Dubai Duty Free, Chief Operating Officer, Ramesh Cidambi has declared 2019 as being ‘cloudy with a chance of sunshine’ as he reflected on a tough year.

Last year, Dubai Duty Free reached its milestone sales target of Dhs7.3bn (2bn) in the early hours of 29 December, but speaking at the 2019 MEADFA Conference in Muscat, Oman Cidambi said he knew 2019 would be difficult and was just looking to finish positively.

He said: “We are looking forward to finishing the year just about ahead of the water compared with last year in terms of business.”

Elaborating on the challenges facing the business in 2019, Cidambi said DDF struggled in categories such as tobacco because of the difficulties with the excise regime (imposition of excise duty in arrivals) and implementation of digital tax stamps on cigarettes from 1 August 2019.

“All of this really damaged the tobacco business, which is an extremely important category. This is not only because of the 8% or 9% of revenue it generates, but because it encourages people to come to the shop and buy something else. For every dollar spent on tobacco, we estimate people spend $2 on other stuff.”

DEVELOPMENT APLENTY AT DXB

Despite the various challenges facing overall business, development was aplenty at Dubai International Airport. Cidambi said: “We essentially redeveloped Concourse C with the opening of the gold area and Gifts from Dubai shop in December 2018 and also worked on the fashion area.

“Overall, Concourse C is about 4,500sq m and is brand new as we speak with all the areas now developed. The concourse opened in April 2000 and a big renovation and refurbishment was due. The passenger flow had also changed because of the opening of Concourse D.”

Work also continued this year in Concourse B, the most important concourse at the airport for DDF, which opened in October 2008 and accounts for 33% of total business. The perfumes and cosmetics shop expanded in the western part and a new Gucci store opened last December.

Cidambi commented: “After we opened the perfumes and cosmetics store, sales in the existing Concourse A store and new Concourse B store combined, were 75% higher than what they were when we only had the shop in Concourse A.

“We also opened a new Ferragamo store in Concourse B where sales increased and a new Chanel outlet in June 2019, where we have also experienced an uplift in sales. We really focused on fashion and the brands.

“In addition to opening a Christian Dior store in September, we undertook some work on the two ends of the concourse where we have a sports shop and book shop.”

Aside Concourse B, work was undertaken in the ‘relatively new’ Concourse A. “We did a little bit of modernisation to the shop, upgraded the technology offer at the end of the concourse and did a minor renovation.”

Regarding overall retail development in the past 12 months Cidambi is happy with how the retailer has progressed and pleased with the development of business in all areas of the airport.

He also expressed his satisfaction with the relationship the retailer has with airport operator Dubai Airports. “We have had insight into the planning process at the airport at a very early stage, whether it is an airport or concourse development.

“We engage with the airport authority four or five years before a concourse opens. This is why the passenger flow within the concourse or terminal is suited for a retail business and we are able to generate the revenues we look for.”

According to Cidambi, early engagement with Dubai Airports has meant Concourse D represents the ‘best evolution’ of DDF’s retail offer and is a true walkthrough with very high penetration. “As soon as the passenger enters the retail area, he is able to orientate himself very quickly to what we offer. This was only possible because of the early engagement.

“If you don’t have early engagement and influence in the design process then there is absolutely no way of achieving this.”

Cidmani, who admited to doing some ‘shadow boxing’ with Eugene Barry, Vice President Commercial, Dubai Airports in terms of retail and food and beverage in Concourse D said: “We definitely think early engagement was key.”

Another example of where early engagement proved crucial was the terminal three arrivals shops. DDF knew from the outset the location of the stores was not ideal. From 2003/2004 to the opening of the shop in the baggage claim area in 2008, Cidambi argued with the designers about the location. He recalled: “In the end, we opened with those new locations and struggled with penetration across the arrivals business.

“Several years on, we are opening a new arrival shop next month with greater visibility and hopefully greater penetration. Sometimes you get it right and sometimes you don’t from a retailer’s perspective, but I respect that airports and airport planners have their own views.”

In terms of embracing e-commerce opportunities DDF has focused on improving its website, digital marketing and obtaining customer data. “Last year, we started a project encompassing all three elements which we are now near the end of.

“The net result has been an improvement in terms of communicating the offer to our customer, telling them about our offer and gathering and maintaining data.

“We believe initiatives like these are almost as important as the retail development. Our website has had problems since launching in April, which resulted in us losing some business, but the issues were fixed by May.

“The aim is to finish the year at least close to the turnover we generated from the website in 2018.”

Looking ahead to 2020, Cidambi concluded: “The strength of the dollar continues to worry us. If there is weakening of the dollar in some form, this will represent a ray of sunshine as far as I am concerned.”