Dr. Munif Mohammed and Faye Bartle prepare to greet delegates on the final day of the TR Consumer Forum 2024.

Dr. Munif Mohammed, CEO, Lagardère Travel Retail KSA and Middle East, sat down with Faye Bartle, Managing Editor at TRBusiness, to discuss everything from mega-trends to the nuances of the travel retail supply chain.

“Duty-free means value, and the industry is based on the government saying you don’t have to pay taxes, and we should respect this, we must pass on this gift to our consumers,” said Mohammed of the travel retail industry, adding “Travel retail  is the only supply chain in the world that’s completely secure thanks to customs control. It provides a guarantee for quality and product providence, and gives the customer a certain level of comfort that products are authentic.”

Mohammed noted that Lagardère KSA and Middle East generated €6.6bn in sales in 42 countries, and that 39% of those sales were duty free. Food service was its fastest growing segment both organic and in terms of acquisitions, and Munif stressed the most prominent learning from this sustained commercial success was to adopt a nuanced approach.

Local inspiration

“We must move from head to heart,” he said, adding: “We must use a nuanced approach when thinking about personalisation, personal engagement, what can we do in terms of store activation etc.”

“When we first started in Saudi the assortment came from Europe and our big duty free warehouse. We struggled for six months. Then we learnt more about our customers, now we don’t buy the EU assortment,” noted Mohammed, stressing the concept of acting as global experts, but local partners.

Mohammed emphasised the point by running delegates through a timeline of Lagardère turnarounds and success stories, from stores in Riyadh and Jeddah to Dubai, where they initially tried pushing euro-centric assortments.

Further examples included that of the Madinah Master-Concession, where in two years Munif oversaw a 400% increase in sales thanks to a focus on fragrances, tobacco, and a renewed approach to local products like mint.

“Makeup and skincare is a challenge though, very difficult,’ he admitted, noting: “Maybe we need to be introducing more in-store testing, but it’s a broad issue and the market is not very well developed for those segments.”

 Saudi Arabia 

Mohammed zeroed in on the Kingdom of Saudi Arabia, pointing to its Vision 2030 plan as evidence of concerted efforts to move away from an over-reliance on oil (80%of the nation’s GDP is encapsulated within petrochemicals) and a push towards tourism and sustainability.

“Vision 2030 is about driving change, I see it as part of Saudi Arabia’s efforts to become a more responsible global citizen,” Dr. Munif Mohammed.

He added that Lagardère has recently signed a contract for five airports within KSA duty free for smaller units, the biggest being about 150sq m, and pointed to tremendous growth opportunities within the region, such as Riyadh Air.

“They want to be a digital native airline that has tech integrated on every part of their product offer, and bring back more luxury – they’re not a budget airline – and now some of the rules around minimum capital as a foreign investor have been changed to make Saudi a more appealing place to invest,” said Munif.

Sustainability

He also touched on his ongoing efforts in sustainability throughout the industry, not just with Lagardère but as a member of the sustainability sub-committee for MEADFA.

“We’ve done some basic work with the board and our members with a survey, but the next step is concrete action. We are working to create a charter for action, which we would ask all our members to sign, and the action is more about products,” said Munif.

Munif emphasised the need for all within travel retail to think local and look to pass on the benefits of what he referred to as the ‘gift’ of duty free concessions.

“We know from Lagardère studies that the biggest carbon footprint is in the products we sell, 5% of the footprint is in Scope 1 and 2 (direct emissions and energy used to run stores), so the focus must be on products,” he continued, adding that the problem was not the packaging, but the ingredients, and it was there the industry’s focus should lie.

Munif finished by referencing a fellow speaker at the TR Consumer forum, “The key leverage point is the retailer, but at the end price cannot be the only way we measure things.

I always refer to Ramesh [Cidambi] on this, that we can’t always keep pushing price, especially in F&B, as it’s very difficult for the consumer to manage three prices rises in a year.”

READ MORE: Saudi Arabia adopts duty free arrivals exemptions

READ MORE: JEDCO launches multi-category tenders at KAIA T1

READ MORE: DXB defends ACI top spot as DDF announces new management