Dubai Duty Free’s Cidambi addresses challenges while planning for future
Ramesh Cidambi, Managing Director, Dubai Duty Free
Dubai Duty Free is navigating a complex retail landscape, balancing immediate market challenges with long-term strategic planning. Managing Director Ramesh Cidambi, who took the helm on June 1, is steering the company through what he describes as “a long hot summer” of softer trading conditions while simultaneously preparing for future expansion and relocation.
Market headwinds
Cidambi candidly describes the current market situation. “The biggest challenge has been the softening of the business, which we started to see earlier in the year in March, April,” he says. “By the time we rolled on to May, it was fairly certain that penetration was down, spend was down, and consumer sentiment had definitely deteriorated.”
This downturn has been particularly pronounced in the luxury fashion segment. “We saw that footfall into the fashion boutiques dropped. Conversion of people, passengers going into the boutiques dropped. The average transaction value dropped by nearly US$200 compared to January,” Cidambi explains.
Despite these challenges, Cidambi maintains a balanced perspective, noting that while the high-end fashion brands, which contribute 11% of Dubai Duty Free’s business, have been significantly impacted, “the 89% of our business which was not the big four or five brands, that was a bit more resilient.”
Strategic response
In response to these market conditions, Dubai Duty Free is implementing a multi-faceted approach. Cidambi has engaged directly with brand partners, particularly in the luxury segment. “We have had multiple conversations with the brands and asked them to look at assortment, to look at pricing, to look at customer service, to look at whatever levers retailers have in terms of improving the situation,” he says.
Internally, the company is focusing on enhancing customer experience and operational efficiency. Cidambi elaborates, “We have been looking at customer service, customer experience, the price perception that people have. We have been looking at the profitability of the business, staff productivity, and all of the work that we are doing in terms of seeing all these different aspects of the business while continuing to invest.”
Cidambi has been working with luxury brands, urging them to evaluate their product range, pricing strategies, customer service quality, and other retail tactics to enhance their overall performance
Ongoing investments
Despite the challenging market conditions, Dubai Duty Free continues to invest in its retail infrastructure. Cidambi highlights recent developments: “We opened the Terminal 3 phase one of the arrival shop. The arrival shop is a big shop, it’s 1,100 square meters, but in the first phase we opened about 500 square meters of it in September.”
These investments are already showing positive results. “The initial results from the phase one opening is very positive,” Cidambi notes. “If you have an improved retail offer people will spend. It’s simple, but it’s not easy.”
Long-term vision
While addressing immediate challenges, Cidambi is also focused on long-term strategic planning. “All the things that we are doing in terms of looking at our business will translate into a strategic plan for the next five years,” he explains. “We hope to finish the plan by the beginning of November. The plan will cascade into a business plan for each year and the business plan will cascade into the budget for 2025.”
This strategic plan will encompass various aspects of the business, including assortment, margin management, supplier relationships, staff productivity and other operational considerations.
Dubai Duty Free has unveiled the first phase of grand T3 arrival shop, expanding retail footprint and elevating traveler experience, with promising early results
Al Maktoum International Airport
Dubai Duty Free is also actively involved in planning for its future operations at Al Maktoum International Airport. Cidambi shares insights from recent discussions, “We had the first meeting to look at the design of the new airport, the passenger flow, the broad outline in terms of the retail areas and the overall passenger experience that the designers are working towards.”
Understanding and potentially influencing passenger flow is crucial for retail success, Cidambi says, emphasizing the importance of this aspect. “The first step in having a strong retail offer is understanding the flow, and then having the opportunity to impact the flow if possible, but having the opportunity to tweak the flow in order to have the best chance of success from a retail perspective,” he says.
Optimism amid challenges
Despite current headwinds, Cidambi remains optimistic about Dubai Duty Free’s future. He reminds us of the company’s strong foundation, “We have a fantastic business. It will do in excess of US$2 billion a year. We have a great team of 6,000 people, but we also have ambition for what we want to achieve in the next three to five years.”
Cidambi concludes with a reminder of the dynamic nature of retail, “With a retailer, every day is a new day and every day you have to deliver in terms of what you have promised the owners of the business.”
