Interview: Colm McLoughlin
How are market expectations for the final run-up to Expo 2020 affected by rising visitor numbers?
COLM MCLOUGHLIN: The total number of tourists to Dubai grew by 0.8% to reach a record-high of 15.9m in 2018, bringing the emirate closer to achieving its target of welcoming 20m travellers per year by 2020, when it will host Expo 2020.
Furthermore, in 2018 Dubai International Airport retained its position as the world’s busiest airport for international traffic, welcoming nearly 90m travellers. The roadmap for Expo 2020 is well under way and Dubai’s main retail players are keeping pace to further strengthen operations as we prepare for the expected influx of visitors.
We remain optimistic about the impact that Expo 2020 will make between October 2020 and April 2021. Around 190 nations from across the world have confirmed their participation. The Expo is expected to attract 25m visitors, 70% of whom are anticipated to come from outside the UAE.
In what ways have new technologies and distribution channels impacted the retail sector and what benefits are they providing?
MCLOUGHLIN: A significant investment has already been made by Dubai Duty Free to upgrade and enhance our online offer that is being rolled out in 2019. It is expected to further enhance the overall e-commerce customer experience, adding new functionalities and improved processes both instore and online. E-commerce is growing and it will become even larger. In my opinion, it will be a good way to continue to boost overall sales in the sector, however, I do not believe that it will ever completely take over from the in-person retail experience of a bricks-and-mortar store. Having a physical presence increases the legitimacy of a business, especially in the Gulf. People are more willing to trust businesses that have a shopfront which they can see. Furthermore, being able to speak with your potential customers face-to-face through trained staff who are ready and willing to be able to offer advice and impart product knowledge plays a very important role in building such trust.
Which specific segments or products are experiencing higher growth in demand?
MCLOUGHLIN: Currently, the top categories in duty-free retail include beauty and cosmetics, which is growing at 8% year-on-year. With the expansion of Dubai International Airport, there has been significant growth in the high-end fashion segment. In the past luxury brands were reluctant to enter the airport retail sphere; however, given the forecast for global travel, particularly from Asia Pacific, they are quickly realising that now is the time to expand and invest in airport retail in particular.
It is important to underline that while the growth of luxury travel purchases have given a boost to airport retail sales, it would be wrong to focus purely on the high-spending passenger. It is essential that the airport retail experience offers customers a wide range of products at all price points.
To what extent has the increase in the number of tourists from Asia led to higher overall spending per tourist in the retail sector?
MCLOUGHLIN: We have observed that average spending per departing passenger is $41 as of June 2019, which is on par with that of Indian passengers. In the case of departing Chinese passengers, sales per visitor are above average, at about $160. The Indian subcontinent contributes 12% to our turnover and China, as a country contributes 18% even though they make up only 4% of passengers overall. It is anticipated that the steady growth in the number of tourists from China and South-east Asia will further boost spending in the retail sector.
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