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An Irishman's Midas touch to Dubai Duty Free

How Colm McLoughlin transformed the duty-free industry as a worthy successor to his compatriot Dr Brendan O’Regan

Colm McLoughlin, Executive Vice-Chairman and CEO, Dubai Duty Free, had no inkling that he would stay on in Dubai for this long when he moved to the emirate in 1983 at the request of the Dubai Government to set up the duty-free retail entity.

McLoughlin, 79, who was born in Ballinasloe, Co. Galway, Ireland, in 1943, had started his career in retail in London in the 1960s.

He worked for the popular high-street chain of Woolworths before moving back to Ireland to work for Shannon Duty Free.

McLoughlin, who was working as the general manager of Shannon Duty Free, was handpicked as part of a 10-member team from Aer Rianta (the Irish Airport Authority). He moved to Dubai on July 15, 1983, a day before his 40th birthday. Dubai Duty Free was launched on December 20, 1983, even before Emirates Airline was launched (The Dubai-based flagship carrier was October 25, 1985 and operated its flights from Dubai to Karachi and Mumbai, using a Boeing 737 and an Airbus 300 B4 wet‑leased from Pakistan International Airlines.)

The affable, accessible McLoughlin, a revered figure for his happy disposition, looks back at those wonderful early years in Dubai.

“I took a voluntary retirement from Aer Rianta to stay in Dubai. Two other persons from the 10-member team, who were on loan from Aer Rianta, stayed back. My deputy, George Horan, was given a warm send-off following his retirement on May 31, 2016, after 33 years of what Dubai Duty Free described as ‘outstanding service to the company’. The other person, John Sutcliffe, stayed in Dubai for seven years and then he returned to Aer Rianta to work as General Manager at Moscow Duty Free for two years and then he went to Bahrain to head up Bahrain Duty Free in 1992, before heading back home again,” he reminisces.

Life has come full circle for Sutcliffe, his son Karl is now the general manager at Duty Free Shoppers Group (DFS Group) in San Francisco Airport, which recently celebrated its golden jubilee anniversary.

What was the Irish population in Dubai back in the day McLoughlin landed in the city?

“There's a Dubai Irish Society here, of which I was chairman in 1988, and at that time there were 300 Irish passport holders in the UAE. There's now about 12,000. But at that time, so in 1983, there were probably just a couple of hundred Irish people, who were largely working in the arts and education sector. Now, most Irish women are engaged in the education sector. But there are some male teachers as well. Besides, there are professionals in advertising and other jobs, including doctors and nurses,” he says.

McLoughlin has changed the face of duty free industry in this part of the world, whose template has struck a big chord with the rest of the globe.

He cites the daily report he receives to drive home his point.

“Last week, I asked our purchasing department to share the details of the sale of Chanel handbags from January 1 to May 31. Data shows that Dubai Duty Free sold 2,200 Chanel handbags at a total value of $50.3 million,” he says.

He explains, “So, describing it as luxury purchasing is a good thing, but the duty-free buying means that duty-free operators around the world should be able to offer prices less than downtown. It all started when Dr Brendan O’Regan, the father of duty-free shopping, got permission from the then Irish government in 1947 to sell products at Shannon without tax and without duty. And that's what happens all over the world and other airports right around the world. Repeatedly, we would meet them at Shannon Airport, who came to see what this was all about. But it is true to say that a lot of people buy luxury products because it's cheaper at the airport than elsewhere.”

Time flies and numbers speak for Dubai Duty Free.

“In 1984, which was the first full year, there were less than four million passengers who passed through Dubai International Airport. In 2019, I’m picking that year consciously because Covid-19 struck the next year, and the airport recorded 86.4 million passengers.” he says.

McLoughlin, the marketing genius, has data at his fingertips.

“A key measurement in the Duty-free industry is the sale per head of each transaction. We have found even over the last two or three years and for many years, Dubai Duty Free was one of the highest in the world for sale per head. And in 2019, our sale per head was $39,” he says.

“Our marketing strategy has changed since Covid-19 struck. Our sale this year is at $47 per head. Typically, we spend 2.5 per cent of our topline on promotion and marketing, and we get measurements back from the agents of what the marketing is worth to us. In 2019, Roger Federer won our tennis tournament, which was his 100th singles career title and eighth Dubai Duty Free crown. We thank the media for the coverage, which if we had to buy it, then the valuation would have been to the tune of $1.3 billion. We judiciously spend on marketing and that’s the secret behind the uptick in our sales per head year on year,” McLoughlin says.

The $8 rise in sales per person speaks volumes about the marketing outreach’s tangible results amid global inflation at an all-time high and the dip in purchasing power in a post-pandemic world.

The proud Irishman has a take on this discernible trend.

“The ease of travel restrictions has made many to buy a Chanel handbag to pamper themselves in a while. Our biggest category of sale is perfumes and cosmetics and not alcoholic beverages, contrary to popular perception. Cigarettes, gold, jewellery and watches are the next in-demand items. The sale per head is holding the line and steadily increasing. Perhaps, because many have travelled once in a year than thrice could be one of the major factors,” he adds.

There has been little change in the category of merchandise since inception, but the volume has gone up through the years.

“We have all the brands that people want. It’s interesting about 70 per cent of what we sell, what we buy and sell, we buy from the local agents, and we import directly where the price is unreasonable, but mostly we buy there,” says the pioneer, who has been feted across the world for his yeoman service to duty-free shopping.

“I’d like to mention in passing that we had about 100 in 1983 when Dubai Duty Free was started in 1983. In 2020, there were still 25 of those 100 staff working for us, then Covid-19 struck. We had introduced a policy 22 years ago. We haven’t recruited a senior person since 2000. All our senior managers are our duty managers, our shift managers. They're all people who started with us, either as salespeople or clerks or something. And we have trained them and promoted them, trained them in-house and promoted them into those categories. So, besides me, Sinead El Sibai and Michael Schmidt, Senior Vice-President, Marketing and Senior Vice-President, Retail, Dubai Duty Free, respectively, were the last two senior persons to be hired in 2000. Our mantra is to catch young talents, and make them grow,” he says.

How is the brand positioning itself amid domestic and regional challenges such as duty-free shopping introduced by Etihad Airways and Qatar Airways?

“We don't mind the challenges. It's good fun competing with them all. And of course, the traffic continues to rise. We are 102 per cent over last year in our sales this year so far. When the Covid-19 struck, we had around 6,000 staff. Unfortunately, around 55 per cent of them had to be made redundant. Now, we’re back up to around 4,200 belonging to 42 nationalities and the cheery Filipinos and Filipinas leading the pack with 44 per cent of the total workforce,” said McLoughlin.

Dubai Duty Free is in the middle of special promotions.

“Qatar will host the FIFA World Cup later this year. We are looking at football related products that may have an avid interest for our consumers. There's going to be special flights between Dubai and Doha, and we are going to have a special promotion for these passengers. We are also going to do special things for our 40th anniversary next year. And whilst we often give discounts and freebies, we are working out some system whereby we will be able to pick products that we can give 40 per cent discount,” he says.

Dubai Duty Free’s brush with tennis started in 1993.

“A gentleman came to us and wanted to know; would we sponsor a game between two tennis players? And I went to Australia to meet those who run the Association of Tennis Professionals (ATP). And when I was there, I came to know there was an ATP 250 tournament for sale. So, we bought it. And we ran our first tennis tournament,” McLoughlin says.

The Dubai Duty Free Tennis Championships began life as the Dubai Men's Open in 1993, a year in which Karel Novacek won the singles and the pairing of Anders Jarryd/John Fitzgerald the doubles.

“We have since upgraded that tournament to a much bigger series. We have created and received millions of dollars' worth of promotion for ourselves and for Dubai. We bought a tennis tournament which we added to a ladies' tennis tournament. We have built a tennis stadium in Dubai and out of that, we built The Irish Village. Now, there is a second outlet of The Irish Village in Dubai Studio City,” he says.

“We have sponsored horse racing as well, such as the tournament in Newbury and Ascot in England for 26 years. There are two days in the year they're called the Dubai Duty Free Day. Of course, we have been involved in Irish Golf for a long time. We have been involved in the Dubai Desert Classic since it began in 1989. We did a tournament the other day in Arabian Ranches. It's just called the Dubai Duty Free Golf Cup. And we have been doing that for 28 years,” he says.

There is the Dubai Duty Free Shergar Cup, a team event. Ireland and the United Kingdom (UK) have a team, the rest of Europe have a team, the rest of the world have a team and the ladies have a team. And thrice in the last four or five years, the ladies have won it. And it's a thing of six or seven races in the day, and there's a three-person team coming from these things. Besides, there is Dubai Rugby Sevens and a sailing league regatta.

Dubai Duty Free Millennium Millionaire was launched in 1999, and the draw has witnessed many people becoming millionaires over the years, thanks to its offer of a $1 million cash prize. The tickets for Millennium Millionaire are Dh1,000 each and can be purchased online or at Dubai Duty Free at Dubai International Airport or Al Maktoum Airport. The draw takes place every two to three weeks at the Dubai Duty Free shopping complex.

"The Finest Surprise draw was introduced in December 1989 to coincide with our first major expansion which doubled our floor space at the time. We needed a promotion for the expansion, and it had to be something that would have a big impact. It was first suggested to have a private plane as a prize, until the logistical aspects were examined and it was decided that a luxury car would be much easier and the price point for the tickets would be affordable," McLoughlin says.

The first car, a Bentley Mulsanne built by the original Rolls-Royce Company, was won by Simon Simonian from Lebanon. "The concept was to be a one-off, but once we had the draw for the first car, there was a lot of demand for another and another, so it was decided to continue with the promotion. Now, over 1,800 cars later, the tickets are still very much in demand," he says.

The Millennium Millionaire draw, which offers 5,000 ticket holders the chance to win $1 million, was added as a sister promotion to the Finest Surprise, to mark the start of the new millennium.

“We have had eight people who have won twice. And we have had 26 people who won luxury cars twice. We have had a person, who won a luxury car, and a $1 million prize twice,” he adds.

McLoughlin, a raconteur per excellence, recounts how Dubai has changed in the past three decades. “We hosted a Dubai Duty Free Golf World Cup, an amateur tournament for people linked to the duty-free industry. In the first year, 14 people came from overseas to participate in it. Last year, around 120 people took part, which gives a sense about our growth. But the first year it started, we had all our guests stay in the Le Meridien Hotel near the airport. We hired a bus to bring them out to the Emirates Golf Club, which was the only grass golf course at the time. I acted as a guide on the bus, and I showed them the tallest building in the Middle East —the Dubai World Trade Center. Our next stop was one of the premiere hotels in the Middle East, The Metropolitan Hotel. I had to talk rubbish for the rest of the way because there was nothing. Our sales on our first day in the duty-free were Dh160,000. Our daily sales are around Dh16 million. Our sales in the first year was Dh73 million. Our sales in 2019 was Dh7.4 billion,” he says.

Dubai Duty Free has won over 700 awards and McLoughlin’s immense contributions have been recognised through more than 70 honours.

The charity arm

In October 2004, Dubai Duty Free launched the Dubai Duty Free Foundation, a charitable body founded under the patronage of HH Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman of Dubai Duty Free, and with Colm McLoughlin as Chairman of the board. The Foundation, which aims to raise funds for worthy causes with a particular emphasis on causes that directly benefit children, has since donated funds to several charities, both at home and abroad.

Among the many charitable initiatives, the operation has supported over the years include the opening of the $1.5 million Dubai Duty Free Sports Complex at Lycée Jean-Baptiste Pointe du Sable in Haiti, as part of the operation's support to the travel retail industry-led Hand in Hand for Haiti initiative. The school was built as a humanitarian response to the catastrophic Haitian earthquake of January 2010. The Foundation also assisted to restore eyesight to over 1.5 million people in India through the Sight Savers Programme and has built houses for those affected by the 2004 Indian Ocean tsunami and funded one village to build 32 houses in Binotong Alangalang, Leyte following the devastating typhoon 'Haiyan' that struck the province of Leyte in the Philippines in November 2013.

In 2017, the airport retailer signed a memorandum of understanding (MoU) committing to contribute Dh500,000 every year for 10 years to support Al Jalila Foundation's medical research aspirations as well as other projects that are best aligned with the goals of the Foundation.

As part of its Corporate Social Responsibility(CSR) programme, Dubai Duty Free also encourages its staff members to recycle plastic waste and turn it into useful products through its Plastic Recycling Drive, and collectively focusing on the 4R's: reduce, re-use, reinvent and recycle.

So far, the Foundation has supported 52 local and 58 overseas charities. In 2008, Dubai Duty Free established its own Corporate Responsibility (CR) department under which the Foundation is managed.