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RETAIL/F&B Last modified on March 2, 2012

Top man!

One of the most famous names in travel retail, Colm McLoughlin, talks to Joe Bates about the evolution of Dubai Duty Free, the airport retail business and the challenges ahead.

Is it true that when you first came to Dubai to set up a duty free operation at the airport, you had only planned to stay for six months, and that was 28 years ago?

Yes, it is true. I often say that I am still here because I never finished what I started! I was part of the ten man team that came from Aer Rianta in July 1983 to establish Dubai Duty Free at Dubai International Airport.

We had six months to complete the job and that included everything from designing and overseeing the construction of the retail area, to recruiting and training staff to ordering stock and setting systems in place. We all worked extremely hard to ensure that we opened on December 20, 1983.

Once we were operational, I was asked to stay on and head up the operation, which I did, and George Horan and John Sutcliffe, both part of the original team, stayed on with me. George is now president of Dubai Duty Free and John Sutcliffe moved on to head up Aer Rianta’s development  in the region, where he was the former managing director based in Bahrain.

What was the fledgling duty free business like at Dubai International Airport (DXB) back then, and could you possibly have imagined that it would develop into the $1 billion-plus it is today?

The existing retail operation at DXB before Dubai Duty Free was a pretty haphazard set up, with a series of concessionaires dotted around the airport, mostly selling the same products. Liquor was sold through a hatch.

One of the early jobs that I had to do was to tell the existing concessionaires, who were mainly local merchants that they would not be able to continue selling at the airport. The good news was that Dubai Duty Free purchased all of their existing stock and for the most part, those same merchants became our regular suppliers and continue to be our suppliers to this day.

Part of our brief at the start was to support the local economy and as a result, some 70% of our goods are sourced locally through the agents or distributors.

Once we established Dubai Duty Free, I think all of us knew that it was going to be a successful business. We had the backing and support of the Government of Dubai and the director general of the Department of Civil Aviation at that time, Mohi-Din Binhendi, was very hands-on.

Our brief was to establish a first class operation that would rival any international airport retailer, and I think we achieved that from the beginning. Our founding principles were to offer a wide range of quality goods at value-for money prices, and to provide a first class customer service in a shopper-friendly environment.

However, having said all of that, if I was asked back in 1983 whether we would be the single largest airport retail in the world, in terms of turnover, I probably could not have imagined that.

Can you give our readers some idea of how the business has grown at DXB in terms of outlets, staff, transactions and annual sales? 

DDF has had year-on-year sales growth since its first full year of business, which was 1984, when our turnover was $20 million. The operation was extended in 1989 and again when Terminal 2 opened in 1998. 

However, the opening of Sheikh Rashid Terminal in 2000, provided the operation with the much needed expanded retail area (an additional 5,400sqm) to grow dramatically in terms of sales, the retail offer and our staffing levels. The next major growth phase was the opening of Terminal 3 in October 2008. 

The current retail operation covers 18,000 square metres and this year our sales will reach $1.45 billion. Our staffing levels are now 4,000 compared to our original staff numbers of 100. I am very proud of the fact that of the original 100 staff that joined Dubai Duty Free in December 1983, 48 of them continue in active service with us today, I think that says something positive about the company.

In 1983, around three million passengers used the airport, this year the figure will be around 51 million.

Looking ahead, the operation will grow by a further 8,000sqm late next year when Concourse 3 opens at Dubai International. Further ahead, the recent announcement of a fourth terminal at Dubai International will bring the capacity at the airport up to 98 million passengers.

We forecast that our sales will double in the next five years, along with our staffing levels.

Do you consider DDF a duty free pioneer and was this always your intention?

Yes, I think Dubai Duty Free is a pioneer and that we have helped set the benchmark for airport retailing in the region. I also think that we went back to the very basics of duty free, which was to offer value for money, and Dubai Duty Free very quickly became synonymous with value.

We were certainly pioneers in promoting and marketing ourselves, and that was very much in line with our brief to promote Dubai as a destination. Our original marketing campaign of ‘Fly Buy Dubai’ was aimed at encouraging passengers to route through Dubai and to enjoy first class duty free shopping when here. 

Airports across the globe are learning from, and in some cases, trying to replicate aspects of what you’ve achieved at DXB, how does this make you feel?

It makes me feel good as I think it is good for the industry to learn from each other and to put things in place that appeal to passengers and encourage them to spend more. At the same time, we also look at other operations and airports and see what they are doing well. 

Is it possible to say what has been the most successful promotion or campaign you’ve ever run and why?

The ongoing Finest Surprise Luxury Car Draw is probably the longest running and most successful duty free promotion of all time. We came up with the idea to sell a certain number of tickets and to raffle a luxury car, a Bentley Mulsanne. The promotion coincided with the expansion of the retail operation in December 1989 and the first car was won by a Lebanese man, Simon Simonian. The publicity generated when the car was won, was huge, and we were inundated with requests to draw another luxury car which we did. 

To-date, we have presented close to 1,500 luxury cars to winners from 70 countries. The promotion is self financing and we still continue to get media coverage for it. In 1999, we added the Millennium Millionaire draw to our promotions, which gives ticket buyers the chance to win $1 million. So far we have created over 120 millionaires, we even had a situation where two of our millionaires won a second time. 

That is fantastic luck!

How has DDF expanded beyond the perimeter of DXB?

Through our marketing efforts, which include the sponsorship and organisation of many major sporting events, I think that the Dubai 

Duty Free brand has gone global. We invest around 3% of our turnover in marketing and actively work to raise the profile of our company and our brand.

We own and organise a major tennis tournament in Dubai, the Dubai Duty Free Tennis Championships, which attracts the top tennis players in the world. The print media coverage received over the two-week tournament is estimated at $140 million, which is fantastic. The Dubai Duty Free Irish Derby generated over €7 million worth of media exposure and we are looking at growing that next year.

We also maintain an advertising presence in global publications, including the trade press, all of which helps promote our brand.

We were very pleased this July when Dubai Duty Free was named ‘Brand of the Year’ for the second year running in the Superbrands UAE awards. I think that is a good indication that we are a strong brand.

I have often said that the duty free industry should promote itself more, as it would be good for the industry as a whole.

Has DDF fully embraced social media and the revenue earning potential of the Internet?

We have not fully embraced social media and I know that it is an untapped resource for us. Recently though we were featured on YouTube for the Flash Mob routine at Dubai International, and that has already had more than 900,000 hits. In addition, we are seriously looking at an online offer and hopefully will have that available in the near future. 

How important do you take customer service, and how is this reflected in your business strategy and staff training programmes?

Customer service is a key part of our business strategy and this has been the case from the very beginning. Our front line staff are the brand ambassadors for Dubai Duty Free and that is something we endorse. We were probably one of the first retailers in Dubai in the early 1980’s to set up a training department and to have in-house and external training courses operating at all times.

We have conducted over 500 training programmes so far this year and all of our new employees take part in an induction programme at which myself and all of our senior team meet with them and outline the company philosophy.

We look after our staff in terms of their benefits and a couple of years ago we purchased 15 new apartment blocks in a new development here, where we now house around 2,286 of our staff.

What do you see as the key challenges facing the travel retail and duty free industry today?

There will always be challenges facing travel retail, whether it is the global economic environment, security issues, LAGS, SARS, we have been through the lot in the past decade alone. But I think that the industry is very resilient and very often where there are challenges, there are also opportunities.

A key opportunity for Dubai Duty Free is the growing importance of the Asia-Pacific traveller, in particular the Chinese. We have seen a big increase in Chinese passengers travelling through Dubai International and they are driving a lot of spend in high-end luxury products. In October for example, 40% of our luxury watches were purchased by Chinese passengers, which is significant.

In order to appeal to these customers, we are recruiting a further 130 Chinese staff, to add to the existing 161 that we have already. 

We are also looking at our marketing and communications, as well as ensuring that the product mix appeals to them as they are very brand-conscious shoppers.

On the technology side of things, we have to ensure that we are ahead of the game and we are constantly updating our systems to ensure that the customers have a speedy transaction process. We introduced the Dynamic Currency Convertor system last year, which allows customers to pay in their own currency. Also, we now accept China Union Pay card to ensure that the Chinese passengers can use their most popular card. Given that there are currently 2 billion China Union Pay cards in use globally, that is an opportunity we cannot miss.

Another challenge for the operation as we continue to grow is to ensure that we stay ahead of the growth in terms of our logistics. 

We have a plan in place to expand our Distribution Centre and to increase the automated warehousing systems from the current 70% to 90%. This is to ensure that we can meet the logistical demands with the opening of Concourse 3 at the end of 2012 where we have a further 8,000 square metres of retail space.

How would you describe your leadership style?

I think that I have an open and relaxed leadership style and that I am approachable for all staff at all levels. I also think that I work hard and lead by example. I like to keep things simple. We do not have an elaborate reporting system, we have a small executive team that I call the ‘Dream Team’. In addition to our daily discussions, we also meet once a week to review all areas of the operation. Decisions are made quickly and that is the way it should be.

What is the secret to the success of Dubai Duty Free?

I think that the hard work and drive of all of our employees and managers has been one of the major components in our success. 

It takes a huge amount of work and effort to run a 24-hour operation that handles an average of 60,000 sales transactions per day and I think that we have the best team of staff in the world to keep it all running smoothly. 

Also, we have great support from H.H. Sheikh Ahmed bin Saeed Al Maktoum, president of Dubai Civil Aviation Authority and Chairman of Dubai Duty Free. Sheikh Ahmed is an absolute superstar and works incredibly hard. He has provided me personally with great encouragement and support over the years and has given me the freedom to do my job.

How do you keep yourself motivated and enthused after so many years in the hot seat?

The fact that no two days are ever the same at Dubai Duty Free is one way to keep you motivated. In addition to our retail operation, we are also involved with so many events both here and overseas through our sponsorships, that we are always busy. 

In addition, Dubai Duty Free oversees the running of the Aviation Club and The Irish Village complex, which is one of the most popular bar and restaurants in Dubai. In a few months, we will open our own five star hotel in Dubai, the Jumeirah Creekside hotel, which will be managed by the Jumeirah group. So, there are always plenty of things going on and I honestly look forward to going to work every morning.

What do you consider home now – Dubai or Ireland?

Ireland will always be my home and I like to support all things Irish here in Dubai, whether it is supporting the various Irish social and business groups or helping to bring out Irish singers to perform in The Irish Village. 

However, both my wife Breeda and myself love living in Dubai and enjoy all aspects of life here, from the great weather most of the year, to the social and sporting side of things here. Life is very good.


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