Dubai Duty Free (DDF) has reported a rare decline in annual sales as the weak euro and fall in Russian spending hit one of the world’s most successful retail operations.
For decades, the airport retailer has reported rises in year-on- year sales helped by the rapid growth of Dubai’s airports. But the strong dollar has hit the country’s retail sector hard, while a decline in spending by Russian visitors has also compounded the impact.
DDF, with retail operations across Dubai International Airport and Al Maktoum Airport, has reported a 1.5 per cent decline in retail sales figures for last year compared with 2014.
Its 2015 sales receipts totalled Dh6.89 billion compared with Dh6.99bn in 2014 – a Dh107 million drop.
The wider DDF Group, which includes leisure operations such as the Irish Village as well as airport retail sales, reported sales of Dh7.06bn a drop of 0.6 per cent, according to DDF.
“The drop in Russian spend at DDF is estimated at Dh200 million,” said Colm McLoughlin, the executive vice chairman of Dubai Duty Free. “Other factors include the weak euro, which has affected business and we are working with our suppliers to balance this out. There has also been a slight change in the buying patterns of Chinese passengers who are not always looking for high-end brands but are looking increasingly at mid-range brands. So all this combined has made it a challenging retail environment.”
DDF recorded 26,848,832 sales transactions throughout the year, an average of 73,558 sales transactions per day.
Perfumes continued to be the highest-selling category with sales of Dh1.14bn, 16.5 per cent of total annual sales. Liquor and cigarettes followed, with sales of Dh1.07bn. Confectionery came in fourth with sales amounting to Dh556.14m, followed by gold with Dh549.32m.
“On the upside, we have seen an increase in spend by other nationalities, including the African passengers and the GCC and Indian travellers,” said Mr McLoughlin.
“With challenges come opportunities and we have consistently looked at ways of improving our retail offer to an increasingly diverse passenger mix.
“We have collaborated more with our suppliers to ensure that we are delivering the right products at the right prices wherever possible.
“We have increased our online presence this year and as a result our online sales are around Dh50m. We expect this to double in 2016.”
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