Crisis, what crisis?

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According to McLoughlin, Dubai Duty Free does 55,000 transactions a day, which annually account for 1000 tons of both pistachio nuts and Toblerone bars, among other goods.

How does Dubai Duty Free make over a billion dollars a year, and why does its head Colm McLoughlin think that no rival airport can knock it off its perch?

About twenty minutes into the interview, overwhelmed by the statistics of success, I plead with Colm McLoughlin to tell me some bad news. He looks dumbfounded. Then he starts laughing. "There is no bad news," he shouts with his arms outstretched, "we've only just begun." And now he's really laughing hard. Bad news? Bad news is about the funniest thing McLoughlin has heard all week.

McLoughlin is the twinkly-eyed Irishman who heads up Dubai Duty Free (DDF), and has done since its inception in 1983. Like many Irish men, he often talks with staggering understatement: "You know, Damian, I think we're not doing so bad," he says, shortly before dropping into the conversation that DDF saw sales of $1.1bn last year. Or "we really can't complain," after mentioning that an average sales day is about $2.5m.  He is a charmer, no question, and in full stride he is a walking, talking advertisement for all that is good about Dubai.

Perhaps some of the enthusiasm is because, for McLoughlin, the economic crisis is a passing cloud, one that never really affected DDF.

"We saw sales dropping off at the beginning of the year, but not seriously. At the end of June we were seven percent down on 2008, but in 2008 we were 28 percent up on 2007," he says, "so we started doing extra promotions and discounts, and in September our sales were 14 percent up on (September) 2008. For the nine months of this year we have now wiped out the deficit, and we are 1.5 percent up on last year. 2008 was the biggest in terms of sales for any airport in the world. We are forecasting finishing the year four percent up on 2008 and retaining our number one ranking in the world."

That is an amazing feat, no? DDF is on course to break all sales records in this of all years. If 2009 couldn't hold it back, what would it take to stop DDF succeeding?

On the subject of competition, McLoughlin is unruffled. He will concede that airports around the world are getting better when it comes to shopping, and even that there are other GCC airports with a decent duty free operation. But he doesn't believe any of them will catch Dubai.

He says: "Abu Dhabi's is getting better. In comparison with Dubai it is small. Abu Dhabi was celebrating last year because they sold $100m. We had more than a billion. Bahrain will be about $100m. Beirut has got a nice development, apparently, although I haven't seen it."

Surely Abu Dhabi is going to want to a slice of the massive revenue that can be generated through duty free shopping? The UAE's capital already has well advanced plans to build the kind of airport that is a more fitting home to its prestigious domestic carrier, Etihad, and it is hardly likely to pass up the opportunity to emulate the duty free operation at Dubai. How much longer does McLoughlin think Abu Dhabi will lag behind Dubai?

He says it quietly. "Forever."

 And then he explains DDF's plans for world domination: "There's a new concourse being built here, concourse three. That will increase the capacity of Dubai's airport to seventy million people a year. At the same time, Dubai World Central is being built. It is going to be the biggest airport in the world, which will have a capacity for 140m passengers a year.

"Look, the biggest airport in the world is Atlanta, Georgia; it processed 95m passengers last year. Heathrow is the third biggest, it does 65m passengers. This new airport in Dubai will have capacity for 140m passengers, and the current airport will still have capacity for 70m passengers. It's unbelievable. And we're putting duty free shopping in there. Eventually, which might be in fifteen years time, there will a facility for 64,000sq m of retail space.   At the moment we have a total of 15,000sq m."

McLoughlin believes DDF's position at the top of the tree is unassailable, and listening to him, it is hard to argue otherwise. He says DDF is on target to double its business to $2.2bn a year by 2013. In fact, he says, DDF has doubled its annual profits some six times since it began.

Which begs the question, how? Given that DDF, when all is said and done, is just a handful of shops in a place where people go, primarily, to travel, how is it generating these massive and ever increasing sums of cash?

McLoughlin says the answer is in clever shop positioning and marketing strategies. He says DDF does 55,000 transactions a day, which annually account for 1000 tons of both pistachio nuts and Toblerone bars, among other goods.

"We have more turnover than Heathrow. As an airport, based on sales, we were ranked third in the world for a long time. Heathrow was the biggest, South Korea's was number two. On the 2008 figures, we jumped them. More people got through Heathrow, a lot more, 70m this year perhaps. But we do better, you know?"

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READERS' COMMENTS

Dubai Duty Free
Posted by Wissam, Montreal, Canada on Sunday 8 November 2009 at 05:02 UAE time


Beg your pardon!!!!????
I myself, no one else, have been in Dubai airport for more than 25 times between Sep 08 and May 09. Before the crisis, I used to buy, as gifts, all kind of food, to take home. One reason for that: not at all the price, it was more expensive than my home. But simply because all products were fresh !!! But in that period, forgive me to say, i beg ur pardon, all products were 1 month before expiry. Why???? Please ask Mr. McLoughlin.
Ask the people at the counters too.
For me, i love Dubai, and the UAE people. My objective: to come back soon. But please Mr. Colm, i know the brits are straighforward!!!!! They trained me to be!!!

Thanks

Regards

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