Dubai Duty Free is a success story that mirrors the trajectory of the emirate itself. Its business has expanded exponentially from US$20 million in 1984 to recording sales of US$1.4 billion from January 1 – November 8 this year alone. Colm McLoughlin, Dubai Duty Free’s executive vice chairman and CEO, has been with the organisation from its inception in 1983 and continues to lead the operations of this multi-billion dollar enterprise. Here, in an exclusive interview with Business Traveller Middle East, McLoughlin shares how Dubai Duty Free has risen to a position of strength over the last four decades.
Dubai Duty Free celebrates its 39th anniversary this month. What’s been the biggest personal highlight for you over the past nearly four decades?
I’m very happy personally that I’ve been working in this industry for 53 years, and 39 of which have been at Dubai Duty Free (DDF). I’m very happy that Dubai Duty Free became the single largest Duty Free operation in the world, in terms of sales.
Dubai Duty Free has won in excess of 700 awards over the years, and I have received some 80 personal awards from the industry and media alike. All of these would not have been possible without the support that I received over the years, from my own boss, His Highness Sheikh Ahmed bin Saeed Al Maktoum, my team at Dubai Duty Free and my family, especially my wife Breeda.
DDF sales crossed the US$1bn in August and is on course to reach US$1.6 bn by the end of this year. What are some of its biggest growth drivers?
The sales growth and success of the operation are the result of many factors, a key component of which has been our commitment to developing the retail offer despite the difficult retail climate brought on by the pandemic. We kept our development plans in place and as a result, in the past year, we opened several luxury boutiques including Christian Dior in Concourse A and B, Louis Vuitton in Concourse B, and a Cartier boutique too in Concourse B. Since their opening, these outlets have provided substantial incremental growth in the high-end luxury category. They now rank among the top five luxury brands in Dubai Duty Free, with Louis Vuitton in second place, followed by Dior and Cartier in third and fourth place, respectively. And despite the lack of Chinese passengers still, we are seeing Russian, Saudi, Indian, British, and American passengers among the top nationalities who are spending the most on these brands.
DDF is yet to recover to its pre-pandemic sales of US$2.029 billion which it achieved in 2019. When do you forecast for this to happen?
Overall, the recovery is doing well and based on the indication and forecast for the traffic growth at the airport, we will likely see a return to 2019 figures in 2024. Currently, we have recovered over 83 per cent of our business for the year to date from January to October, whereas the passenger recovery is about 72 per cent of 2019 levels.
What are some of the digital-first initiatives that DDF has implemented and how does it intend to stay ahead of the curve on the tech front?
We have had an online offer since 2014. Digital marketing is a key factor in reaching and retaining our customers. With a 360-marketing approach, DDF maximised advertising via digital channels which includes e-mail marketing, online and social, promoting various sale days including the Dubai Duty Free Anniversary Sale, seasonal promotions like Eid and category campaigns focusing on targeted audiences such as perfume and liquor buyers.
Meanwhile, our Distribution Centre in Ramoul, from which all of our products are transported to the retail areas, is 95 per cent automated. We could not handle the millions of transactions a year, that we do, without embracing the latest technology.
Our investment in technology extends to ensuring convenient payment methods for our customers and as a result we have enabled and accepted different payment methods including Apple Pay and Alipay. In yet another first, we have partnered with WadzPay Technologies to provide our customers with the freedom to pay in digital currencies. We are the first duty-free operator to accept digital currencies as payment at any point of sale (POS) terminal and process refunds in digital currencies through POS terminals and merchant dashboards.
Dubai Duty Free is also a big sponsor of sporting events. What is the return on investment that it potentially receives by way of sponsoring such events?
Part of our brief from the very beginning of the organisation has been to promote Dubai as a sports and leisure destination, and we have always seen sports as a positive way to reach a wider global audience. We calculate the value of our support in a number of ways, including the important media exposure that covers TV, print, and now social media. We also assess our sponsorships in terms of spectator turnout, player participation, and the overall fan experience, all of which reflect on our brand.
Some of the biggest events that we continue to support include our firm favourite which is the Dubai Duty Free Tennis Championships. As the tournament owners and organisers, we were very proud to celebrate the 30th anniversary of the Championships in February 2022. The organisation of the tournament is largely done in-house. Last year’s tournament was played behind closed doors, so it was especially good to see the return of fans at 100 per cent capacity this year.
The two-week tournament results in major TV exposure for Dubai and is calculated independently at around US$1.3 billion.
We are also delighted to have returned in person to our overseas event in the UK and Ireland after an absence of two-and-a-half years due to enforced Covid-19 travel restrictions. We support the teams at Newbury, Ascot and The Curragh in staging these horseracing events including the Dubai Duty Free Spring Trials Weekend in April, the Dubai Duty Free Irish Derby in June, the Dubai Duty Free Shergar Cup in August and the Dubai Duty Free International Weekend in September. All these events have once again delivered highly competitive racing and provided Dubai Duty Free with TV coverage around the world.
Looking ahead, Dubai Duty Free will continue to maintain its busy events calendar which includes the Dubai Duty Free Sailing League Regatta and the Emirates Dubai Rugby Sevens.
The UAE wants to be a net zero country by 2050. What are some of the sustainability measures undertaken by DDF to support that goal?
Since its inception, Dubai Duty Free has long been contributing towards the protection and improvement of the environment. It has been certified by ISO 14001 since 1999, and we strongly demonstrate our environmental commitment throughout our people, processes, and projects. We implement an effective Environmental Management System, and the top management takes ultimate responsibility for ensuring the availability of resources to provide continual improvement.
We also encourage our employees towards sustainable practices both in and out of work. Dubai Duty Free’s Duty of Care ensures that any waste it produces is properly handled and in accordance with the law. Whether recyclable, non-recyclable or general waste, Dubai Duty Free has a system in place to ensure proper segregation, recycling, and disposal.
In addition, we have launched an ecosystem restoration journey called “Plant a Tree, Plant a Legacy,” which calls on the organisation to plant 10,000 trees in 10 years. This project is expected to help sequester carbon and help decrease carbon dioxide levels and other greenhouse gases in the atmosphere. Planting more trees will effectively also support the goal of preserving forests, deserts, and mountain ecosystems.
The Dubai Duty Free Foundation is actively engaged in philanthropic outreach programmes. Which are some of the biggest initiatives it has supported thus far?
We are very aware of the importance of corporate social responsibility and of giving back. Our foundation, the Dubai Duty Free Foundation, which was established in 2004, has donated US$33 million to 114 local and overseas charities, with a particular emphasis on charities benefitting women and children.
Some of the biggest initiatives that we are supporting annually include Sightsavers, which provides primary and secondary eye care, including cataract surgeries and eyeglass distribution; Smile Train which provides cleft lip and palate surgery and related treatment; the Al Jalila Foundation, to help with their medical research specific to cardiovascular disease, diabetes, cancer, obesity, and mental health; and the People of Determination, to provide educational support for its students.
DDF has reportedly rehired nearly 2,000 staff this year alone. What are its plans to grow its human capital?
Currently, our employee count is over 4,500, which includes rehired staff and 94 new Emirati recruits. It is definitely a very good feeling to see former staff return and to welcome the new additions to the company.
What are some of the inhibitors to growth that you foresee in 2023 for DDF?
The main concerns are, of course, the strong dollar which reduces the spending capacity of many of our passengers, whether from the UK, Europe or Asia, and the strong likelihood of a recession in Europe. Interest rates are still increasing and this is going to have an impact on those able to travel and spend on non-essential or luxury items. Supply chain issues still persist, but overall these are easing as we come to the last weeks of 2022.
What are the expansion plans for DDF?
We are continually looking at improvements throughout the retail operation and there are a number of plans which includes additional retail space in Concourse B – East and West, re-planning of Fashion and Electronics spaces in Concourse D and changes and refurbishment in the Concourse C Control Tower.