Why luxury retailers like Dubai
Dubai, which has the busiest airport in the world for international traffic at 89.1 million passengers in 2018, makes a powerful case study on just how much visitors arriving or departing wish to buy, a research released on Tuesday said.
While globally, around 19 per cent of departing passengers make a purchase, compared to 40 per cent departing from Dubai, says the study released by Chalhoub Group.
According to the study, shifts in global travel and mobility provide luxury retailers with substantial opportunity, with travel and tourism contributing $8.8 trillion to the global economy and 319 million jobs globally. “This number is only set to grow, with travel and tourism in the future forecasted to be responsible for one in every five new jobs and operating as the second-fastest growing market sector after the chemical industry.”
Within Dubai Duty Free, luxury goods account for one third of all sales. Last year, these brands pulled
in $680 million at Dubai Duty Free[ii]. This success can be linked in part to the limited availability of some of the major brands in the luxury spectrum in many regional destination, suggests a report by CBRE. The study noted that Dubai has long been the main, or only, city where luxury brands are available[2] . As for what’s next, Dubai Duty Free has growth on the horizon.
“Part of our 10-year-plan is to hit sales of $3 billion,” says Colm McLoughlin, executive vice-chairman and CEO, Dubai Duty Free.
Dubai Duty Free also has expansion plans to achieve 80,000 square feet of retail, with 10,000 total future employees. Tourist-related activity like Dubai’s shopping festivals have proven particularly successful for attracting travellers; in 2018, approximately 60 per cent of shoppers to Dubai’s Shopping Festival were international. These numbers have also witnessed growth; in the same year, 49 per cent of shoppers to the Dubai Summer Surprises were international, up from 45 per cent the previous year.
“The tourist is a captive audience for retailers because part of the travel experience involves discovery, browsing, shopping, getting inspired, experiencing, sharing, and discussing. As retailers we have to make sure we provide visitors and guests those wonderful experiences, great curation, inspiring windows, incredible service, unique products and unbelievable experiences which will absolutely delight them,” said Patrick Chalhoub, CEO Chalhoub Group.
He said various studies have shown that travellers tend to possess higher levels of disposable income and are willing to spend it on goods and services to make their travel experiences more convenient and memorable. “Yet these travellers also want experiences that are culturally connected, unique, authentic, bespoke and possess a regionally relevant and personalised approach — the new definition of luxury.”
The Middle East is expected to more than double its number of arrivals, from 61 million to 149 million in two decades, driven, in part, by the region’s focus on shifting away from oil dependence and diversifying its economy.
“Governments within GCC countries are creating a market environment for tourism to increase national GDP. These travel patterns mean a world which is more mobile, more transient, and more connected than ever before. This presents a colossal opportunity for luxury goods and service providers, from hospitality to retailers, the study said.
Part of our 10-year plan is to hit sales of $3 billion Colm McLoughlin, Executive vice-chairman and CEO of Dubai Duty Free.