Dubai Duty Free looks to brighter future

As Dubai Duty Free celebrates its 20th anniversary tomorrow, it can look forward to even bigger economic growth rates in the next 10 years. Ranked the fifth largest in the world, many see it occupying the No. 2 or even No. 1 in the next decade.

Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman of Emirates Group, says becoming No. 2 or 3 is not what is important. What is, however, is continuing to provide quality service to customers.

The way to economic growth in the last 20 years has been through the quality of services provided which has made shopping at Dubai Duty Free "an experience to enjoy" as Sheikh Ahmed puts it.

At the marble-floored Dubai International Airport, the Dubai Duty Free areas showcase 35,000 product lines that range from perfumes and cosmetics to laptop computers, cameras, watches and sports gear.

It has a so-called "gold and jewellery island" in keeping with Dubai's reputation as the city of gold. Gold bars and jewellery have been the the number one selling items since the duty free facility began in the early 1980s.

For instance, last year, gold sales totalled nearly three tonnes.

This is in addition to the food halls, the sunglasses shop and other diverse outlets. Around 4,150 kilos of caviar were bought by customers and 40,000 designer sunglasses sold last year, but electronic gadgets were the second hottest selling items after gold that year.

With sales expected to top the $350 million mark by the end of this year, the Dubai Duty Free is today part and parcel of Dubai's burgeoning economy, drawing up to 70 per cent of the items on display from the local market.

Dubai Duty Free started as a small organisation on December 20, 1983, beginning with 15,000 items. With a 129-strong sales staff - they number over 1,000 today - it made a profit of $20 million by the end of that year.

Today, Colm McLoughlin, Managing Director of Dubai Duty Free, points out: "It has been gratifying to have watched our organisation grow from scratch in 1983 to become one of the premiere and most influential operations of its kind in the world."

The growth of the Dubai Duty Free operations is inextricably linked with that of Dubai International Airport, whose flagship, Emirates, was established in 1985, and quickly reflected the increase in passengers that passed through the airport.

In 1986, 3.77 million passengers passed through the airport, the number spiralling in 1989 to four million and 5.1 million in 1990. In those years, duty free sales increased to $31 million, 68.5 million and $95 million respectively.

With further passenger growth in the 1990s, marked by the opening of Terminal 2 in 1998, duty free sales continued to rise, standing at $178 million in 1999, $217 million in 2000 and $244 million in 2001.

The opening of the Sheikh Rashid Terminal in April, 2000, saw a 12.3 million rise, and the unabated increase has resulted today in over 16 million passengers per year. Dubai's Terminal 3 is to open in 2010 when passengers are expected to shoot up to 70 million within the next five years, with duty free sales up to $600 million.

The growth of Dubai Duty Free sales is part of an overall worldwide increase, set to rise 50 per cent higher by 2010, according to a study by Generation Databank, a Swedish consultancy.

Duty free sales in the Middle East, the Indian Sub-continent and the Commonwealth of Independent States (CIS) grossed $1.7 billion last year, 8.5 per cent of total global sales, suggests the study.

Of this, the Middle East has taken $800 million in duty free sales, far higher than the average 4.6 per cent global growth rate, according to Justin Boutros of Channels Exhibition in Dubai.

And Martin Moodie of Moodie International predicts that the duty free sector in the Middle East will outpace the rest of the world in the coming decades.

The $20 per passenger spent at Dubai Duty Free last year is astronomical compared with the $5 average in 1984. Today, Dubai is beating duty free sales around the world. On average, for example, a passenger's duty free shopping amounts to $13.03 in the Middle East; $11.64 in Europe; and $10.68 in the Far East.

Dubai International Airport and Dubai Duty Free have built up a formidable reputation in the world. This has been partly due its aggressive marketing strategy, with Dubai Duty Free spending five per cent of its annual budget on marketing and promotions compared with the industry's average of only two per cent.

As a result, Dubai has become a household name.

"In a survey, 25 per cent of respondents said they voted for the Dubai Airport because of the Dubai Duty Free. You can't get a better endorsement than that," says McLoughlin.

Dubai Duty Free is also riding high with the international media. Its name comes up in regular features in top international newspapers and magazines such as the International Herald Tribune, The Wall Street Journal, The Observer, Time and News-week and it gets highlights on CNN, BBC, CNBC, and Eurosport.

But this is also because it picks up awards like hot cakes. Since its establishment, it has received around 70 international awards for the quality services it provides, the most famous of which are the annual Frontier Awards.

"The retail concept at the Sheikh Rashid Terminal is probably the finest example to be seen anywhere and takes airport retailing to a new level," said the judges in bestowing the 2000 Free Airport Retailer of the Year to Dubai Duty Free.

"What is also impressive is the airport authority's willingness to allow Dubai Duty Free a free hand to make retail a top priority at the airport," they add.

This is a point that has been emphasised by Sheikh Ahmed when he says: "Some people may think that if a business entity is run by a government department it will be bureaucratic and inefficient. We are very astute here and have every encouragement from the government."

Dubai Duty Free has a keen eye for the adventurous as part of its shop floor promotions. Its Finest Surprise draw, for instance, introduced in 1989, has helped its international customers win luxury cars such as Rolls-Royce, Bentley, Mercedes, BMW, Porsche, Ferrari, Jaguar and Maserati.

To celebrate its 20th anniversary in business, all sales generated on December 20 will be donated to local charities, emphasising the fact that Dubai Duty Free is part and parcel of the society and economy of the emirate.

Factfile
Shoppers' paradise
* Dubai Duty Free started operations on December 20, 1983, making annual profits of $20 million. This year's profits are expected to top $350 million.

* It started with 129 employees. Today, it has well over 1,000.

* The duty free operation has grown with the increase of passengers: in 1986, 3.77 million passengers passed through Dubai International Airport; this topped 12.3 million in 2000 and expects to soar to 70 million in 2010.

* On average, each passenger spends $20 in the duty free, far higher than the amount spent in the Middle East, Europe and Southeast Asia.

* Dubai Duty Free has draws for a million dollars and luxury cars, and sponsors