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DUBAI INTERNATIONAL: Over the next 10 years Dubai Duty Free is expecting its sales to reach US$10 billion.

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KitKat is the region's number one snack brand purchased from Dubai duty free.

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ANNIVERSARY: Mid-December saw Dubai Duty Free celebrating 25 years of business and customers were able to get 25% off all purchases bought on that day.

While many retailers around the world are suffering from deteriorating consumer confidence, there is one channel of retail that will continue to boom.

Airport retail is now the fastest growing sector after the internet. Despite reports of a global economic downturn, retail sales figures are increasing.

Driven by the rapid increase in air travel and major investment in new airports and facilities, sales at airports are exceeding expectations and the Middle East is a hotbed of opportunity for airport retailers.

According to the latest report from Verdict Research, a Datamonitor company, retail sales at airports will grow by 11% in 2008 to US$30 billion and it is the emerging markets of Asia-Pacific and the Middle East that offer the most exciting opportunities for retailers.

The clean slates of emerging market airport development provide huge scope for growth that is less feasible - physically or financially - in regulated and restricted mature markets, and this is now being taken advantage of by airport operators.

Increasing passenger numbers are a key driver with the strong growth witnessed over the last five years set to continue, particularly in emerging markets, says research company, Verdict.

"The key factors stimulating this growth are increased affluence, growing tourism, rapidly expanding airline networks and new routes, especially those of low cost carriers. The increase in business travel as a result of globalisation is providing a further boost to airport retailers," says Nick Gladding, lead research analyst and author of the report.

The Middle East has seen the fastest growth in passenger airport traffic over the last five years and will remain the fastest growing region over the five-year forecast period.

Between 2002 and 2007, retail sales in the four key Middle East markets of the UAE, Qatar, Bahrain and Oman more than doubled from $461 million to $1.2 billion and the report reveals that sales are set to double again, and reach $2.5 billion by 2012.

At the forefront of this growth is Dubai international airport, which recorded 50 million passengers in 2008. With the addition of a new concourse and terminal, retail space has more than doubled and with it, it brings a broader range of jewellery, luxury and fashion items than are already available.

As Dubai Duty Free headed into the last quarter of 2008, sales reached $780 million, a 27% increase over the same period in 2007.

Perfumes maintained the number one category as sales rose to $110 million, while sales of gold rose by 35% to reach $92 million from January to September 2008. Another notable increase was in confectionery, which rose by 36% with sales of $58 million.

Over the next 10 years Dubai Duty Free is expecting its sales to reach $6 billion and Colm McLoughlin, company managing director is more than optimistic for the company's future.

"In four years time retail space will reach 30,000m² at Dubai international. Over this period we expect sales to double to just over $2 billion. By 2016 sales should exceed $4 billion and in 10 years our sales at Dubai international airport will be $6 billion."

McLoughlin is quick to add that currently Dubai Duty Free's profit is three times bigger than that of UK-based luxury goods store Harrods.

Other Middle East airport authorities are to upgrade their retail infrastructures too. A new terminal is under construction at Abu Dhabi, enabling it to compete more effectively against Dubai when it opens in 2010, while a third UAE airport at Ajman is due to open a year later.

Other Gulf states, most notably Qatar and Bahrain also plan terminal extensions that will include substantial retail facilities.

India also offers rich pickings for airport retailers. As a country that already has a strong trading culture and an international mindset, India is fast becoming a key market in global airport retailing with investment from international airport operators including the Swiss-based Nuance Group and Britain's Alpha Airports Group, now owned by Italy's Autogrill.

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