Colm McLoughlin, Executive Vice-Chairman and CEO, Dubai Duty Free: Interview

Interview: Colm McLoughlin

What improvements can be made to Dubai’s logistics capabilities and infrastructure to better support the growth of the retail sector?

COLM MCLOUGHLIN: First and foremost, the Jebel Ali Port will be enlarged from a logistics point of view, reaching an overall capacity of 22.1m twenty-foot equivalent units by 2018. In addition, retail operators will have to look at their own storage areas and increase capacity so that it will have an overall effect in reducing road traffic. They will also look at automation as a way to enhance efficiency. Most of the big retailers in the city have come to check Dubai Duty Free’s set-up, with 95% of our operations automated, which enabled us to deliver 167,450 pallets in 2015. From the public’s point of view, the facilities are already in place. Freight at both airports has been growing considerably and it is a big part of the business.

Which opportunities for the retail sector do you expect with the launch of Dubai South?

MCLOUGHLIN: There will be retail opportunities derived from the population that will be living there. Apart from the airport, golf courses and malls, some service industries and other companies will be established there. There are now around 2.5m people living in Dubai, but by 2018 that figure could be 4m. The shopping in Dubai, because the malls are so luxurious, is truly different. A lot of people in the emirate perceive shopping as leisure. It is not just about the essentials; it is an experience. I have no doubt that by 2020 there will be 20m people visiting Dubai.

To what extent do the retailers in the emirate need to expand their online presence, and how will this impact the traditional retail segment?

MCLOUGHLIN: New technologies are very important in the retail sector. At Dubai Duty Free we are planning on using social media much more effectively than we have in the past. We are looking at marketing in a totally different way. There are several online-shopping start-ups and at the beginning of 2015 we launched our online sales service. We hoped that this would give us incremental business, but it was launched with the aim of providing an extra service to customers, who increasingly expect an online option. In 2015 our online sales reached Dh63.8m ($17.4m) and we are looking to double that for 2016. For the future, we expect mobile technology to be much more prevalent in our operations, so you will be walking through Dubai Duty Free and you will receive a message on your smartphone telling you to go to a particular store and get a 20% discount.

How have recent global factors, such as regional turmoil, currency fluctuations and lower commodity prices, impacted the sector?

MCLOUGHLIN: It has been a challenging year for the retail sector across the board, and for the travel retailer in general. It is true to say that a weak euro, a drop in spending by the Chinese and the overall decline in Russian travellers, which in our case we estimate cost us Dh200m ($54.4m) worth of business, have had an impact on our numbers in 2015. Despite all of this our sales turnover reached $1.89bn in 2015, and it looks to be a positive year for Dubai Duty Free in 2016. Despite the many challenges in the retail sector, the operation is looking forward to a busy year with a further 7000 sq metres of retail space at the recently opened Concourse D. Since its opening in February 2016, we have had a lot of positive feedback from our customers on the overall layout, design and products available; and sales wise it is also doing very well. Dubai Duty Free’s sales forecast for 2016 is close to $2bn. Passenger numbers are expected to continue to grow both at Dubai International and Al Maktoum International airports, so we need to continue to attract these new passengers. Moreover, this trend is set to continue to grow.