Dubai Duty Free's Colm McLoughlin gives GTR Magazine a glimpse into another successful year
Colm McLoughlin, Executive Vice Chairman and CEO of Dubai Duty Free
During a recent interview with Colm McLoughlin, Executive Vice Chairman and CEO of Dubai Duty Free, Global Travel Retail Magazine learned that the year is shaping up to be better than ever for the busy retailer. Passenger traffic at Dubai International has now reached nearly 99% of 2019 levels, but for Dubai Duty Free, sales are even better than those of pre-pandemic times, despite some remaining challenges.
McLoughlin says 2023 sales have reached US$1.121 billion as of July 10. “This is 35% higher than the same period last year and 9% higher than pre-pandemic in 2019,” he says. “Overall, the recovery is doing well. As per the latest forecast for traffic growth at the airport, and based on the current sales trajectory, we expect a full rebound this year. We are positive that we will meet our target by year end, which is AED7.5 billion, or more than US$2 billion.”
Returning passengers keen to shop
McLoughlin says passengers are still returning to travel, but those who are shopping in duty free are demonstrating a greater willingness to spend. “Our spend per head, which was around US$39 pre-pandemic, sits at around US$47 currently,” he says. “While there is a slight drop in penetration, those who are shopping are spending more, a trend that has continued for the past couple of months.”
One reason for the greater spend is the company’s investment in luxury boutiques, according to McLoughlin. While the company already had an appealing and strong fashion retail offer, the newer investment is being reflected in the sales growth. “Apart from our current renovation plans for our Arrivals and Liquor and Tobacco shops, we will continue to work closely with our suppliers to ensure we offer a great product range, and that our growing staff continues to provide excellent customer service. All these factors will ensure penetration and average spend continue to improve,” he says.
Dubai Duty Free's Concourse A
Routes and destinations
Dubai International Airport currently serves 234 destinations across 99 countries. Emirates is now serving over 140 destinations on six continents. The airport’s main destinations are India, Pakistan, Thailand, the Philippines, the UK, France, and the US, with regional traffic to Lebanon, Jordan and Dubai.
“Passenger traffic this year has largely been driven by the airport’s standard travel destinations, including India, Pakistan, Saudi Arabia, and the United Kingdom,” says McLoughlin. “Russia as well has been a major market. With China further easing travel restrictions and the annual seasonal peaks and festive holidays, Dubai International Airport will likely see millions more passengers come through the key east-west transit point. A significant peak in outbound travel is expected to continue throughout the summer holidays.”
The return of the Chinese
The Chinese traveler is normally of great importance in Dubai Duty Free — a cohort that has been completely absent for three years. McLoughlin says with the reopening of the country, Dubai International has seen a steady increase in China-bound flights since Q1 of this year. Currently, almost 46% of pre-pandemic Chinese passenger numbers have returned for travel through Dubai International. “We have long recognized the importance of this sector at Dubai Duty Free, which already accounts for 6% of our business in the year to date, and we have no doubt that this will rise even more as we look forward to fully regaining it by Q1 of 2024,” McLoughlin states.
Wellness, sustainability and promotions
With one exception, buying habits have remained relatively unchanged since pre-pandemic times. That exception is the awareness of passengers about sustainability and wellness products. “Most brands and suppliers have integrated these in some of their products, where applicable, which addressed this trend,” says McLoughlin.
Otherwise, travel retail exclusives, new launches, and promotions continue as the usual driving factors. “We have lots of ongoing promotions, new product launches and offers,” says McLoughlin. “These include great discounts across a wide range of selected products and top brands, including gifts with purchase on some products — both in-store and online — that are intended to further enhance the overall shopping experience of visitors both locally and abroad this summer, particularly during the summer months, which see peak travel.”
Strongest categories
Always a strong category at Dubai Duty Free, Gold has remained in the top five. The others in that rarefied circle include Perfumes, Liquor, Cigarettes & Tobacco and Electronics. Perfumes sales reached US$186 million, representing a 28% increase over 2022. Sales of Liquor increased 23% to US$162 million, while Gold sales were up by 33%, amounting to US$110 million. Cigarettes & Tobacco increased by 34% with sales amounting to US$105 million while Electronics came in fifth place with sales of US$93 million, representing a 46% increase.
The Gold shop in Concourse C
Current challenges
The global supply chain was severely disrupted early in the pandemic, and has yet to return to pre-pandemic reliability, but McLoughlin says he is seeing a significant improvement in supply chain from a logistics standpoint, depending upon the category. “We are still anticipating a shortage of supply in some categories due to scarcity/unavailability of raw materials,” he says. “Liquor has particularly been a challenge. Allocations from suppliers have been fair to Dubai Duty Free, but far from what we need. Perfumes and cosmetics probably have the greatest number of remaining issues with raw materials. The Food category has pretty much recovered from all the logistical issues. We are closely working with brand/suppliers on forecasts and allocations to ensure maximum fulfilment of our business requirement.”
Inflation is also presenting challenges around the globe, with retailers like Dubai Duty Free still unsure of the eventual outcome on sales. “Increased cost is another thing on our radar, and we continue to monitor its eventual effect on our business,” says McLoughlin. “Although there appears to be consumer acceptance as these increases are consistent worldwide, there is only so much we can pass on.”
Finally, in this positive time of regrowth and renewal, Dubai Duty Free will be celebrating its 40th anniversary. “We are currently reviewing our plans for the 40th anniversary of Dubai Duty Free, which will be in December this year,” adds McLoughlin. “We are very excited to celebrate this major milestone. So, watch this space.”
Colm McLoughlin pictured with the first members of staff at Dubai Duty Free in 1983
