Dubai Duty Free generated sales of $2bn in 2018.

Dubai Duty Free (DDF) has emphasised the growing importance of Chinese passengers at Dubai International Airport.

Last year, DXB handled 89m passengers with DDF generating record sales of $2bn. In terms of total purchases, 3.7% came from Chinese-based consumers or Chinese travellers to China.

Colm McLoughlin, Executive Vice Chairman and CEO, Dubai Duty Free told TRBusiness: “There are 16 flights each day out of Dubai to Chinese cities.

“As I said, 3.7% of purchases were Chinese driven last year, accounting for 16.5% of total business. Chinese traffic has been very positive for us.”

CHINESE EMPLOYEES

At present, DDF employs more than 6,100 people of which 780 are Chinese. “If you look at Dubai Duty Free 15 years ago, we were not employing any Chinese staff. Currently, Chinese staff are our third biggest group in terms of employees,” McLoughlin emphasised.

In 2018, DDF also signed a strategic partnership with Chinese travel services provider Ctrip to promote itself to Ctrip customers travelling from China to Dubai.

“We have a contract with Ctrip in China, which is encouraging and we give a small discount to Chinese passengers which have booked through Ctrip.”

DDF is not only content with the volume of Chinese passengers passing through its stores, it is also satisfied with how things have started in 2019.

“This year is about the same as last for the first three months (January to March). We are 0.5% down on our income, but this is nothing to worry about. There are forecasts of extra traffic which is stable at the moment,” McLoughlin indicated.

Left-right: Mona Al Ali, Dubai Duty Free Vice President, HR Service Delivery, Ramesh Cidambi, Dubai Duty Free Chief Operating Officer, Christine Zhang, Senior Vice President of Ctrip.com, CEO of Ctrip Global Shopping and Michael Liu, Executive VP/Global Shopping CEO at the signing of DDF’s strategic agreement with Ctrip.

Further reflecting on 2018, reaching the $2bn milestone was almost inevitable.

He recalled: “We identified the $2bn figure as a landmark for us last year and worked very hard to achieve it. It was always a given that we were going to do it.”

McLoughlin added: “Each year, there are changes in the sales split. Last year became a terrific one from the point of view of Apple products and iPhones, new technology and so on.”

“We actually registered Dhs280m ($76.2m) with the Apple technology company. Taking everything to account we have had a great run.”

Sales of e-cigarettes, which can now be offered as duty free products in Dubai are also expected to soar. The same products were expected to become legal to sell downtown from this month.

“E-cigarettes can now legally be sold as duty free products in Dubai. As a result, we are now selling Iqos products from Phillip Morris in several places.”

Dubai Duty Free currently employs more than 6,100 people.

$3BN DOLLAR TARGET

Looking ahead, DDF has set itself the long-term target of $3bn. But this could take around 10-years to achieve, according to McLoughlin. “The next big focus is our second airport, Al Maktoum, which is being developed more and more.

“There is a plan in place for Al Maktoum Airport, but it is a little longer term.”

Currently, DXB, which handled 89m pax in 2018, has capacity for 118m passengers. In the next decade or so, the airport is expected to have three runways, two new concourse buildings and capacity for 135m passengers.

“When that time comes, the plan is for Dubai Duty Free to have 80,000sq m of retail space. Our mind and our forecasts are also saying we will reach $3bn and have around 9,000 employees.”

Last May, Colm Mcloughlin and Saba Tahir accepted the award for Best Airport Retail Environment as voted for by millennials, in Singapore.

One DXB development project which has already been completed is the revamp of Concourse C.

McLoughlin, who also revealed the opening of new dedicated areas for Victoria’s Secret, Bulgari and Gucci at the airport commented: “Concourse C at Dubai International Airport has been completed and looks absolutely wonderful.

“There is a very fine liquor and tobacco store, lovely perfume shop, gold shop, jewellery outlet and sports shop. We also have promotional shops offering Finest Surprise and Millennium Millionaire draw tickets.”

CONCOURSE C REVAMP

The revamp of Concourse C is a comfort for passengers, acknowledged McLoughlin. “They no longer have to worry about doing all their shopping in Concourse B and can now do some in Concourse C.”

In terms of challenges, the implementation last year of more stringent hand-baggage restrictions on carriers such as Emirates and Etihad is something DDF has been forced to contend with.

McLoughlin explained: “Most hand-baggage is now limited to 10 kilos. This has sparked a decrease in sales of certain products such as powdered fruit drink Tang, powdered milk and that kind of heavy stock. This is causing a slight problem.

“Refunds are being handed to consumers who are refused entry on board. We simply have to get around this. The airlines are just implementing what they see as correct rules.”

The latest phase of redevelopment at Concourse C was completed last year.

Other challenges include currency fluctuations and the introduction of VAT in the United Arab Emirates from 1 January 2018.

“Currency is a problem in that prices are more expensive for passengers and that our margins have to be reduced on occasions to ensure we are offering good value.”

“The introduction of VAT was something new in our part of the world. Although it is only 5%, it has still affected our sales to arriving passengers because prices are not VAT free on arrivals.”

“When something like this comes along you just have to do the best you can.”

Regarding the company’s digital footprint, McLoughin said DDF had introduced a Click & Collect service. “This is a very small percentage of our business and only comprises about 1% of total sales.

“It is there, ready, available and in use. There is also an opportunity to expand it should we wish.”

 Apple products, iPhones and new technology performed strongly for Dubai Duty Free in 2018.