Despite the global economic downturn, 409 duty free and travel retail delegates from across the Middle East and beyond attended the MEDFA Conference at the Al Bustan Rotana hotel in Dubai on November 23-24. Themed “New Horizons’, delegates were challenged to maximise the region’s potential through strategic vision. And, while the conference emphasised the region’s resilience to the global recession thus far, news of Dubai World’s delayed debt repayments has since shocked the global investment markets and thrown open the possibility of yet undiscovered financial problems in the region and across the world. In such a climate the qualities of innovation, customer focus and partnership espoused throughout the conference become even more important.

Investing for growth

MEDFA president Anthony Chalhoub, Dubai Duty Free managing director Colm McLoughlin - speaking on behalf of His Highness Sheikh Ahmed bin Saeed Al Maktoum, Dubai Airports & Emirates Airline chairman – and Dermot Davitt, editor of The Moodie Report, cited sustained investment in travel, tourism and infrastructure plus ongoing passenger traffic growth as evidence of the region’s resilience. While tourism for is down in line with world reductions, and regional airlines anticipate a significant loss in revenue, passenger traffic continues to rise as the region – up 5.9% compared to a global drop of 4.3% for the first nine months of 2009 year on year .

The region achieved 2.6% sales increase for the first six months of 2009, compared to a world fall of 7%. Investment in aviation, airport and tourism infrastructure continues apace and Chalhoub highlighted projects such as Doha’s US$11bn airport investment, doubling passenger capacity to 24m; Abu Dhabi’s US$6-8bn investment growing passenger potential up to 20m; and Dubai World Central Al Maktoum airport, due to open in June 2010. Regional investment was further summarised in a two-part video presentation which reviewed developments at various airports including Abu Dhabi, Cairo, Larnaka, and Doha.

Stephen Cole, Al Jazeera news broadcaster, and René Carayol, Inspired Leaders Network CEO,  both enthused and challenged the industry with their outside perspectives. Cole said he believed the “Gulf is well placed to catch early the tail wind of recovery”, which he attributed to the region’s continued investment.

Drawing lessons from recession

Carayol applauded investment in infrastructure, but questioned whether the shopper’s experience matched up. Globally he felt the travel retail experience does not, with real shortfalls in customer service. He maintained recession could be a turning point for companies; using comparisons such as British Airways and Emirates, Tesco and Asda, Virgin Atlantic and Ryanair, his message was clear: “What makes you unique, special, different?...If you want to be a leader, you have to love people, be an optimist and be absolutely clear on what you stand for.”
 
Looking at how individual operators had tackled the crisis, Aer Rianta International-Middle East managing director John Sutcliffe explained: “We have had to look at our cost base and efficiencies but also at ways of driving sales and creating a more friendly environment,” he said.

Keith Hunter, Inflight Duty Free vice president Qatar Airways, said its important UK routes had suffered badly from reductions in spend, mostly due to price differences – a problem which was still largely unaddressed. Selwyn Grimsley, Tourvest Duty Free CEO, said that by pre-empting the problem, being innovative and changing ranges, they had avoided a similar situation on Virgin and had actually seen double-digit growth in sales.

Addressing the penetration problem

Dubai Airports Company CEO Paul Griffiths argued for greater efficiency in airport operations: “We must get passengers into retail quicker; so 90% of their time at the airport is there, not 50%.” Matthew Hodges, Rémy Cointreau director Europe-Global Travel Retail,  also highlighted footfall as a problem. “Four out of five people don’t even go into the shops,” he said. “We need to start breaking the rules in terms of what we offer…perhaps become a little less precious, a little more flexible in order to drive footfall....price is not the only reason to buy.”

Phil Humphreys, Diageo Global Travel and Middle East managing director, challenged how ‘the trinity’ works or, in his view, doesn’t work. There is massive untapped potential, he said, and increasing footfall is the key to unlocking growth. “We have to surround passengers in a way never done before; inspire them to visit the shop,” he said. Projects Diageo had undertaken at Abu Dhabi with ADAC and DFS Group had shown that it airport authority, retailer and brand owner can share strategic intent and investment with incredible results.

According to Nigel Dolby, Dolby Consulting, the industry may be worth US$35bn, but it is losing an equal amount in sales each year. Dolby spoke about the problem of dwell time and passenger misconceptions and misunderstandings of the airport retail offer. At all stages of the travel process from ticket sale to the gate, passengers are delayed, confused and developing increasingly negative perceptions. All this prevents purchasing and at every stage billions of dollars in potential sales are lost - $4bn at check-in alone.

Better engagement between key stakeholders was a pertinent theme, with information transparency and data sharing under discussion. Cadbury general manager International Travel Retail Steve Brock explained that airport consumer research was vital to product development and had revealed a real desire for more cross category merchandising and promotion.

Urging action on tobacco

Keith Spinks, ETRC secretary general , updated the audience on the growing threat to duty free tobacco sales, imploring delegates to write to their governments challenging the anti-tobacco lobby. There was a call that the industry should become more responsible in terms of retailing tobacco, possibly adopting a code of conduct. Spinks revealed good news on the LAGS issue, announcing that by 2011 passengers arriving from any destination and transferring intra-EU will be able to keep their liquor purchases providing they are in approved sealed bags accompanied by a receipt from the previous 36 hours. By 2013 all LAGS restrictions on intra-EU flights will be lifted for passengers, subject to ratification.

Also taking part in panel discussions were: Pedro Castro, Aldeasa COO; Atef Khomassi, Dufry Sharjah commercial director ; Santiago Llairo, JTI corporate affairs & communication worldwide duty free ; Sunil Tuli, Asia Pacific Travel Retail Association (APTRA) president ; Ramesh Cidambi, Dubai Duty Free director IT & Logistics; Nilesh Khalkho, Sharaf Electronics CEO; Revic Tantoco, IDFS (Morocco) marketing manager and Abdel Kader Katamish, Egyptair vice president Duty Free Shops. The audience was also updated on growth and development of travel retail in India by Deepak Talwar, IDFS Trading (India) chairman .

Chalhoub concluded the conference by highlighting issues that all key stakeholders should consider moving forward. Airport authorities must work more closely with retailers and suppliers and open discussions to better involve airlines. They need to speed up airport processes, improving dwell time in retail. Suppliers must provide greater transparency in pricing and references, and improve product delivery and traceability. Overall, there needs to be greater information and data sharing plus better passenger communication and explanation of the retail offer. All need to adapt to the rapidly changing customer profile and integrate corporate responsibility.

Presentations are available for download on the conference programme pages.

The conference was organised by TFWA on behalf of MEDFA, and moderated by Dermot Davitt of The Moodie Report. Guest moderators were Doug Newhouse of Travel Retail Business (Tobacco session) and Susan Gray, consultant Airport Commerce & Talent Management (India session).

MEDFA also announced a generous $10,000 donation to TFWA’s Heart2Art charity program.

The conference attracted a good representation of both operators and landlords (representing 29% of delegates) and brand companies (47%) and drew a global audience – with the Middle East accounting for 52% of delegates, the EU 29%, Asia and non-EU European countries representing 5% each, Africa and the Americas each contributing 4% and Oceania representing 1% of visitors.

MEDFA and TFWA would like to thank their generous sponsors including Platinum sponsors Diageo, Dubai Duty Free (Gala Dinner - liquor sponsored by Bardinet and Pernod Ricard-Gulf), Dufry Sharjah (Opening Cocktail), Emirates Airline, Nivea, Patrón Spirits International, Chalhoub Traveller Ltd, and ARIME; Gold sponsors Clarins, Gold Silk, Philip Morris; and Silver sponsors ADAC and Perfetti Van Melle; Thanks to Nestlé International Travel Retail/KIT KAT and IDF for sponsoring the coffee breaks, Traveller International and Diageo for the lunches, Sharaf DG for the portfolio and Frey Wille and Nomination for the speaker’s gifts. Bahrain Duty Free, DFS, Dubai Duty Free and MEDFA also provided prize draws. 100 delegates also rounded off the two-day event with a Desert Safari.

The next MEDFA Conference will take place in Cairo in November 2010 (dates to be confirmed).