The Middle East & Africa Duty Free Association (MEADFA) conference in Dubai attracted a record 570 attendees this morning – some 70 more than 2013.

 

The two-day conference at the Jumeirah Creekside Hotel in Dubai was flagged as exploring retail opportunities in the region and began with a welcome address from MEADFA.

 

Well-known moderators Dermot Davitt and Michael Barrett welcomed all delegates and thanked Dufry for the cocktail reception the previous evening and equally Dubai for hosting the whole event.

 

They then introduced a new innovation with an interactive iPad system for the audience to ask questions after the presentations – and anonymously. This was all part of a worthy effort to capture more audience response and feedback, although it was initially a slight barrier on time to allow for old-fashioned questions from the floor.

 

Michael Barrett also warned delegates not to take the tablets out of the room, lest they receive the bonus of a small ‘electric shock’.

 

Meadfa President Sean Staunton then took to the stage and he reminded delegates that the region had enjoyed a good profile at the recent TFWA Cannes Exhibition where both Dubai Duty Free and Bahrain Duty Free both won awards.

 

He also pointed to the distinguished award made by the Prime Minister of Ireland to Dubai Executive Vice President Colm McLoughlin recently.

 

Staunton then moved on to say that he was delighted that the Duty Free World Council has been set up considering the challenges facing the industry today are so timely.

 

He warned the audience against complacency when it comes to threats facing the business and he emphasised that suppliers should be encouraged to give more support and attention to the region.

 

Excited about the conference with its broad range of topics, he outlined the forthcoming sessions and added that Dubai– as the biggest international airport in the world – would obviously be featured.

 

600 EXPECTED OVER FULL PERIOD

Staunton ended his brief introduction by saying that Meadfa is all about community development and working together and he particularly thanked the sponsors of the event, adding that the association is expecting the conference to exceed 600 over the full period.

 

The next session featured an opening keynote by Issam Kazim, CEO, Dubai Corporation for Tourism & Commerce Marketing (right), who set about explaining how Dubai plans to achieve its aim to become a world leader in tourism. [Click here for more on this subject: http://www.trbusiness.com/index.php/regional/middleeast/16393.html-Ed].

 

In terms of the tourism vision, he said this was consistent with the goals set in mid 2013 by HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman and CEO of Emirates Airline and Group, Chairman of Dubai Airports and President of the Dubai Civil Aviation Authority.

 

By the end of last year he said 10m visitors came to Dubai, with the main destination focus aimed at families.

20M VISITORS TO DUBAI BY 2020

He then looked back on some of the historic and iconic milestones in Dubai, including the opening of the Dubai World Trade Centre in 1978; the launch of Emirates in 1985; the opening of several iconic buildings over the last 15 years and impact these have had as global icons for the Dubai brand.

 

Kazim then pointed to the fast rate of visitor growth from the 1m seen in 1993 to 5m in 2004 and 10m in 2013. He then showed a film showing how ‘dreams’ had been transformed into ‘reality’ creating the Dubai we now as the ‘8th most visited city in the world’.

 

He said 2020 will see some 20m visits to Dubai a year, promoting the city to the world. This has – and is – being helped by what he described as harnessing some of the world’s leading tourism brands and events.

 

As part of this he added that Dubai’s aim is to become the leading family destination and the preferred country for the world to visit to do business – while ultimately trebling the contribution to the Emirates’ economy.

 

In order to achieve this he acknowledged that Dubai is going to need more hotel rooms, with the Emirate counting between 130-150,000 in total by the end of 2010. The top 10 visitor nationalities in the year ending June 2014 were: Saudi Arabia; India; UK; US; Russia; China; Iran; Oman; Kuwait; and Germany.

 

Kazim then talked about the major milestones ahead, such as Expo 2020 which he described as ‘a massive event’ for Dubai and then the new Dubai World Central Airport, with its ultimate promised capacity of some 200m passengers.

 

[Right: Matthew Brown, Managing Director of retail consultancy Echochamber].

 

MASSIVE PLANNING EXERCISE

Towards these years lots of new facilities are being planned for families he said, along with general attractive events, shopping festivals and anniversary summer surprises. There will also be more food festivals, the festival of light and several other events.

 

In terms of engineering the destination’ itself, he said there is an increasing drive to make sure families are happy to visit Dubai, or even want to live there, so big efforts are being made to provide the facilities they need in terms of services.

 

The government is also trying to make it much easier for people to buy tickets online before they come to Dubai, with the ultimate ambition to make Dubai the world’s premier family destination.

 

Meanwhile, the three and four star segment improvements will include taxi drivers who can double as tour guides, concierge and hotel staff training, and even more training for some 300 mandarin speaking tour guides.

 

The ultimate purpose is to make Dubai more accessible and this will include the opening of more overseas offices as it redefines its tourism industry beyond the present, where Emirates already flies to 140 destinations in 80 countries….

 

REMARKABLE AS POSSIBLE…

A Dubai Corporation for Tourism is also being formed and he says the country is also working hard with overseas media to promote attractions in Dubai as a whole. As part of this ‘MyDubai’ is also a new concept and promotional platform.

 

He said the destination offering is now about making it as remarkable as possible and not just shopping malls, but also Arabian souks other attractions that are unique about Dubai, such as spice and gold markets.

 

Thrill seeking activities are also on the menu, along with fine gastronomy reflecting the 200 nationalities that live in Dubai, which the government wants to highlight more.

 

He then showed a packed future calendar and a huge number of planned events before adding that there are also plans to make it easier for visitors to obtain tourist visas in future, in line with a new proactive approach from government who have already eased the process for a further 13 countries’ nationals to visit the Emirate.

 

Right now, Kazim said 80% of tourism is leisure related, but this is likely to change since there is now a team dedicated to leisure travellers and another aimed specifically at the other visitor sectors.

 

INSPIRATION FOR TRAVEL RETAIL?

A year in travel retail incorporating highlights of 2014 in the Middle East and Africa was the next subject covered by a film produced by The Moodie Report.

 

This also touched on the impact of Ebola and tobacco legislation, plus some international developments, including the fall in the number of Russian travellers due to the tensions with Ukraine and the international community.

 

The next session was entitled ‘Retail Reinvented’ and this saw Matthew Brown, Managing Director of retail consultancy Echochamber talk about how travel retail can take inspiration from the latest concepts and sales techniques present in domestic markets around the world.

 

[Right: Peter Irion, Executive Director, Gebr. Heinemann].

 

He told the audience he travels all over the world to look at shops and it is ‘still tricky’ tricky for retailers, as he showed a succession of retailers who have been forced to close around the world, including Radio Shack in the US (closing 1,000 stores) and Blockbuster in the UK.

 

Brown then made the audience laugh as he said that people love to queue outside shops and he couldn’t see why in many cases. He said he first noticed this in 2007 and then showed some more up-to-date images of people queuing in New York when Apple launched its iPhone 6.

 

He said it was ludicrous that people were camping outside the shop for a product they couldn’t afford and one they clearly did not need. He also showed a long queue outside a new Primark in Cologne, Germany where consumers had gone seemingly mad.

 

Turning away from this subject, he then said that online retailing is going to have a massive impact on these consumers in future, even more so than it has already. Online shops have understood the physical store as much as the online sector, said Brown and more importantly see the potential.

 

One example he showed was a Kate Spade promotion involving literally taking over run down shops and converting the windows to pop up stores. Here, people could order their goods by passing their phones over the barcodes behind the shop window, with the goods delivered to their hones within the Manhattan area within an hour.

 

There was no access to these stores in any shape or form – merely the shop front window phone-ordering platform. He said cash registers could also become a thing of the past as PayPal and staff with iPads become even more familiar sights.

 

He even referred to one store where staff could use their iPads to turn up the music, or dim the lights, depending on what seemed appropriate at the time.

 

[Right: Simone Horn, Trade Marketing & Category Development Manager Global Duty Free, Imperial Tobacco Group].

 

LOOKING IN WITH A FRESH EYE

Brown said customers expect more today and while he clearly didn’t pretend to know much about travel retail, this was a big positive as he spoke as he saw it, without the usual baggage carried by so-called experts.

 

He then described his own quaintly termed push for posh’ trend he has been tracking for years, which is not a luxury but an every day trend that began in the value sector with people who are setting new standards for others to try and keep up.

 

After showing images of the luxury Guerlain store in the Champs Elysees and the FRAGRANCES shop concept by DFS to demonstrate super luxury, Brown moved onto railway stations and the reinvention of Kings Cross Station in London in particular and the retail and food service revolution that has been happening there.

 

He also demonstrated multiple examples of what he regards as stand out retailing from around the world and in travel retail. Small and passionate entrepreneurs are becoming the brand leaders of the future and he added that there are three ways to learn from the best, with storytelling, pop ups and personalisation.

 

He said the pop up store is a defining example and he even showed a Prada Oasis & Juice Bar on the beach in Doha – just to illustrate that the best pop ups don’t have to cost a lot of money and there are virtually no fit out costs.

CAPTURING CUSTOMERS’ IMAGINATION

He then proceeded to give a number of dramatic and impressive examples from the world of luxury with Chanel and its association with the Olympic Games, to some very modest offerings that have nevertheless captured the imagination of consumers.

 

Make it personal, said Brown… because if you can get a product to connect back with a customer then it is simply brilliant. He also added that in his view, travel retail is no longer living in a bubble any more and he already benchmarks it with baseline retail.

 

The next session in Workshop B entitled ‘Understanding BRIC Travellers’ drew on the latest TFWA research into the shopping behaviour of travellers from Brazil, Russia, India and China to discuss whether the current airport retail offer is truly adapted to their needs.

 

The panel in this session consisted of Garry Stasiulevicuis, Managing Director of Counter Intelligence Retail; Peter Irion, Executive Director, Gebr. Heinemann; and Simone Horn, Trade Marketing & Category Development Manager Global Duty Free, Imperial Tobacco Group.

 

Garry Stasiulevicuis kicked off proceedings declaring that taken as a whole, the mean average of spending by travelling Russians is $90 is across the spectrum. He said Russians outspend Indians at a total level and across all of the key categories.

 

 

70% OF RUSSIANS PLAN PURCHASES

Of all those who plan to travel abroad, 80% plan to visit a travel retail store, 70% plan to purchase and 90% actually make a purchase, leaving 10% who don’t buy at all. In addition, 35% are looking for their regular brand, 34% look for value from a purchase and 33% state that quality is key to their purchasing decision.

 

Stasiulevicuis added that 42% of Russians take advice in store and 20% state that sampling is likely to influence their purchase. Also, 42% have a clear budget in mind, while more than 30% prefer three for two  offers.

 

Having said this, Stasiulevicuis said that almost 55% of Russians do not maximise their allowance and 14% of those interviewed said having to carry goods is a barrier to them spending anything. Interestingly, 18% of Russians also stated that their barrier to purchase was linked to concerns over authenticity of the goods.

 

Turning to research on Indian traveller spending, Stasiulevicuis said that of those researched, 80% plan to visit a store, 77% plan to purchase and 54% of those purchases are made in duty free. A total of 42% also stated that quality is a key driver to purchase and 66% have some interaction with staff.

 

Of these, 25% are converted to purchase. Some 47% also have a specific price point in mind that they do not wish to exceed.

 

UNCLEAR STORE SIGNAGE?

Perhaps most worrying was the finding that 16% do not buy as they say they are unclear of what the store signage means. In an excellent no-nonsense presentation, Stasiulevicuis said there are clearly some clear benefits to be had from these findings.

 

Heinemann’s Peter Irion then made his presentation on the Russian travellers, beginning by declaring that Heinemann loves to create value, but it likes to get to know its customers.

 

He complimented Garry Stasiulevicuis’ data which he said matched Heinemann’s figures. He then took a brief historical look at the ever-changing history of the Russian-German relationship, where interaction has always been significant.

 

Irion said Heinemann is serving many Russian customers in numerous airports and it has chosen to develop joint venture businesses in the regions to appeal to this and other customer nationalities.

 

He said 51% of Russian travellers visit duty free shops and 13% never do, while 47% of all Russian shop visitors buy on every trip and another 26% at least on every other trip. He added that the average transaction value is $110.93 and Russians obviously prefer luxury brands.

 

 

 

GETTING TO KNOW CUSTOMERS…

Irion then made the interesting point that it is not enough to know customers by nationality, but more important to know them individually using many different touch points and different messages for different target groups.

 

You have to give the benefits if you want to attract the customers and he said the Heinemann and Me loyalty club now has some 300,000 members and their details and is proving its worth to the company.

 

Irion also produced a plethora of statistics relating to Russian spending, in line with the company’s pledge earlier in the year to be much more transparent than it has ever been in the past.

 

It was then left to Simone Horn from Imperial Tobacco to introduce her presentation entitled ‘A Chinese Journey. She said Imperial Tobacco is in 160 markets globally, but in China the centres of wealth are fundamentally Beijing, Shanghai and Guangdong.

 

She reminded the audience that currently not even 10% of the Chinese population ever cross a single border to step out of China, yet Chinese are already in the top four nationalities of travellers worldwide and it is forecast their number will grow by another 50% by 2020 (according to Oxford Economists).

 

THE CHINESE TRAVEL ‘HIERARCHY’

As is well known, she added that their spending also remains the highest and this will increase significantly even more than any other nationality in the years to come. She then talked about how Chinese travel and the hierarchy that exists within travelling groups and where Chinese choose to travel in tours.

 

She said Chinese would rather travel to 10 European cities through 15 days on a bus than be stuck somewhere with nothing to do, because it is about the story they can tell when they get home and all of the photos they have sent home that they can talk about with friends and relatives when they return.

 

Food is also an important topic with Chinese preferring their own food, although actually everyone shares this and it is not regarded as belonging to any one individual, but rather more the group. There is also a strong hierarchy amongst those that sit around a table together, so she said westerners should also be aware of this when offering food and drink.

 

As for self-treating, she said Chinese self treat is not for the Chinese since they are very premium oriented and gifting plays such a major role. At the same time she said tobacco is a well-received gift and she showed some Imperial brands such as Davidoff, explaining that Davidoff Elite is now the special product Imperial has developed for Chinese consumer.

 

She also warned those in the audience that the Chinese are also ‘flexible’ on timing and they expect service providers to be flexible as well. Since they also travel in groups and purchase in groups she said retailers should always make sure they have sufficient stock because if they can’t service everyone’s purchases – which are often the same brands – then no one will buy anything.

 

 

 

HEINEMANN INVESTS IN RUSSIA

In the questions and answers section that followed, Irion said frankly that Heinemann’s sales to Russian customers were 20% down due to reduced travel and spending and it is his view that it is a similar picture in other European shops. The company has been able to offset some of these losses by running special sales promotions he added.

 

Far from pessimistic, he said Heinemann is confident that the Russian travellers and their spending levels will come back fast and in the meantime the company is taking the opportunity to invest because crisis times always offer opportunities.

 

Interestingly, one project that the company has been working on is an iPad digital assistant which has the possibility to communicate with Russian customers and he says these are the tools you need in order to work closely with the customer.

 

Lastly, Irion said that in the current environment it is very important to try to maximise the spends wherever possible by allocating the highest spending groups to the nearest gates and so allowing them to maximise their spends in the shops on the way.

 

The last session of the first day was entitled, ’The Meadfa Debate: Do retailers do enough to support premium brands in Middle East and African airport retail?’

 

In a novel start to proceedings, the moderators asked the audience to vote on the motion with their iPads either yes or no, with the answers coming in at 40% for yes and 60% for no.

 

The brave volunteers in the middle of all of this were as follows: Keith Hunter, Senior Vice President, Qatar Duty Free; Tarek Yassine Hamila, CEO, Hamila Duty Free; Stefan Dembinski, L’Oréal Luxe Travel Retail, Europe & Middle East; Francis Gros, Head of Global Channels, Luxottica; and Michel Mignot, former Export Director of Chanel.

 

Qatar Duty Free’s Keith Hunter was affirmative about retailers doing enough, pointing to their heavy investment in the region. For his company’s part he said they now have 24m passengers passing through what is a 50m-plus capacity airport in Doha.

 

He said the main thing to look at once you have made that investment is where do you go here from there and is it providing the return you want? Having said that, Hunter added that QDF is ready to work the business as it changes.

 

Having said that, he repeated what he has said to TRBusiness several times before, that he hasn’t always been too amused by the treatment QDF has received in the past, with some suppliers seemingly dictating a menu of what is available and particularly at the old Doha Airport where space was extremely tight.

 

PRICE NOT A MAJOR DRIVER…

L’Oréal’s Stefan Dembinski said that in his view, price is no longer a major driver because travel retail has become the bridge between many companies, plus digitalization has provided the means to compare prices. If you stick to prices as a co-driver ‘then you lose’, he said, adding that value is key.

 

Dembinski said all parties have all invested millions and they try to enrich the experience of consumers in store and surprise them, but it is also about understanding who the consumers are and how they behave.

 

He said that basically the conversion rate for L’Oréal is something the company is ‘quite good at’ with around 66%, but if this is to be increased then the footfall will have to rise and exchanging data between the various parties needs to be a key competence in the industry if this and other goals are to be achieved.

 

[Right: Keith Hunter, Senior Vice President, Qatar Duty Free].

 

He added that if the travel retail industry does not engage in doing this then Google, Facebook and Amazon will do it because these companies are already looking into the travel business. Showing a picture of France’s famous defenders from the past, Dembinski said: “It is all about being all for one and one for all to share the information from the four silos of our business.”

 

The next contribution came from Tarek Yassine Hamila, CEO at Hamila Duty Free who explained that Tunisia is unique in the sense that it does not have the high transit traffic enjoyed by the Middle East. It has also undergone political change after the Arab Spring, while Heinemann ATÜ and Hamila took over the operations at the five international Tunisian Airports, creating Tunisia Duty Free.

 

He said travellers through these airports can be high spenders, since there are not many big brands in the High Street. He added that it is therefore not only a matter of just changing the look and layout of airport space, but redefining and optimizing what goes into the departure and arrivals spaces.

 

Especially considering the arrivals shops have been increased by 30% and the shops now offer a total of more than 10,000 products. This is before the joint venture adds some branded boutiques in future, he added. Eight million passengers will have access to these shops and he says there is great opportunity here and particularly in Tunis Airport where the space is being doubled.

 

[Background: The consortium of ATÜ Duty Free, Gebr. Heinemann and Hamila Duty Free won the tender to operate the duty free shops at Tunis‐Carthage, Djerba‐Zarzis, Sfax‐Thyna, Tozeur‐Nefta and Tabarka‐Ain Draham. The consortium offered €32m ($41.1m) for the contract which starts in November and will run until the end of 2022. The shop space at the five Tunisian airports – all international – is 5,406sq m. The five airports handled eight million passengers last year. During the competitive bidding procedure, ATÜ/Heinemann/Hamila had competition from global DF&TR players, including Dufry, LS Travel Retail, World Duty Free Group, Aer Rianta and Flemingo-Ed].

 

Tarek Yassine Hamila (below) said the joint venture is now bringing in digital communications and a loyalty card and returning to the debating question, said the retailer will provide the right environment for luxury brands. He said the new joint venture now anticipates a 20% increase in sales in year one and 5% in each year thereafter.

 

$43M INVESTMENT IN TUNISIA

He said brands should find it confortable to thrive in an environment where the joint venture will invest €35m ($43.4m) in the first 12 months to delight and surprise the passengers with a brand new range of store concepts with a department store format, quality shop fittings and some travel retail exclusives.

 

Newcomers will include Victoria’s Secret; Ferragamo; Michael Kors; Tom Ford; and Furla. He also said that the retailer is creating the best shopping experience in North Africa and it knows its customer base.

 

Francis Gros, Head of Global Channels at Luxottica then gave his views, introducing his company as the number one domestic sunglasses retailer and supplier in the world. He said that in travel retail the company is represented 140 airport stores in a category where the revised Generation Research value in 2013 was $1.6bn (+7.7%).

 

He made reference to the successful annual sunglass workshop in Cannes and the practice of sharing category management expertise with the retailers for years, since he has two hats in leading both the domestic markets and the travel sector under his title of Head of Global Channels.

 

Hunter also said that from his perspective sharing data might be desirable, but it can also be difficult since it comes from so many sources and is often in no useful form until it is formatted and this process can be potentially huge, while data protection laws must also be protected at all times.

 

TOO MUCH ‘SAMENESS’ IN TRAVEL RETAIL?

Moderator Dermot Davitt then asked if there is too much sameness in travel retail, to which Tarek Yassine Hamila replied in the negative. With his company in the start-up stage, he said the Tunisian airports offering would consist of shops with ‘a local touch’, which he believes will make a big difference to the customer experience.

 

[Right: L’Oréal’s Stefan Dembinski].

 

He said the brands will nevertheless have a huge role to play in displaying their products and he said they need to contribute and be very active with the retailer.

 

For his part, Qatar Duty Free’s Hunter said he thinks there will always be an element of sameness which is unavoidable, but he also made the valid point that there are also many brands that haven’t entered the travel retail environment.

 

He said Francis Gros had really pushed sunglasses to QDF and really asked them what it was they wanted and the result today is that sunglasses is now a big sector. Similarly, he said QDF has also done good business with L’Oréal and Chanel, but this was not true of every supplier.

 

Hunter said the difficult conversations sometimes needed to be had and he admitted that Qatar Duty Free hasn’t always got it right.

 

[Right image: Francis Gros, Head of Global Channels at Luxottica].

 

But he pressed his point home that some suppliers at the old airport had seemingly treated it as a marketing exercise and seemed more concerned about their brand image. He added that this had been ‘a big frustration’ at the old facility where the retail space available was so small.

 

[TOP IMAGE: Meadfa President Sean Staunton opens the first day of the conference. This was well moderated by Dermot Davitt from The Moodie Report and Michael Barrett from APTRA-Ed].