Dubai Duty Free aims for sales of Dh9bn

Dubai Duty Free is an unparalleled success story, growing from a 100-employee operation 27 years ago to the number one single airport duty free operation in the word.

Colm McLoughlin as Managing Director has overseen that growth and in an exclusive interview with Rebecca McLaughlin on Dubai One TV’s Emirates 24/7, says he and the company are far from done.

With more sales space coming in the form of Concourse 3 and Al Maktoum International, McLoughlin outlines his strategy and explains the impressive numbers Dubai Duty Free has posted, despite the economic slowdown

- During a period when most of your competitors have seen sales fall over 15 per cent, what is DDF doing differently to have posted a sales increase of 3.6% per cent (over 1 billion US dollars) in 2009 and retain its position as the single largest airport retailer in the world?

Firstly we’re very happy to retain the number one position in the world, of course that is at a single airport and we had been training behind Heathrow and Incheon in Seoul for many years.

Last year was a different year for everybody. It was different for us as well. We reacted in our own way.

We did additional marketing, additional promotions and we did specials for our customers.

If you look at good airports around the world they sell generally to 16 per cent or 18 per cent of departing passengers.

In the case of Dubai Duty Free we sell to more than 32 per cent of departing passengers and we do that because we are well positioned. Our location is good.

We have fantastic cooperation with the airport.

Our boss [Sheikh Ahmed bin Saeed Al Maktoum] is terrifically helpful. We have good value.

We have the best team of staff in the Duty Free Industry because we train them very well.

We think all of these things added together means that’s we can continue to plugging away good.

- Let’s talk about future expected income. With the opening of Al Maktoum International Airport and Concourse 3 at Dubai International Airport in 2011, how will your bottom line be impacted?

This will be good. This year alone, for example, for the first six months versus last year, our sales are plus 16 per cent. In our case that’s Dh320 million.

In the future we expect, over the next six years, to double our business again.

We’re talking about in Duty Free language in excess of $2 billion, but in our own language in excess of about Dh9 billion.

This will come about by the building of Concourse 3 at the existing airport.

We’re putting about 8,000 square metres of retail space there.

With the opening of Al Maktoum International Airport at Dubai World Central, we have a small Duty Free ready and built, and ready to go when it's needed metres.

But eventually there is a plan for that airport for 64,000 square metres of retail space.

So I visualise in five years’ time the business is going to be twice as big as it is now.

We’re going to have 5,000 to 6,000 staff working for us as opposed to our existing number of 3,700. I think we've only just begun.

- As a key sponsor of the Dubai Summer Surprises - tell me what the period represents for Dubai Duty Free in terms of revenues? Are we up or down on last year?

In the case of Dubai Summer Surprises the more people we can encourage to come to Dubai the better it is for us because they go through the airport in most cases. We have joined as a sponsor for six or seven years with them.

We have a weekly promotion were people who go through Duty Free and spend an excess of Dh500 will enter a draw each week for seven weeks and have the opportunity
to win Dh25,000.

We have joined Mastercard in that promotion and it's very successful.

- Regarding sponsorship and DDF’s involvement with domestic and international sporting events, have budgets been downsized?

We did the very opposite. We took on extra events. We increased prize money in various things. We invited more guests and more press for example.

We are now the sponsor for the Irish Derby. It's now known as the Dubai Duty Free Irish Derby.

We are going to Ascot and are the main sponsor there of an event called the Shergar Cup. No we did not reduce our budgets and sponsorships.

We did not reduce prize money, in fact we increased them and we boasted about that a little bit and I think that has been good for us.

- In terms of the average spend per customer, what dips and spikes have you seen over the past 12-18 months? Which areas, products showed the greatest
weakness?

We have seen a change in the spending and there was definitely a downturn in spending on luxury products.

But it was more than compensated for by extra spend on less luxurious products.

So our spend per head is very healthy. It’s about $45 per head.

Now that varies from one terminal to the other. But it is healthy and it is up on previous years and of course our job is to make sure it continues to go up and that seems to be happening fairly well.

- Has the trend moved away from big ticket items to smaller ones or is there staple goods which always run off the shelves?

The trend was away from big ticket items maybe one year ago, but its slowly coming back.

You know a very small change in flights or in people can make a very big difference.

Years ago here we all spoke about the spend of Russian visitors for example and whilst that is still very good, there is now a new spending coming into the market which is Chinese.

- How viable would a loyalty scheme for your most valued customers be?

I'm not sure, we have discussed this internally many times. We have not implemented it to any great extent.

We do have a joint promotion at the moment with American Express. We do have our own branded American Express card.

We have found that's very successful. We have about 14,000 card holders. It offers discounts to passengers at the Duty Free. American Express tells us that are the highest spending card they have.

- Well then wouldn’t an alliance with Emirates for example or Skywards, their loyalty scheme, make good commercial sense for Dubai Duty Free?

It would. Emirates and we have spoken about this and there are various things we are considering. But there is nothing definite.

- Dubai Duty Free is nearly 27 years old and now recognised as the biggest Duty Free operation in the world. What’s your personal ambition for the organisation as it approaches its third decade?

I think we want to see Dubai Duty Free continue to grow.

We want to see it do new things and sometimes it’s difficult to do something new and right this minute for example Dubai Duty Free is building its own hotel.

We will have a 5 star hotel in operation. We will have 293 bedrooms and these are really 5 star bedrooms.

They are up to 55 square metres in space. We will continue to promote things to sponsor things. We will continue to mind and look after our staff.

You know when we started our Duty Free in 1983 we had 100 staff.

We still have 56 of those staff members working for us and there is a good feeling about that.

Watch the full interview on www.dubaione.ae and catch Emirates 24|7 on Dubai One every Saturday at 8 pm and again on Sunday morning at 7.30

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