DDF's Colm McLoughlin on the future of Duty Free

Colm McLoughlin, CEO of Dubai Duty Free, sheds light on the company’s performance over 2018 and shares his viewpoint on the future of the duty free experience in airports
At the conclusion of October 2018, Dubai Duty Free had achieved $1.6bn in sales representing a 6.18% increase over the last year. The company is expected to reach $2bn by end of 2018.
At the conclusion of October 2018, Dubai Duty Free had achieved $1.6bn in sales representing a 6.18% increase over the last year. The company is expected to reach $2bn by end of 2018.

AVB: Could you share some details regarding DDF’s performance over 2018?
Colm McLoughlin: In terms of sales up to the end of October 2018, Dubai Duty Free has achieved $1.6bn in sales representing a 6.18% increase over the last year. Dubai Duty Free is expected to reach $2bn by end of 2018.

Liquor, Perfumes and Tobacco held on to the top three spots category-wise. Liquor sales reached $242m representing 15% of the total revenue while Perfume sales reached $240m, accounting for 15% and sales of Tobacco was up by 24% to $184m.

AVB: Are there any insights you can share regarding DDF’s 2019 strategy?
CM: Our main strategy is to continue investing in our retail offer both in-store and online and we are in the midst of some major refurbishments and renovations in Dubai International at the moment. This includes:

•The opening in November of a Dubai Duty Free shop at Queen Elizabeth 2 (QE2), a floating hotel, which is located in Port Rashid.  The shopping arcade features categories from Gold & Precious Jewelry, Electronics, Watches, Perfumes & Cosmetics, Liquor to Sense of Arabia and QE2 Souvenirs.
• Completion of the Dubai Duty Free Concierge Service at Emirates Business Class Lounge in Concourse A.  When completed, this will provide travellers with a bespoke service where they can order products from the comfort of the lounge with their goods being delivered in the lounge or at the gate.
• CC and CB Victoria’s Secret – Nov 2018
• Completion of the remaining of CC (Gold/ Gifts from Dubai/ Fashion) in Nov 2018
• CB Perfumes Shop East Side – Nov 2018
• CB Gucci Shop - October – Nov 2018
• CB Salvatore Ferragamo Shop -  Nov 2018
• CB Lifestyle / Books – Nov – Dec 2018
• CC At Your Service shop along with the re-design of the gates in the northern side of the Concourse - 2019
• CB Chanel boutique and Sports Shop at the East – Q1 2019
• Expansion of Liquor shop in Terminal 3 Arrivals – early  2019

We are also undertaking a multi-million dollar investment in upgrading and enhancing the online offer which will be rolled out in 2019.  This will enhance the E-commerce customer experience as well as adding functionality and implementing processes both in-store and online.
Dubai Duty Free is also working on a major digital marketing initiative as part of its ‘Road to 3 billion dollars’ project. This initiative will see Dubai Duty Free invest in both people and technology to increase its digital marketing to its customers and to improve its customer engagement and customer service.

AVB: Over the last year, how has Dubai Duty Free improved the overall passenger experience?

CM: We continue to invest and improve our retail operation and have major projects going on at the moment including the additional 537 square meters of retail space for Gold, Gifts from Dubai and Fashion in Concourse C.

By end of 2018, Dubai Duty Free is expecting to complete 76% of the project in Concourse B with an additional 795 square meters of renovated space for Perfumes and Cosmetics at the East side of the Concourse, a Lifestyle and Books Shop in West, and the introduction of boutiques for major brands like Gucci and Salvatore Ferragamo. The final part of the project (24%) is expected in Q1 of 2019 with a Chanel boutique and the Sports Shop (346 square meters) at the East being completed.

AVB: Are there any notable technological improvements that DDF has introduced to help better engage passengers?

CM: In terms of technology, we are very keen to ensure that any technological improvements benefit our customers. As such, we continue to provide convenience by making the payment process as easy and secure as possible with the introduction of various mobile payment solutions such as Apple Pay, Samsung Pay and we are currently in talks with two of China’s widely used cashless payments - AliPay and WeChat Pay.

We also have an e-commerce platform that we are investing it at present and are looking at a major upgrade in this as well as a digital marketing strategy that will help us communicate more directly with our customers. We are also ahead in terms of technology with our Logistics Centre, which, being 95% automated, was the first of its kind in the Middle East when we opened it in 2008. We became the first business in the world to use Oracle Retail Release 16, when it was rolled out in July 2017.

AVB: What is being done to better promote collaboration with global brands and airlines?

CM: We have partnered with a number of entities, including joining Emirates Skywards on a miles redemption programme that has been very well received, resulting in over 918 million air miles (YTD – Oct 2018) being redeemed this year, valued at $4.2m, which we believe is incremental spend.
We have a significant focus on the Chinese market and some of the major ongoing partnerships we had are with CTrip and Union Pay card. We have run a year-long campaign with C-Trip, the largest travel operator in the world with over 300 million members so that we can reach important Chinese travellers when they are planning their trip to or through Dubai.

The Dubai Duty Free and CTrip partnership has been a very successful collaboration. The combination of promotions and discounts drove over 61,000 sales transactions with C-Trip’s customers valued at $60.6m (YTD-Oct). While Dubai Duty Free was the first retailer in Dubai to accept the domestic Union Pay cards way back in February of 2012, and Union Pay is now the third biggest card payment method behind Visa and Master Card. 

We also introduced Apple Pay and Samsung Pay and are now, through Network International, in talks with AliPay and WeChat Pay in view of the rapid increase in Chinese tourists passing through the airport. All of these initiatives have helped us ensure positive sales growth and that will continue in the year ahead.

AVB: What would you highlight being the current trends and challenges of delivering the duty free experience within an airport terminal?

CM: Trends and habits change quickly and all retailers have to adapt to that whether it through the product offer or shop ambience. Upgrading the retail environment is ongoing and we are constantly looking at the product range to ensure that it appeals to our diverse passenger mix. We try to ensure that we have travel retail exclusive offers and that we have the latest products on offer as this is what travellers expect.

There have been so many changes but I suppose the technology side is the one that has changed the most. In terms of payment methods, even up to recent years, cash was the main payment method used by our customers, now it is 60% card payments and increasingly these are contactless payments along with the introduction of Ali Pay and so on.

E-commerce has also been a game changer and one that we embraced a number of years ago, mainly as a convenience for our customers who can order online and pick up when they travel. Now we are investing a good deal in redefining the online offer and introducing a number of marketing systems whereby we can interact much more with our customers before they travel and while they are in the airport. We are very excited about this development process.

AVB: How do you expect the duty free experience to evolve over the next five years?

CM: I think that our industry is in good shape today and based on forecast travel figures, the future looks bright provided we all stay ahead of the curve. This, of course, means that as an industry we must continue to invest in our retail offer, our shops have to be attractive enough to encourage shoppers who might otherwise purchase online or downtown, we have to offer exclusive products or be the first to have products where possible. We have to invest in the latest technology to engage with our customers, even before they travel, and to make purchasing as quick and efficient as possible.

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