Dubai Duty Free meets growth target

On December 20, 1983, at 7am Dubai Duty Free was born.

Unlike the pomp and ceremony that has come to define events in the thriving, global metropolis which the emirate has evolved into, there was no official event, no ceremonial ribbon cutting heralding the occasion then.

A bottle of beverage and a carton of cigarettes were the first items bought off the gleaming shop floor of what was to become a billion-dollar retail success attracting millions of travellers every year.

The duty free industry began in 1947 at Shannon Airport in Ireland, when businessman Brendan O'Regan began selling a selection of Irish handicrafts to transatlantic travellers.

Just under 40 years later it was Dubai's turn to dip into the duty-free honey pot. Current Dubai Duty Free managing director Colm McLoughlin came to the emirate from Ireland at the head of a 10-man team on a six-month consultation in 1983 with a view to importing the concept in the UAE.

McLoughlin along with the duty free has since remained in Dubai.

The night before the opening was characterised by the usual niggling doubts businesses the world over experience before getting started, says author Graeme Wilson in his chronicle of the rise of duty-free called Fly By Dubai.

In an interview with Gulf News, McLoughlin talks about Dubai Duty Free's rise and growth.

Gulf News: What does it take to create a retail experience which has come to characterise Dubai Duty Free?

Colm McLoughlin: It takes 20,000 square metres of retail space with 21 million transactions taking place thus far in 2008, around 60,000 per day. It takes 17 million units of merchandise moved from the DDF's floor.

What were some of the challenges you experienced while building Dubai Duty Free into what it is today?

We would like to pretend generally that there were never any problems but of course there were many problems. What comes to mind immediately was when Iraq attacked Kuwait in 1990. We had three to four hundred staff that were scared and wanted to go home. It was just a matter of keeping it nice and smooth and calm.

The financial crisis has had an impact on all sectors of world economies including tourism and air travel. How has this affected Dubai Duty Free?

We have found in the last couple of months that our increase over the previous year has not been as big as it was in the earlier year, but just the same we are running well ahead of last year. In November we were 11 per cent up on last year. For the year to date we are 23 per cent up on last year. We have just broken through $1 billion (Dh3.67 billion) sales target for this year so far and we think very positively about duty free. Traffic continues to increase at the airport so we're not holding our heads and crying, we're very positive that duty free will continue to do very very well.

What is your outlook for 2009 and beyond?

We're budgeting an increase next year over this year in sales. We have been recruiting strongly, we've got all our new people in place. We have just opened terminal three at the airport and its doing very well and I am sure we will continue to improve. Just around the corner is the Dubai Trade Center in Jebel Ali, just around the corner is the new budget airline Fly Dubai and while it is an economic crisis around the world that actually has felt a spinoff everywhere, we are still very positive about duty free. We expect our business to finish this year at about Dh3.9 billion in sales. We expect that to double in the next four years. So we're very positive.

After 25 years, what is most gratifying about your experience with Dubai Duty Free?

I think the kind of business we have evolved into. I think the most gratifying for us is not at all the profit. I think the fact that our spread is so much, the fact that we are involved in so many different things, the fact that we have been part and parcel of the economic scene in Dubai for the last 25 years.

We own the Aviation Club, we own the Irish Village we own the Century Village we own the Dubai Tennis Championships and we own a foundation. We are helping many things in many parts quietly around the world. We still have 57 of our original 100 staff working for us 25 years on.

They are the most gratifying things and sure we make profit and that's great and the more we make the better but that's not the number one, that's not the top of our list at all.

Do you have any plans for further expansion?

We just opened Terminal 3. Concourse Three is being built at the airport right now. We are going to put three and a half thousand square metres in the retail space there.

The new airport at Jebel Ali will be a temporary arrangement but we will open there next year and we are putting 5,000 square metres of retail space there so our plans for expansion are huge.

We are building our own hotel right now at the aviation club, five-star, 296 bedrooms, around Dh460 million investment and it will be opened in the first quarter hopefully of 2010 so we doing expansion all the time.

Self-doubts: Teething troubles

Was there enough stock? How were the staff to manage all the customers? Would the cash registers break down? Would the credit systems work? Would the concept work? These were some of the questions plaguing the minds of Colm McLoughlin and his team 25 years ago.

Today, these questions have been answered with Dubai Duty Free evolving into the third largest duty free in terms of sales in the world. Dubai Duty Free has recorded a growth in sales from a humble $20 million at its inception in 1983 soaring to $1 billion as it commemorates its 25th Anniversary this week.

The duty-free industry is worth $32 billion globally with airports generating roughly half of this and Dubai Duty Free contributing six per cent to the global industry.