said.

Singapore has recently tightened its rules on booze and tobacco. The duty-free allowance for spirits, wine and beer was lowered to two litres on April 1, from three litres previously. In July, the Ministry of Health also announced that tobacco products sold in Singapore must have standardised packaging and enlarged graphic health warnings from July 1, 2020.

CAG will continue to work closely with DFS to grow its luxury concession businesses at the airport, Mr Teo said.

In his statement, Mr Brennan noted that DFS has held the liquor and tobacco concession at Changi Airport since 1980.

“During this time we have exceeded all expectations for what travel retail can offer in an airport environment,” he said.

“We are proud of our achievements and deeply appreciative of the efforts of many talented people who have contributed to our success,” he added, before thanking CAG for its past support.

The DFS spokesperson told BT: "Regardless of our decision to withdraw from the liquor and tobacco concession at Changi, we remain fully committed to our future in Singapore."