Dubai Duty Free (DDF) has reported a return to profitability from January 2021 following the devastating impact of the coronavirus (Covid-19) pandemic.

Speaking during a webinar today (30 June 2021), entitled Air Traffic in the new Normal, organised by The Middle East and Africa Duty Free Association and Airports Council International Africa, Ramesh Cidambi, COO, Dubai Duty Free said returning to profitability in 2021 had been its prime objective since the middle of last year.

“We knew we would lose a bit of money in 2020, but definitely wanted to be profitable in 2021. We took a bunch of steps in terms of looking at our operating costs.

“These included reducing our inventory by 55% compared to what we started the pandemic with and significantly reducing our staff. We also looked at every line item in terms of our Capex.”

Passenger numbers at Dubai International Airport may have dropped a mammoth 80% between June 2020 and June 2021, but this did not stop DDF from reaching its profitability goal.

REDUCED PASSENGER NUMBERS

“We are pleased to say that from January 2021, we have been profitable every month, despite much reduced passenger numbers,” Cidambi emphasised.

Reflecting on how DDF has handled the pandemic, Cidambi, who revealed total business dropped 68% during the aforementioned 13-month period (June 2020 to June 2021) recalled: “After Covid-19 started, we closed the airport and on 25 March 2020 all flights were cancelled. Until May 2020 we were working partially from home and at the airport.

“The team did a fantastic job working with the authorities and Dubai Airports to put together protocols for a safe reopening of the duty free business.

“Fortunately, the good work by our team and the airports in the region generally allowed for a situation where we were able to open safely and reassure passengers they could comfortably shop duty free and not be anxious about Covid-19.”

He added: “All parties have done a good job in this respect. We have continued the messaging over the last 12 months.”

The past 12 months may have been challenging for DDF, but this has not stopped the retailer from continuing to develop its stores. “We opened a new gold shop a couple of months ago and will open new boutiques later this year. In addition, we opened two new Foodplus shops in Concourse B in the middle of the pandemic.”

Passenger numbers may have dropped 80% during the period June 2020 to June 2021, as previously mentioned, but numbers did improve as the year progressed. Cidambi recalled: “Passenger numbers gradually started to pick-up and peaked in December. This was due to a combination of Christmas, New Year and the fact the Delta variant was yet to manifest itself.

“In January 2021, we continued to experience good numbers, but in April there was a time when the pandemic had really taken India by storm and infection numbers increased dramatically.”

The cessation of all inbound flights from India on 24 April 2021 due to the pandemic has certainly contributed to the overall slump in pax numbers. “We then entered the month of Ramadan when traffic was softer and then headed into the Eid holiday period.

“At the moment, we are in that in-between situation where the Delta variant is a threat and has increased restrictions in terms of traffic.”

Amid all the threats and challenges associated with the Covid-19 pandemic, DDF has pursued digital opportunities and increased sales from digital concepts by 165%.

The quick creation of a home delivery service between April and May last year — sales had surpassed $13 million as of 13 January 2021 — was just one initiative. “The home delivery site was launched in June 2020. It comprises 3,000 or 4,000 products and sales have been pretty successful.

“Overall, we have ramped up our marketing in terms of the digital space and are utilising digital marketing much better. We have reduced our spend in terms of traditional marketing which has paid dividends.”

SIXTY TWO PERCENT OF RETAIL SPACE NOW OPEN

Prior to closing in March 2020, DDF was operating around 37,000sq m of retail space. On reopening in June, it was running just 6,300sq m in Concourse B.

Concourse C partially re-opened in October 2020 before more of that concourse opened in December. “By the end of last year, we had two main areas open along with the arrivals shops. On 24 June 2021 we opened Concourse D in Terminal 1, which means we now have around 62% of our total retail space open.”

All that remains is for Concourse A to re-open at the end of this year or start of next and for Al Maktoum International Airport to resume operations.

Focusing on digital and managing the reduced retail space has enabled DDF to increase penetration and spend-per-passenger. “I would say Dubai Duty Free has been fortunate that its penetration rate has been consistently better than before the pandemic.

“This is due to improved marketing, better customer service, clearer communication and staff and team members who are very motivated.

“The fact that spend-per-passenger has remained at this elevated level for a year is really fantastic.”

Offering some final reflections of this turbulent period and casting an eye on the future Cidambi concluded: “Dubai Airport is a long-haul airport serving passengers going from east to west.

“We are pleased with what we have seen so far in terms of the resilience of our business under the leadership of Executive Vice Chairman and CEO Colm McLoughlin and are very pleased we are profitable.”

Stay close to TRBusiness for more from today’s joint Middle East and Africa Duty Free Association and ACI Africa webinar.