x Abu Dhabi, UAEThursday 27 July 2017

Dubai Duty Free sales decline by 4%

Although passenger traffic at Dubai Airport rose by 3 per cent, people spent less. Travellers switched from buying luxury items to every day items.

DUBAI // Sales at Dubai Duty Free have fallen by 4 per cent in the first five months of this year as travellers change their spending habits, an executive says. Colm McLoughlin, the managing director of Dubai Duty Free at Dubai International Airport, said although passenger traffic had risen by 3 per cent so far this year, people were spending less. "They are not spending as much money on luxury products as they did before and they're spending more money on normal, run-of-the-mill items," Mr McLoughlin said. From Jan 1 to May 26 this year, the duty free operation has sold Dh1.52 billion (US$414 million) worth of goods, down from Dh1.59bn in the same period last year. Dubai Duty Free had processed 6.67 million transactions so far this year, down slightly from the 6.99 million in the same period last year, Mr McLoughlin said. Sales of perfume and cosmetics, which make up about 19 per cent of all sales, have fallen by 7 per cent, he said. But sales of confectionery items were up by 9 per cent and cigarette and tobacco purchases had risen by 8 per cent, Mr McLoughlin said. "From what we hear in the duty-free business, this is terrific," he said. "Some operators are down 20, 25 per cent from last year. So we're very happy." But Naeem Ghafoor, the chief executive of Skyline Retail Services consultancy in Dubai, said a marginal sales drop after Dubai Duty Free's expansion at the airport's Terminal 3 last year could point to a bigger decline in overall shopping activity. "If, with the additional 10,000 square metres of retail space sales are down by 4 per cent overall, in real terms the decline is a lot higher than that," Mr Ghafoor said. Mr McLoughlin said Dubai Duty Free's profits had risen by 2.2 per cent so far this year compared with the same period last year. He credited small cost-saving measures such as reducing electricity use in the warehouse where possible, and cutting inventory. He said Dubai Duty Free had not postponed any expansion plans or laid off any of its 3,500 staff and the company was pushing ahead with its planned five-star hotel at the Aviation Club in Dubai. The nine-storey hotel, which is already under construction, is due to be finished next year and Mr McLoughlin expected the Dh450m project to be profitable after seven years. The retailer will also have an additional 2,500 sq metres of retail space at Dubai World Central-Al Maktoum International Airport at Jebel Ali when it opens in June next year. In two years, Dubai Duty Free will have 5,000 sq metres of retail space as part of Dubai International Airport's Concourse 3, which will be dedicated to the new Airbus A380s, Mr McLoughlin said. He said he was optimistic that sales would increase after the low-cost airline flydubai starts operations from Monday. "We think we are beginning to see a recovery," Mr McLoughlin said. "Our sales in May are down by less than they were in the previous months. There is an air of optimism." aligaya@thenational.