Abu Dhabi: a retail model that breaks the mould?

By Kevin Rozario |


The Abu Dhabi Airports Company will begin its extensive Midfield Terminal Complex RFP programme next month for its duty free and larger F&B facilities.

 

The RFP and subsequent tender schedule for Abu Dhabi International Airport’s much anticipated Dhms.10.8bn ($2.94bn) MTC currently envisages ADAC releasing its duty free and larger F&B RFP’s in April, with a September deadline, followed by the specialty retail RFP in May/June and the tender deadline this October.

 

Services and small F&B RFPs will be made available in July with a deadline of November. This will come ahead of niche contracts, with RFPs for a museum and lounges in August, ahead of a November deadline. The final dates for all decisions have also been earmarked for December of this year.

 

There will be a total of 30,000sq m of commercial space on offer, split between 10,000,sq m of speciality stores; 11,000sq m of F&B; 7,500sq m of core-category duty free; and 1,500sq m of services and other amenities.

 

Gavin McKechnie, Vice President Commercial, Abu Dhabi Airports Company.

 

CONSISTENT POSITIVE MESSAGES

In an in-depth interview, Gavin McKechnie, Vice President Commercial, ADAC told TRBusiness recently that the opportunity afforded by the new facility will be tremendous, a message which is entirely consistent with that imparted in an exclusive film interview with TRBusiness at the TFWA Cannes show last October.

 

He said that with so much new space available, ADAC has considered its options carefully with respect to the types of contracts, their lengths, how they are divided up, and the retail concepts that underpin them.

 

One of the most visible highlights of the new terminal – which is not due to open until 17 July 2017 – will be its new triple-height store units, as McKechnie explained: “There will be four big icon stores that will be 300-350sq m each. The frontages will be triple height, although the stores themselves will be on one level.

 

“They will have a major impact as you walk through. They are big for any luxury brand and we have had a lot of interest from the houses.”

 

But this is only part of the overall new approach and offering that ADAC has in mind, with McKechnie making clear that he wants to get away from the stuffy old restrictive retail deals in the past and open up the market. “We are trying to break away from master concessionaires… it is a kind of lazy option,” he says.

 

 

CONTROL AND MORE FLEXIBILITY

“We want more control, more flexibility and as much variety as possible. We’ve had a lot of conversations with brands and quite a few would rather come in on their own rather than in a master concession. Some of the bigger luxury labels have the local infrastructure to do it. “They know they can manage the stock better than a concessionaire.”

 

He is also open-minded about the duty free offer, saying it could be split between two operators due to the way it is being designed. “We will go to the market and see what comes back. We are still deciding.”

 

This unfolding new bold approach to its commercial offer at the new Midfield Terminal Complex has also been wholly consistent, as was demonstrated when TRBusiness interviewed Mohammed Al Bulooki, Chief Commercial Officer at the Abu Dhabi Airports Company during the Trinity Forum back in January 2013.

 

He pointed then to a successful model with a 60% growth in revenue in the prior three years and admitted that even he had been surprised at Abu Dhabi Airport’s retail progress. He said at that time: “…I didn’t believe in three years you could do this and it is unheard of in any other airport that has not increased in space. In the same space, we have seen 60% growth; this is just too good.”

 

At the same time, Bulooki added that for DFS to decide to come to Abu Dhabi back in 2008 was a also a big deal and a game changer for the airport, describing the retailer as a’ forward thinker’ who didn’t know whether the retail model was going to work out or not, but who was willing to give it a chance.

 

Mohammed Al Bulooki, Chief Commercial Officer, Abu Dhabi Airports Company.

 

CONCEPTS COME BEFORE FINANCIALS

The same bold approach is now being applied to the Midfield Terminal Complex, with significant effort being applied into marketing the retail element, as ADAC wants an offer that is clearly different. Putting its money literally where its mouth is, it has been unequivocal in stating that it is less interested about the financial bids as the concepts.

 

McKechnie said: “The concepts are much more important than the financials. To show that, when we put the RFP out we will use full scoring criteria with technical making up 60% and the financials only 40%. That tells you how much importance we are attaching to customer service levels and the design (which make up the technical element.”

 

He adds: “We have a really spectacular terminal building that’s 52 metres high. If we get the same old ordinary offer, the size of the building will just dwarf the retail, so we won’t have gained anything other than space. So for us, we really want partners to come up with something new… we have the space.”

 

In the meantime, Abu Dhabi Duty Free’s retail revenue has continued to show consistently strong progress. In 2013 it recorded record sales of AED.912.7m ($248m), an increase of +13% compared to 2012 from 16.5m passengers. By the time the MTB opens, ADAC expects to have reached 25m and within two years of opening 30m is earmarked.

 

 

‘ONCE IN A LIFETIME OPPORTUNITIES…’

As reported by TRBusiness in February, Mohammed Al Bulooki, Chief Commercial Officer, Abu Dhabi Airports, said: “The new Midfield Terminal Building will offer once in a lifetime opportunities for ambitious and innovative retailers, and will have a capacity of more than 30m passengers a year.

 

“Abu Dhabi Duty Free has expansion plans ahead of the new terminal building opening in three years’ time, with the introduction of new outlets to continuously improve the shopping experience for passengers passing through Abu Dhabi International Airport”. [Click here for full story: http://www.trbusiness.com/index.php/regional/middleeast/14690-sales-hit-248m-as-adac-seeks-bids.html]

This news story is a very small part of a major interview with ADAC’s Gavin McKechnie conducted by TRBusiness’ Senior Editor, Business & Brands, Kevin Rozario, which will appear in the April print edition of the magazine, which is out shortly.

 

Gavin McKechnie also talked to Editorial Director Doug Newhouse on film about the airport company’s ambitions at ADAC back in October 2013, where he outlined the Midfield Terminal Complex vision and how he believes it will free up ADAC’s retail and F&B options from its present space constraints.  [To watch this informative 10-minute video, click here: http://www.trbusiness.com/index.php/video-channel/14205-video-gavin-mckechnie-vice-president-commercial-adac.html]

 

Reporting by Kevin Rozario with contributions from Doug Newhouse.

 

TOP IMAGE: The huge Dhms.10.8bn ($2.94bn) Midfield Terminal Complex is so named because it will be located between two runways when it opens in 2017.

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