Hamad International Airport in Doha.

Solid partnerships with suppliers backed by a dynamic programme of retail executions helped Qatar Duty Free (QDF) to deliver impressive results in 2017, despite the country’s enduring diplomatic crisis.

In an exclusive interview with TRBusiness, Tab Musleh, Acting Head, Qatar Duty Free revealed that instore penetration rose by 3.2%, as average spend per head lifted by 6.8% and average transaction values increased by 3.1%.

“The blockade undoubtedly presented a challenge to us in terms of our supply chain, however, thanks to our strategic relationships with our core suppliers, we were agile in minimising the impact on our sales and profitability,” he said.

Experienced retail executive Tab Musleh was installed as Acting Head of Qatar Duty Free in January, having been with the company for three years.

EMBARGO: ONE YEAR ON

June will mark the one-year anniversary of the blockade placed on Qatar by five of its neighbours – Bahrain, Egypt, Saudi Arabia, UAE and Yemen – that sparked a regional crisis in travel and trade in 2017.

As reported, those countries severed economic and diplomatic ties with Doha – including travel by air and sea in certain instances – over Qatar’s alleged links to state-sponsored terrorism and the undermining of security and stability in the region [click link above for the original statement from the UAE outlining its actions and demands].

A number of carriers including Emirates, Etihad and EgyptAir consequently moved to suspend flights to Qatar hub Hamad International Airport in Doha until the crisis had been resolved.

Earlier this month, Qatar Airways Group Chief Executive H.E. Akbar Al Baker addressed the European Parliament on the ‘illegal’ blockade.

Aside it being the first time that an airline leader outside the European Union has personally appeared in front of the European Parliament’s Committee on Transport and Tourism (TRAN), Al Baker’s appearance was notable for another reason.

Namely, the divulging of inside detail on the effects of the blockade, against which the State of Qatar and its airline has strengthened its resolve as the country ‘became subject to a ruthless campaign of isolation’, the EU Parliament heard.

He went on to state that the intention of the blockade was designed to endanger Qatar’s economy and threaten the livelihood of its residents, in doing so branding the response of the International Civil Aviation Organization (ICAO) ‘timid and disappointing’.

H.E. Akbar Al Baker, Group Chief Executive, Qatar Airways addressed the European Parliament on the ‘illegal’ blockade last week.

There are divided opinions on the ongoing economic and financial impact of the blockade on the Qatar economy to date, but an International Monetary Fund (IMF) report in March has pointed towards a ‘fading’ in the direct economic and financial impact on the country caused by the ongoing and seemingly deep-seated rift.

“While economic activity was affected, this has been mostly transitory and new trade routes were quickly established,” read an excerpt from the IMF report.

“The banking system has also adjusted. Following the rift, foreign financing (non‑resident deposits and inter-bank placements) and resident private sector deposits fell by about US$40 billion. This decline has been offset by liquidity injections by the central bank and public-sector deposits, particularly from Qatar Investment Authority (QIA).”

It already understood that Gulf States are looking at plans to end the deadlock, but for obvious reasons it remains to be seen what bearing international diplomacy will have on such as delicate discourse moving forward.

Last month, newly installed US Secretary of State Mike Pompeo was alleged to have told the Saudi Arabian administration during a trip to Riyadh that ‘enough was enough’ with regards to the blockade, in comments reported by the New York Times.

Qatar Airways has been working closely with QDF and HIA to understand the changing customer profile.

SWIFT REACTIONS

In real terms, Qatar Airways had to quickly come to terms with a decision that suffocated 18 routes, leaving it with two air transport corridors.

However,  increased frequencies and alternative connections with the likes of Iran, Turkey and Oman have buoyed the economy, according to the IMF.

“QDF also worked with HIA and Qatar Airways to understand the changes in customer profiles through dynamic business intelligence, which enabled us to quickly evolve our business in response to the changing sales environment,” commented Musleh.

“As a result of the ongoing geopolitical situation, we have seen a shift in customer demographics. However, the evolution of our product offering from QDF, combined with Qatar Airways’ expedited expansion plans and the opening of many new routes has catered to our new passenger segment.”

Musleh says that as a result of changing demographics, QDF has witnessed growth in customers from Asia and Eastern Europe, in addition to the US and parts of the Asian subcontinent.

This has played out in conversations with operator Hamad International Airport (HIA) to shift flights departing to Guangzhou Baiyun International Airport to one concourse to tap increased spending from Chinese passengers travelling for Chinese New Year.

Another example has been QDF’s collaboration with partner Qatar Airways to roll out targeted promotions to new destinations at launch such as Helsinki, Kiev, Prague and Sohar in Oman.

“We have also tweaked our product, brand and service offering to cater to these new and growing passenger segments,” reveals Musleh. “For example, we recently introduced the Alipay mobile payment method to make it easier for our Chinese passenger.”

EXCLUSIVE INFLIGHT PARTNER

Qatar Airways’ inflight programme has earned a well-deserved reputation for both luxury and accessibly priced gifts over the years, with more than 170 products spanning fragrances and cosmetics, skincare, watches jewellery, fashion and accessories, children’s toys and memorabilia.

The programme received a timely boost last year when Qatar Duty Free was named as exclusive supplier for inflight duty free.

Since then, QDF has moved to consolidate its on-the-ground and inflight business, streamline its procurement strategy and optimising its stockholding.

“This seamless integration has also enabled QDF to predict passenger behaviours and tailor product needs,” commented Musleh.

A one-of-a-kind Maison Christian Dior boutique arrived at the main retail atrium of Hamad International Airport  last month, offering two fragrances curated especially for the Middle Eastern traveller.

Since January, Qatar Airways’ passengers have also been able to take advantage of QDF’s pre-order service online, available via the QDF website to order and collect items from their seats upon boarding.

“Launching our online pre-order service is another step in enhancing the experience we offer to our customers,” added Musleh.

“It enables customers to pre-plan purchases and collect them inflight which, in turn, helps us to anticipate customer demand and to shape our inflight offering.

“There are further opportunities to be explored such as the link between in flight and on the ground shopping to the convenience of our passengers. This is just the start of that journey.”

MORE OPENINGS PLANNED

On the ground, QDF already operates more than 40,000sq m of retail space at HIA covering in excess of 90 luxury boutiques and outlets and a plentiful selection of restaurants and cafes.

In April, QDF unveiled a Middle Eastern-first Christian Dior boutique (34sq m) in travel retail, with two fragrances curated exclusively for the region’s passengers.

Additionally, an Estée Lauder pop-up (200sq m) showcasing brands such as La Mer, Clinique and Tom Ford recently rolled out.

To celebrate the start of direct flights to London Gatwick Airport in May, QDF this week took to social media to promote iconic British merchandise from its two Harrods stores – the latest of which opened in January – to reflect its product offerings.

Qatar Duty Free recently unveiled a 200sq m Estée Lauder pop-up showcasing brands such as La Mer, Clinique and Tom Ford, with more pop-ups and store openings planned to open over the coming months.

This week, it was also announced that the HIA signature store from Swiss watchmaker Tag Heuer is the top performing boutique among Tag Heuer’s entire travel retail boutique portfolio globally.

It also revealed to TRBusiness that a Samsung store (150sq m) is also set to unveil in due course.

“Some of our existing stores and boutiques are also undergoing a store refresh and we look forward to announcing the arrival of new brands into Qatar Duty Free in the near future,” said Musleh.

Last year, QDF opened the Middle East’s first airport stores for Gucci, Moncler and Giorgio Armani, in addition to Mulberry and Polo Ralph Lauren.

This bolstered a retail spread featuring the likes of Bottega Veneta, Ermenegildo Zegna, Bulgari, Hermès, Rolex, Omega and Swatch.