UAE. The 2018 Middle East & Africa Duty Free Association (MEADFA) Conference began today in Dubai with a strong turnout of almost 500 delegates. The conference had been relocated and postponed from its original venue Beirut, Lebanon in November 2017.
Opening the event, TFWA Managing Director John Rimmer thanked friends and partners in Lebanon and voiced the association’s hopes to take the event to Beirut in future.
The rescheduled conference takes place amid a time of change and challenge in the region. The travel retail industry faces the impact of regional conflicts, currency fluctuation, regulatory challenges and increasingly stringent hand baggage rules among some Middle East airlines.
In his welcoming address, MEADFA President Haitham Al Majali outlined how in the first half of 2017 global duty free sales increased by +4.6%, according to Generation Research. This was driven by increased fragrances and cosmetics revenue (+10.2%) and wines and spirits (+6.3%). Growth in the Middle East in the same period was just +0.8%.
Africa however declined -3.5% in this period, said Al Majali. “The Middle East is a huge success story for the channel, and accounts for a 9% share of the global duty free market (worth US$63.5 billion worldwide),” he said. “But we can’t be complacent about the political, economic and social challenges that we face.”
Against that challenging backdrop, the Middle East and Africa region remains one of promise and opportunity for travel retail, he said. It is home to the world’s biggest airport for international passenger traffic, Dubai International, which is expected to serve close to 90 million passengers in 2018.
“We are delighted to be in Dubai… a business hub that has become an example to the rest of the world,” said Al Majali.
Other developments under way include the expansion of Al Maktoum International Airport, the planned opening of a new terminal in Muscat, scheduled for late March; Bahrain International Airport’s new terminal and the anticipated opening of Abu Dhabi International Airport’s Midfield Terminal Building in 2019.
Middle Eastern airport developments
Dubai Duty Free Executive Vice Chairman & CEO Colm McLoughlin welcomed delegates to Dubai on behalf of H.H. Sheikh Ahmed bin Saeed Al Maktoum. The retailer has grown to a US$2 billion company in the past 16 years and now accounts for 43% of the Middle East’s 9% share of the global duty free market.
Dubai Duty Free has set its sights on becoming a US$3 billion company within the next few years. Chief Operating Officer Ramesh Cidambi said a positive traffic environment and refurbishments at Dubai International Concourses B and C will help grow the business. But he warned that pressures from e-commerce players will provide the strongest threat in the coming years.
“The real threat comes from players like Alibaba,” he said. “The only chance we have is working together with brand partners, better engaging with consumers. If we continue to improve different parts of our business and engage better with consumers, we will be well placed. We are already up +7% on last year for the same period – it’s a positive start for 2018 and we expect to carry that momentum into 2018-2019.”
Muscat International’s new terminal, which has a 20 million passenger capacity and is set to open in the first half of 2018, will feature an elevated retail and dining offer. Oman Airports Management Company Non-Aeronautical Senior Manager Faisal Sultan Salim Al Mamari stated the airport company is forecasting +100% growth in non-aeronautical revenue at the facility.
Leading this charge will be the joint venture between Aer Rianta International-Middle East (ARI-ME) & Oman Air, managing 5,320sq m of retail space; and new food & beverage company BTA. Al Mamari said ARI-ME will be bringing some exciting hi-tech, digital elements to the duty free offer.
He also noted that concessionaires for speciality retail will include WHSmith; a BeRelax spa; Gallery Argan offering gold and jewellery; Travelex & Global Exchange for foreign exchange; and a new Plaza Premium (Aerotel) airside hotel.
Business outlook
After the coffee break, broadcaster Richard Dean listed the big stories that will have an impact on the business sector in 2018. Changing consumer profiles and needs, developments in technology and across cultural aspects of society will all have an impact on retail, he said.
Next up, Counter Intelligence Retail Research Director Stephen Hillam looked at the travelling consumer in the Middle East through findings from a new study for MEADFA. He outlined the big drivers of growth, and spoke of the need to better understand who passengers are, and how to target them.
Taking the focus to Africa, Inati Ntshanga, aviation consultant and former CEO of South African Express, explored the current climate in African aviation. He discussed the urgent need to develop open skies within the African continent as rising disposable income and a growing population contribute to burgeoning passenger numbers – expected to climb by +8% in 2018, following a +7.5% jump in 2017.
The final session of placed the spotlight on innovation and key initiatives in travel retail. These included a new, app-led pre-order service soon to be launched by Beirut Duty Free in partnership with Inflyter; a ground-breaking campaign by Dufry in support of the United Nation’s (UN) sustainability goals; and Philip Morris International’s (PMI) bold initiative to build a smoke-free future for the industry.
PMI Vice-President Middle East Tarkan Demirbas detailed the company’s mission to roll out smoke-free products. It is “our vision that these will one day replace cigarettes”, he said.
Around 4 million smokers have switched to smoke-free alternatives since PMI launched its IQOS product, comprising 8,000 people every day, he revealed.
Dufry External Affairs Director Sarah Branquinho outlined how the retailer is supporting the United Nations’ mission to reach 2 billion people with its 17 sustainable development goals agreed upon in 2016. The industry giant is leveraging its reach across travel retail to communicate these targets, using various platforms from print to digital. It has rolled out the campaign to 32 locations across Europe, Middle East, Asia and South America and has reached 54 million passengers.
The final presentation of the day detailed Inflyter’s innovative new app-led pre-order service that is set to launch with Beirut Duty Free. CEO Wassim Saadé and COO Amir Abbaszadeh said that the app can transform the average 23 minutes of exposure that duty free retailers have to a consumer into 58 days – the average time (the company claimed), from booking to taking a flight.
Note: Click here for a full report on the concluding day of the conference. You can also view proceedings via Moodie Live, our real-time Blog from MEADFA.
