Dubai Duty Free rebounds with strategic focus amid market uncertainty
Dubai Duty Free’s Managing Director Ramesh Cidambi with Global Travel Retail Magazine's Editor-in-Chief Hibah Noor catching up at Marina Bay Sands in Singapore
Dubai Duty Free’s trajectory through 2025 presents a compelling counternarrative to the broader luxury retail malaise. While global fashion executives predict worsening industry conditions and luxury brands face their first decline in value creation since 2016, Managing Director Ramesh Cidambi reports sales growth of 15% alongside sustained passenger traffic growth in the high single digits.
The performance marks a significant rebound from earlier concerns about consumer spending patterns, with April delivering the retailer’s best month ever for that period and ranking as the fourth-best month in company history. May continued the positive momentum, though Cidambi acknowledges the seasonal dynamics ahead.
“June onwards we’ll see,” he says. “In June, July, August typically the average spend tends to drop because families are traveling as a group. So you can’t expect to see the same spend as you would if you have individual business travelers or individual leisure travelers.”
This resilience becomes more remarkable when contextualized within Dubai Duty Free’s broader performance trajectory. The retailer achieved record annual sales of US$2.16 billion in 2024, with December setting an all-time monthly record, positioning the company to capitalize on momentum despite global headwinds.
The refreshed FIX store is said to be a must-visit for those looking to take home a taste of Dubai
Navigating trade complexity
Global trade dynamics create a multifaceted challenge for Dubai Duty Free’s strategic planning. “The anxiety that we have is really the uncertainty that is there. And the uncertainty is feeding into slowdown in terms of the economy, both in the US and in other parts of the world,” Cidambi says. “If the tariffs do actually settle at a high level for China, then we will see a knock-on effect with the Chinese customers.”
That being said, he admits tariff regimes could create opportunities. “If there is a high tariff regime in important countries, then the duty free being quote-unquote tariff-free by definition, it could help,” Cidambi notes. “But it’s also then a function of how stringent the customs enforcement is when you buy something in Dubai and you go to a high tariff country.”
The Chinese question
The fashion industry anticipates geographic profit shifts as brands pivot focus from China to other Asian markets including Japan, Korea and India. For Dubai Duty Free, these macroeconomic shifts present particular complexity given the hub’s role as a transit point between East and West.
The retailer’s Chinese business segment illustrates this challenge. Pre-COVID, Chinese travelers represented 17% of Dubai Duty Free’s business, but current levels sit at just 6-7%. Fashion sales to this demographic have dropped 40%.
Cidambi notes the analytical challenge of accurately measuring true Chinese national spending versus passengers simply transiting through China. “The Chinese airlines like China Southern and so on are taking people to China and then transiting to the Philippines or other places. So when we talk about Chinese spend we have to be careful to make clear that we don’t really know the Chinese spend by nationality,” he explains.
This passenger flow complexity reflects Dubai’s strategic position in global aviation networks, but also highlights the analytical sophistication required to parse actual consumer behavior from demographic aggregates. The distinction matters significantly for inventory planning, staffing decisions and promotional strategies. “We need to interrogate and understand, for example, has fashion really dropped by 40% or is it just that the passenger mix has changed?” he says.
Dubai chocolate phenomenon
Dubai Duty Free’s standout performance stems from both strategic category management and viral cultural phenomena. The Dubai chocolate sensation continues to have extraordinary momentum, with daily sales of one million dirhams (US$272,300).
The viral trend generated US$22 million in the first quarter of 2025 alone, representing over 1.2 million individual chocolate bars sold. This single product’s success illustrates how social media-driven consumer behavior can rapidly transform retail categories.
“Dubai chocolate is still doing one million dirhams a day,” Cidambi reports. “This is 40% of the confectionery category, 4% of total business.” The phenomenon has attracted multiple competitors, with six brands now offering variations: “We have Locali, Samha, Bateel, Fix, Al Nassma, and we have I Love Dubai.”
The trend originated in 2021 with Fix Dessert Chocolatier’s “Can’t Get Knafeh of It” bar, containing pistachio cream, tahini and knafeh, but exploded globally through TikTok viral videos attracting millions of views. The phenomenon demonstrates how travel retail can capitalize on social media-driven cultural moments that transcend traditional product categories.
Beyond its revenue impact, the Dubai chocolate success reveals sophisticated consumer psychology at work. Travelers increasingly seek products that serve dual functions: personal consumption and social media content creation. The chocolate’s visual appeal, cultural authenticity and Instagram-worthy presentation align perfectly with contemporary travel retail consumer behavior.
Confectionery continues to demonstrate strong growth for Dubai Duty Free
Category performance
Gold has emerged as another significant contributor to the bottom line, through price appreciation rather than volume growth. “Gold volumes have actually dropped, but the rate per gram has gone up, so because of that gold performed well,” Cidambi notes.
This dynamic reflects broader precious metals market trends but also demonstrates Dubai Duty Free’s ability to benefit from commodity price movements that might negatively impact other retailers. The volume-versus-value distinction suggests sophisticated consumer behavior, with travelers making more selective, higher-value purchases rather than impulse buying.
Perfumes delivered exceptional results as a standout category, while tobacco remains competitive in the Middle East market. Perfumes led 2024 category sales with US$411 million, representing 19% of total revenue and showing 9.79% growth. Even technology categories showed improvement, with Apple recovering from earlier iPhone weakness through strong MacBook and iPad performance.
Fashion presents a more complex narrative. While the category struggled through the first quarter, April showed 12% growth year-over-year before flattening again in May. This volatility mirrors global luxury fashion headwinds, where price increases have reached consumer acceptance ceilings and aspirational luxury buyers are pulling back, though some remain steadfast.
Gold sales contributed to 10% of total revenue, an increase of 35%
Luxury experience optimization
The boutique business faced challenges for several months but showed signs of recovery in April. Cartier’s dedicated boutique in Concourse B exemplifies Dubai Duty Free’s sophisticated approach to luxury retail positioning within airport constraints. Cartier’s performance helped drive significant gains in Dubai Duty Free’s boutique segment, which represents 10-11% of total sales. “Fashion is a work in progress, but within fashion hard luxury, as in Cartier, has done phenomenally well,” says Cidambi.
The luxury segment benefits from strategic passenger flow engineering. First and business class travelers encounter boutiques within minutes of check-in and en route to lounges. Average transaction values maintain stability at around US$2,000 per transaction, with approximately 300 daily transactions across the boutique network.
This performance contradicts broader luxury market struggles. The global luxury industry faces its first value creation decline since 2016, with growth expected at just 2-4% annually through 2027. Dubai Duty Free’s luxury segment resilience suggests that location, passenger demographics and operational execution can insulate retailers from broader market headwinds.
The retailer has also introduced a preloved luxury segment through Reklaim outlets, which delivered AED33 million (US$9 million) since its December 2024 launch, with AED12.9 million (US$3.52 million) generated in April alone.
Cidambi’s understanding of transaction time requirements also reveal sophisticated operational planning. “They need 15 or 20 minutes – luxury shopping is not a five-minute thing,” he states.
Strategic renovations
Dubai Duty Free’s commitment to infrastructure enhancement shows quantifiable returns, particularly in alcohol sales, where competitive positioning matters significantly. The completion of arrival shop refurbishments across all three terminals represents substantial investment in competitive differentiation.
“It was important for us because 45% of the alcohol we sell is sold in the arrival shops,” Cidambi explains. “To compete effectively with the Indians, it was important for us to upgrade the shops on both sides. We did the liquor and tobacco in Concourse B departures last year and we did the arrival shop renovation this year.”
The renovations address multidirectional competitive pressures. “We need to compete with the Northern Emirates, domestic retailers and Indian retailers, who have become stronger and stronger on both the arriving and departing business,” he says.
The strategic importance becomes clear when considering the customer demographics. Indian customers represent 55-60% of whisky category sales, while the competitive landscape has intensified. “In the Northern Emirates the price competition has been intense because there is a lot of liquid in the market and some of the liquid is finding its way to the Northern Emirates,” Cidambi notes. “We are happy with the renovation and we are happy with the results so far.”
Arrivals sales represented 7% of total sales and an increase of 17% over April last year
Incremental revenue
Dubai Duty Free has implemented customer service initiatives that generate measurable returns. Link selling strategies have produced “US$40,000-US$50,000 more in revenue per day,” Cidambi says.
The retailer also launched its milestone Dubai Duty Free Millennium Millionaire Series 500, which “was sold out within a record seven days,” generating AED19.2 million (US$5.2 million) in April lottery sales.
Airfare sensitivity
Rising airfares present a persistent concern that could theoretically impact passenger spending patterns, though the impact does not appear to be as great as it could be. “The high fares are definitely a concern for us. You tend to think of a customer having a budget for a trip,” says Cidambi. “So if he [or her] spends a lot on the hotel or on the car rental or on the airfare, then it has to impact his spend. But it appears that customers seem to have become desensitized to the high fares at the moment.”
This observation aligns with broader travel industry trends showing sustained demand despite elevated pricing. However, Cidambi maintains analytical vigilance about potential tipping points. “We kept telling the brands, don’t keep on pushing the prices up by giving the excuse of inflation or whatever. Because at some point, the customer will start pushing back and they will resist their price increases.”
The summer travel season will provide crucial data about fare impact sustainability. Seasonal normalization following Ramadan and Easter should offer clearer indicators of underlying consumer behavior trends.
Geographic diversification
Regional tensions create temporary operational challenges but Dubai Duty Free’s geographic diversification limits exposure to single-route disruptions. “The India-Pakistan thing we think is a relatively short duration event,” Cidambi notes. “We think that the closure of the airports and the airspace closures or restrictions on airspace should dissipate soon.” At the time of writing, the closures have been extended into June.
This operational flexibility reflects Dubai’s strategic aviation positioning but also highlights risk management advantages of hub-based retail operations. Unlike airport retailers dependent on specific bilateral routes, Dubai Duty Free benefits from global connectivity that provides natural hedging against regional disruptions.
Brand relations
Dubai Duty Free’s response to market challenges extends beyond infrastructure to direct engagement with brand partners. Cidambi has personally reached out to luxury brands struggling with declining performance to push for strategic adjustments.
“We have had multiple conversations with the brands and asked them to look at assortment, pricing, customer service and whatever levers retailers have in terms of improving the situation,” he says. “They're taking a more positive approach, saying that they are looking at the particular demographics of the customers who are coming in, and footfall.”
With fashion brands facing global headwinds and changing consumer behavior, the retailer’s proactive partnership approach aims to optimize performance across all stakeholders.
“We are very happy with the operation. We are very happy with the passenger numbers,” Cidambi says.
