Left: Marcus Spahn, GM Commercial Non-Aero at Matarat Holding. Right: King Abdulaziz Airport in Jeddah. Photos supplied by Matarat.

Marcus Spahn, General Manager Commercial Non-Aero at Matarat Holding, tells Kevin Rozario why Saudi Arabia is the market to watch in travel retail.       

Saudi Arabia is undergoing a rapid transformation of its aviation market and along with that has come a major revamp of the airport commercial offer in a relatively short space of time.

A breakthrough change has happened: the opening of the first arrivals duty free store in the kingdom. It debuted in mid-October at King Khalid International Airport in Riyadh, the busiest airport in the country, with others to follow soon at King Abdulaziz in Jeddah and King Fahd in Dammam.

Matarat Holding owns the airport assets in Saudi Arabia. It has four operating companies: one for each of the three international airports above plus one called Cluster 2, which handles another 24 gateways.

They range from airports with significantly less than one million passengers per year to some that are considerably bigger like Abha with 4-5 million passengers per annum. The total portfolio is 27 gateways.

Introducing arrivals duty free

Marcus Spahn runs the non-aero business at Matarat, having had a series of high-profile past roles in the Middle East including Chief Commercial Officer for Munich Airport at Cairo International Airport and Commercial Director at Hamad International Airport in Doha.

The Visitor store run by Chalhoub Group. Photo supplied by Matarat.

On the arrivals offer, he said: “We are currently introducing arrivals duty free at our three main international airports in Riyadh, Jeddah and Dammam.”

The country’s customs authorities announced the plans last year and between then and now, alignment with the regulations have been taking place.

“A lot of benchmarking and data analysis went into the decision to introduce arrivals stores in cooperation with the Saudi customs authority,” he added.

For the offer itself, Matarat benchmarked with airports across the region and worldwide to ensure it has the right product mix in place as the arrivals stores roll out.

“We have a very competitive and attractive offer. Our arrivals stores won’t be enormous, like Oslo Gardermoen, for example, but neither will they be small kiosks. Footprints are between 150sq m and 250s qm. For us, the main categories will be tobacco, and also P&C and confectionery. We still don’t know what the precise buying patterns will be like in arrivals, but based on our passengers’ purchasing behaviour in departures, we believe these categories will be key.”

Matarat is also looking at digitalisation, with e-commerce a strong possibility in later phases. Pre-order and pick-up on arrival is the likely starting point using technology-driven solutions for passengers to collect their goods.

Market opportunity

Saudi Arabia is the Middle East’s largest aviation market with almost 112 million passengers in 2023 and is going through a big commercial transformation in line with the goals of the country’s latest aviation strategy. The strategy ties in with the overarching Vision 2030, which has set Saudi Arabia on a modernisation path away from a reliance on fossil fuels and towards international tourism.

King Abdulaziz International Airport in Jeddah. Photo supplied by Matarat.

The Kingdom is ambitious, believing that transforming the aviation sector can push air traffic capacity to 330 million passengers annually by 2030. This will rely on expanding direct air connections to more than 250 destinations around the world.

Matarat has made great strides in delivering state-of-the-art international airports, helped by its privatisation efforts – and it has also ramped up its duty free retail facilities. Spahn is an old hand in the market having been Commercial Director at King Khalid Airport under the management of Fraport, the operator of Frankfurt Airport. In Riyadh, he was responsible for all commercial revenue streams and pioneered the launch of Saudi Arabia’s first-ever duty free shop in 2012.

In recent years, travel retailers have been highly focused on the kingdom. Heinemann was the latest to set up shop through a joint venture at Jeddah Airport having won the concession last year. A handover took place in August, TRBusiness understands.

Also at Jeddah, ‘The Visitor’, a multi-category department store in the domestic concourse was opened earlier this year covering 2,600sq m of retail space. Run by concessionaire Chalhoub Group (the largest retail operator in the Middle East) the store spans luxury brands, beauty, fashion, confectionery and tobacco.

Across the kingdom’s international airports the key categories are tobacco, perfumes and cosmetics, food items, confectionery and electronics. Looking ahead, Spahn said: “Our duty free offer will move towards more exclusive lines from international brands – and a bigger variety of them – with a substantial increase in local brands and products, especially in food and confectionery.

King Khalid International Airport in Riyadh. Photo supplied by Matarat.

He added: “When it comes to local products, premium dates, camel milk products and Saudi coffee beans are something that we will certainly see more of in the future. We will be looking to continually improve customer service and bring the ‘sense of place’ of Saudi hospitality to our shops.”

Varied passenger mix

Matarat has carried out research to identify the different personas travelling through its top airports in order to pin down the exact retail offer that each of those gateways should be delivering. Eight profiles are being targeted from blue-collar manual labourers and pilgrims to international business travellers. It means having a wide range of goods – and pricing – to service them.

King Fahd International Airport in Dammam. Photo supplied by Matarat.

“Our traveller profiles are very diverse. They range from local business travellers to assisted passengers, and an increasing number of tourists. A large component, especially in Jeddah, has always been religious travel with pilgrims coming to Saudi Arabia,” said Spahn.

As tourist and entertainment developments in the kingdom scale up in line with Vision 2030 – for example on the Red Sea coast or in AlUla, the gateway to ancient historic sites like Hegra, often compared with its sister city of Petra in Jordan – leisure travellers, both international and domestic, are rising. Spahn noted: “These numbers are growing fast and range from high-end travellers, families, groups and individuals alike, to backpackers.”

Statistics from the Ministry of Tourism show that Saudi Arabia welcomed 27 million international tourists in 2023. In addition, like all countries in the Middle East, the country has a big share of expats among its passengers, both white- and blue-collar workers.

In this respect, Saudi Arabia’s airport retail market has a lot of similarities compared to others in the Middle East. The big difference, however, is the huge domestic travel market due to the country’s large size and population (33.3 million in 2023 according to Worldometer).

“The local population and local traffic is something other Middle East countries don’t have,” noted Spahn.

“Almost 50% of air traffic is still domestic.”

All photos supplied by Matarat.

This interview first appeared in the November/December 2024 issue of TRBusiness magazine. Click the magazine cover to view.

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