Middle East bucks duty-free trend

Armina Ligaya

• Last Updated: November 23. 2009 7:32PM UAE / November 23. 2009 3:32PM GMT

DUBAI // Duty-free retailers in the Middle East continue to outperform their global counterparts, with regional operators among the few to report sales increases.

Sales at Dubai Duty Free so far this year have risen nearly 3 per cent compared with the same period last year, to Dh3.4 billion (US$926 million), said Colm McLoughlin, the managing director of Dubai Duty Free at Dubai International Airport. He expects to end the year with growth of 4 per cent.

“We’re selling to more people,” he said on the sidelines of the Middle East Duty Free Conference in Dubai. “And then we’re offering discounts and promotions, and that’s working very well.”

The modest gains are bright spots in an industry that has suffered steep declines globally. The latest statistics from Generation Research, an independent industry research firm based in Sweden, show the Middle East was the only region with increased sales in the first half of this year. Duty-free sales grew 2.6 per cent in that period. Worldwide sales, by contrast, fell 7.4 per cent, to $19.9bn from $21.5bn.

Duty-free sales fell 17.4 per cent in Europe and 18.9 per cent in the Asia-Pacific region in the first six months, Generation Research reported. Sales in Africa and the Americas fell 15.6 per cent and 8.2 per cent respectively.

In Abu Dhabi, duty-free sales have risen 12 per cent so far this year compared with last year, in part due to the addition of 2,600 square metres of retail space in Terminal 3 at Abu Dhabi International Airport, and a boost from visitors to the Formula One Grand Prix.

“This year will be the best year in the history of the company,” said Dan Cappell, the vice president of non-aeronautical revenue and business development at the airport.

Dubai is also expanding its duty-free offerings. Mr McLoughlin said Dubai Duty Free would spend Dh15m next year to refurbish the 1,300 sq metres of retail space in Terminal 2, which houses the new low-cost airline flydubai. This was on top of the Dh100m earmarked for Dubai airport’s new Concourse 3, due to open in 2012, he said.

John Sutcliffe, the managing director for Aer Rianta International, a leading global airport retail management company, said its operations in the Middle East were its top performers. Sales at Qatar Duty Free so far this year were 6 per cent higher than the same period last year, while Muscat Duty Free had experienced 8 per cent growth, he said. Bahrain could expect flat sales this year because of lower demand for chartered flights from the UK en route to packaged holidays in Thailand and India, and a weak pound. Egypt has seen strong “single-digit” sales growth.

In Beirut, sales had risen 24 per cent, he said. The recent period of peace and stability had made it a viable holiday alternative to Europe and the US, Mr Sutcliffe said.



aligaya@thenational.ae