COLM MCLOUGHLIN, managing director of Dubai Duty Free, speaks to TTN about signs of recovery and coming trends.
How was Dubai Duty Free affected by the downturn and have things now improved?
The impact of the global economic downturn was felt by the entire industry and Dubai Duty Free (pictured) was not immune. In the beginning of 2009, our sales dipped slightly and we took measures to boost sales, reduce our costs and encourage our shop floor staff to reach certain sales targets. We also introduced a number of promotional campaigns which were aimed at increasing passengers’ spend and a weekly discount offer on selected categories worked extremely well in ensuring that by mid 2009, our sales had turned the corner and were once again on the rise. By the end of 2009, our sales reached $1.14 billion, which represented a 3.76 per cent increase over the previous year.
Sales in 2010 ran at around 14 per cent ahead of 2009 and we expect to close 2010 with annual sales around $1.25 billion. We are obviously delighted that we have maintained a high penetration level of around 42 per cent of all travellers and that our average spend continues to be above $40 for departing passengers.
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There is definitely greater consumer confidence, although the Western travellers in general are still understandably cautious and may opt for an ‘affordable luxury’ as opposed to a major purchase. There are new markets opening up however and the Chinese are currently amongst our biggest customers for high-end luxury goods.
Are there plans for any developments/new promotions in 2011?
In 2010 a good deal of our focus was on planning and finalising the retail operation in Al Maktoum International Airport – Dubai World Central and, once the passenger terminal is ready to open, we will be able to roll out our operation there. We have also been busy planning for the new operation in Concourse 3 at Dubai International Airport which is scheduled for completion in 2012.
However, 2010 was about consolidating our existing retail offer in Terminals 1, 2 and 3.
It is now two years since the opening of Terminal 3 and what is emerging is three very different terminals with a different passenger mix and we are continuing to adapt the retail offer accordingly. In Terminal 2 for example, the success of flydubai has resulted in significant passenger growth in that terminal and we are moving ahead with a mini refit in order to meet this and provide a suitable product mix accordingly.
Emirates Terminal 3 is a fantastic terminal and as a result of the size, location and product mix, we have witnessed a significant growth in passenger spend in T3 this year.
We have put additional focus on our arriving passengers in Terminal 3, where we have two large retail offers in the arrivals hall. Last year we mounted a campaign to raise awareness of the generous allowances and the location of the arrivals shops.
We are also looking at installing a Dubai Duty Free customer help desk in the centre of the arrivals hall which will direct incoming passengers to the two shops and offer any assistance they might need.
In the meantime, we are constantly looking at improving the existing offer or introducing new brands.
Have you identified any coming trends for the future?
As Dubai International Airport is such a major hub, we have seen particular spikes in spend from our Asia Pacific passengers and the Chinese passengers in particular are an important and growing group. It is fair to say that the Chinese have probably overtaken the Russian passenger in spend. Like the Russians, the Chinese are looking for high-end luxury products, in particular in watches and fashion and they enjoy great savings on these compared to their domestic market.
We have also identified specific product categories and brands that are particularly appealing to the Chinese. For example Chungwa is the fastest growing cigarette brand. They are also lovers of high-end Cognacs. Omega is the top selling watch brand in China and therefore amongst the most popular watch for our Chinese passengers. Armani fashion is another favourite and the Chinese are the biggest buyers of Armani at DDF.
We have around 230 Chinese staff and we make a concerted effort to ensure that their shifts coincide with the Chinese flights and that we have Chinese staff in the most popular retail areas.