Destinations

Dubai’s duty-free industry caps a record-setting year with a handful of industry awards

Dec 28, 2012 12:01 am

Skift Take

The growth doesn’t just mean more fliers will have discounted perfume and cases of Marlboro Reds, it means Dubai’s airport authority has solid financing for terminal expansions.

— Jason Clampet

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Dubai Duty Free, which marked its 29th anniversary this month, is on course to achieve a double-digit growth in annual sales expected to hit Dh5.9 billion in 2012.

Impressive sales figures have been recorded across all three airport terminals for both departing and arriving passengers.

“The year 2012 is shaping up to be a fantastic year and I am pleased that our sale per head, which is around $49, and our penetration level of close to 50 per cent, continues to be so strong. We are looking forward to a busy few weeks ahead and closing the year with record sales,” said Colm McLoughlin, executive vice-chairman of Dubai Duty Free.

On December 20th, the award winning airport retailer marked its 29th anniversary with 25 per cent discount offer on a wide range of merchandise, and recorded daily sales of Dh76.91 million in the 24-hour period.

In November, Dubai Duty Free scooped the top prize at the Frontier Awards held in the Hotel Martinez in Cannes, where they were announced as the ‘Best Airport Retailer of the Year’ for the sixth time.

Hailed as the ‘Oscars of the industry’, the Frontier Awards are held to coincide with the annual Tax Free World Association exhibition in Cannes.

With sales up to October reaching Dh4.71 billion showing an 11 per cent increase over the same period last year, Dubai Duty Free is looking to achieve a double-digit growth in sales for the year, the retailer said.

The Perfumes category, which accounts for 15 per cent of total sales at Dubai Duty Free, retained the No.1 spot as sales rose to Dh727 million in the ten-month period.

Commenting on the anniversary discount offer, McLoughlin said the airport retailer began introducing a discount offer on its 20th anniversary back in 2003 and it has since become an annual tradition. “We hear of people choosing to fly on the 20th December and looking at how busy the shopfloor is today, I can certainly believe that to be the case.”

The year 2012 began well for the operation announcing year-end sales of $1.46 billion in 2011, representing a 15.69 per cent increase over 2010.

Dubai Duty Free, which received the ‘Best Duty Free Shopping Award’ for the 11th consecutive year, expects sales to grow to about $3 billion within five years.

Such a growth will position the retailer to forge ahead with its own expansion while also providing funds for the growth of the airport itself, including its role in financing a new terminal with twice the footprint of London Heathrow’s Terminal 5.

McLoughlin said three years down the road, Concourse Four would be built at this airport. Dubai Duty Free has done most of the financing for that.

He said Dubai Duty Free had already taken a loan for $1.7 billion, which is for that project. It will put another 7,000 square metres of retail space in there.

Passenger traffic at the airport grew eight per cent to 51 million last year and is expected to rise by more than 11 per cent this year to about 57 million. Alpen Capital estimates the Middle East now accounts for about seven per cent of the $46 billion annual duty-free and travel retail sector. The sector has continued to expand in the region despite the Arab Spring.

Duty free and travel retail sales in the Middle East are forecast to grow at a compound annual growth rate of 11.6 per cent from 2011 to 2016, outperforming the broader retail industry in terms of growth. The growth projection has been revised upwards in anticipation of higher passenger traffic at the Abu Dhabi and Qatar airports and concourse 3 plans at the Dubai Airport, Alpen said.

(c)2012 the Khaleej Times (Dubai, United Arab Emirates). Distributed by MCT Information Services.

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