Super Retailers
How do the Middle East’s travel-retailers ensure that their offer to travellers remains fresh and engaging? David Davies spoke to three of the leading players about their varying approaches to retail renewal and their plans for the future
WHAT are the latest developments in terms of new stores, expansion projects, etc?
Steve O’Connor, Bahrain Duty Free Shops (BDFS): BDFS is constantly reviewing its product range given many factors including customer experience, supplier innovation and airport development. Our fashion department has recently introduced the Ferragamo, MCM and Zumorrod brands, with the Zumorrod concession being the first of its kind in the Gulf. Other ranges have been expanded, for example Boss, where in addition to the Black range we now offer the Boss Orange range. Fragrances and cosmetics constantly require supplier innovation as our customers continually demand quality and value for money. The addition of Fendi, La Prairie, Mugler and Azzaro, along with the imminent arrival of the Shiseido and L’Occitane ranges, has resulted in a 20% increase in allocated floor space in this category.
Taking account of the natural variations in customer spending power and in an attempt to appeal to all, we have also recently introduced Revlon and L’Oréal in the selective beauty area. Changes are also a constant in the lifestyle department, with Reebok and Billabong being the most recent additions to BDFS. In the past six months, our toys, music and newspaper shops have undergone facelifts of one kind or another, with all three being swapped around. This resulted in a bright new space for toys while news and music has its own dedicated section. Shortly after this was completed, the tobacco department was revitalised with the simple movement of a dividing wall.
Colm McLoughlin, Dubai Duty Free (DDF): This is a time for major growth and development at Dubai Duty Free as we move towards our 25th anniversary in December this year. In the coming months, the new multi-billion dollar Concourse 2 and Terminal 3 will open at Dubai International Airport. In terms of the look and feel of the new retail operations, we have retained the sense of space, light and elegance that we have in Sheikh Rashid terminal. In Concourse 2, the retail offer is positioned on the same level as the departure gates, which is new. Also in Concourse 2, we have the advantage of having retail areas with wider storefronts and less depth than in Concourse 1. We think that passengers will be able to shop more easily here since it is more accessible, and boasts better category management and placement.
We have allocated more space to gold and fashion in Concourse 2 since those two categories are among our top performers in Concourse 1. We also have a much more attractive design for the stand alone retail outlets or ‘pods’ that are located along the 2,000sqm spine of the concourse. These ‘pods’ are both attractive and flexible with respect to merchandising and yet very efficient in terms of the footprint that they occupy in the centre of the retail area. We are also able to take advantage of the fantastic architecture and finishes of the concourse building and the terminal building. We have a spectacular 22m long LED screen that greets passengers as they step off the sky train and into the retail area. In Terminal 3, we will be launching two arrivals outlets that cover a total of 3,500sqm. That’s more than three times the size of the existing arrivals in both Terminal 1 and Terminal 2.
Dan Cappell, Abu Dhabi Airports Company (ADAC) regarding Abu Dhabi Duty Free – please see separate feature on Abu Dhabi Duty Free on pages 48-49.
What is your philosophy as regards promotion and in-store activity?
O’Connor: At Bahrain Duty Free our marketing philosophy is one of entertainment, excitement, fun and rewards which enhance the overall shopping experience. Obviously, our goal is to increase spend, but we also want very much to ensure that the customer enjoys the experience and will remember it as being exceptional on the next occasion they travel through Bahrain International Airport. We have received great support from suppliers on various promotions
run during the years.
McLoughlin: We certainly believe in the need to have ‘retail theatre’, and our promotions reflect this. We have seven different locations that run in-store promotions, ranging from exclusive to more standard promotions. We hold approximately 400 promotions in one calendar year. The duration varies from 1-4 weeks depending on the location. The cash counter also serves as a venue for promotion as demand for promotional slots continues to exceed supply. DDF
in its commitment to strengthen the promotional activities has allocated a pool of competent and trained staff to support the requirements of our partners.
Cappell: In terms of Abu Dhabi Duty Free, we have always had a history of being innovative and bringing things to the market first, and the same applies to promotional activity and campaigns. That mindset and strategy will continue with new retail partner DFS, but obviously they will have their own approach to the promotional plans and focus. Because of the integration plan that means Abu Dhabi Duty Free will cease to exist, to be replaced by DFS Abu Dhabi; it will be more DFS’ promotional focus going forward than that of the historical Abu Dhabi Duty Free. But DFS will work very closely with the commercial function of ADAC, and ADAC will sign off on the business plan that DFS has. Going forwards, we anticipate that we will still be on the cutting edge of retail execution, brand innovation and promotional activity as an airport retail offer.
What is special or unique about your overall offer as a retailer?
O’Connor: Nearly every duty-free around the world has an element of sameness. Of course, there is great innovation from suppliers and manufacturers. However, we also look inward to Bahrain for inspiration as it is renowned for its people and their natural penchant for hospitality. We encourage all of our staff to inject some of this natural
hospitality into their approach to each customer. We like to think that this contributed to our recent MENA Travel Award success where we received the platinum award in the Best Duty Free category. This is an award voted for directly by the travelling public.
McLoughlin: Innovative retailing and marketing – these have consistently put us ahead, and the fact that we invest a great deal in marketing and building Dubai Duty Free as one of the most recognised brands within the duty-free industry while fulfilling its wider role of promoting Dubai to a worldwide audience. Dubai Duty Free’s sponsorship of major sporting events, including the Dubai Tennis Championships, which is owned and organised by us, has resulted in massive media exposure for Dubai and helped put the city on the map. The anniversary day (20th December) promotion in which the discount offered is the same as the anniversary year – last year, DDF celebrated its 24th anniversary and a 24% discount was offered on almost all merchandise. This year DDF will celebrate its 25th year, hence a 25% discount will be offered. This date has been marked and most of the people schedule their flights on this day to avail of the great discount offer, making Dubai Duty Free a ‘destination.’ However, Dubai Duty Free is not just a ‘destination’ – we are also actively involved with charity programmes through the Dubai Duty Free Foundation, whose aim is to help worthy causes, especially those of children. Dubai Duty Free is much more than an airport retailer which is committed to render first class service to customers – we are a trend-setter,an ambassador for Dubai, and a charity supporter.
Cappell: Relatively speaking, we have done a very, very good job at getting spend per head with the retail offer, size limitations and structure of building we have had. But it can be seen from where we have refurbished one or two outlets in Terminal 1 that the whole of Terminal 1 now needs to be refurbished. T3 will be used as our flagship and
benchmark [for all development] going forwards.
As retailers with long and distinguished histories, how do you seek to ensure that customers find something new and engaging every time they walk into your stores? What kind of techniques do you implement to secure their attention – and, with any luck, a substantial purchase?
O’Connor: As I have mentioned, it’s becoming extremely difficult to differentiate duty-free shops as a lot of the same products are on sale in each. Therefore, in our airport we put in a “sense of place” by creating more local Bahraini features. The plan is to develop the theme further. The terminology has become widely used and a lot of airports are saying they want to create a “sense of place” as well. Obviously the problem we are facing here is that the passenger profiles keep changing. When Gulf Air was the only airline in Bahrain 25 years ago there were no problems of this sort. Then Emirates and other airlines came along and now you have different profiles of potential customers.
Developments such as the cost of living here and all over the region, as well as higher salaries, are greatly influencing passenger profiles. Obviously, with the booming banking sector, for example, paying high salaries, we suddenly have a market for people with a high disposable income. They are starting to fly and to look for the higher-end products in the duty-free shop. Our product range has now gone to two extremes, with Rolexes on one end and powder juices on the other end of the scale. It has become more difficult and it will remain a challenge until things level out a bit. We don’t have a lot of tourist traffic here because obviously Bahrain isnot a mass tourist destination. Therefore, change is a constant at BDFS […] We don’t want to just simply meet [customers’] expectations, we want to exceed them.
McLoughlin: We have one of the top – if not the top – purchasing, sales and marketing teams in the world. We have built extremely strong and stable relationships with the leading suppliers of luxury and premium products from all parts of the globe. Hence, we have every must-have item at Dubai Duty Free, from the latest fragrance and the newest gold jewellery design to premium items and the coolest electronic gadgets. You name it, we have it.
Cappell: One of the big differences with T3 is that there will be 100% penetration. The route to pier is through the commercial offer – that was part of the initial design and build discussions. Secondly, in terms of both Abu Dhabi International Airport and DFS, DFS has its own loyalty programmes and platinum premium facilities for customers, and
ADAC is currently working on ways of having its own airport membership scheme.
What does the future hold for your businesses?
O’Connor: Bahrain International Airport is going through much change, and BDFS will continue to develop and grow with the airport. Over 7.3m customers passed through the airport in 2007. This number is forecast to grow on average 9% per year over the coming years (the 2008 estimate is 8.5m customers) with further airport expansion as part of a
BD 300 million (USD $ 800 million) plan. We’re also developing our website (www.bdutyfree.com). We already have the online purchase facility; however, we intend to expand the product range available while also offering the option of viewing the website in the Arabic or English languages.
McLoughlin: We are very excited about what the future holds for Dubai Duty Free. For a start, we are about to move into new offices and our state-of-the-art Warehouse and Distribution Centre, which is semi-automated and covers a total area of 27,000sqm. We are also going to double our retail offer in the coming months with the opening of Concourse 2 and Terminal 3. This gives us a great opportunity to introduce some new brands and expand some of our existing categories. Looking further down the line, we will have more retail space in Concourse 3 and also in the new airport being built at the Dubai World Central at Jebel Ali. In addition, we have recruited a further 1,000 staff in the past six months, which brings our total to 3,000. We celebrate our 25th anniversary in December this year and we have a whole load of activities coming up around that including the publication of a book and the production of a film so, all in all, there is a great deal to look forward to.
Cappell: We have invested significant money in the quality of the retail fit-out in T3, and from this perspective it is something that we are excited about and believe will cause passengers to go ‘wow’ when they see it. We think that it will significantly raise the benchmark in the Middle East.
Delicious
Digg
StumbleUpon
Facebook
