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NEWSLETTER, DECEMBER 2016

Representatives from the travel retail industry across the Middle East and Africa converged in Dubai from 27th-29th November 2016 to discuss the most important factors influencing decision-making for the first day of the MEADFA Conference, which took place at Le Méridien Dubai Hotel & Conference Centre.

Amr Abdel Ghaffar, Regional Director Middle East, UNWTO kick-started proceedings with an informative presentation on the region’s resilience and capacity for growth. UNWTO forecasts that tourism in the Middle East will experience steady annual

growth of 3-4% over the next decade to achieve a 7% average annual growth rate by 2030 – almost double the world’s average – marking 195 million tourist arrivals (almost double the current volume).

“Airline and airport expansion seem to confirm these positive prospects, providing the region enjoys peace and stability,” said Abdel Ghaffar.

He noted a trend for domestic and intra-regional travel in the region, with the spotlight on emerging economies in the run up to 2020.

“The Middle East has achieved the highest growth rates of tourism in the world,” he said. “This is despite geopolitical conflict and security concerns disrupting the growth of tourism in the region during the first half of the decade, the impact of which has varied from destination to destination. Indeed, most of the GCC countries continue to grow steadily throughout this difficult period.”

Although visitor arrivals to the Middle East had reported negative results during the first half of the year, prospects are gradually

starting to improve in both the Middle East and North Africa, he said, and are expected to end the year on a positive note with a very modest overall growth rate of 1-2%.

Taking a cue from Dubai

Moving on, Colm McLoughlin, Executive Vice-Chairman and CEO, Dubai Duty Free drew on his 47-year experience in the industry to describe the evolution of the business and how it’s no longer all about luxury.

“We’ve generally had a good year,” he said. “Traffic through the airport has increased although this can cause congestion, which means some people are spending less time in duty free than they normally would. So although business has been good, it is down by 3% on last year, which represents a drop of AED195 million. Although it looks as if our bottom line will be as per budget, we have been introducing various factors to counteract that moving forward.”

The last three years especially has been tough.

“There are still 74,000 transactions made every day but the amount people are spending has reduced a bit,” said McLoughlin. “We are working to counteract this with more promotions and discounts to coincide with big events and holidays but we can’t continue to do that so we are in continuous discussions with suppliers on pricing issues. Two years ago, for instance, an item that cost EUR60 at the same dirham price today costs close to EUR80. We pay a lot of our suppliers in US$ and we think the cost price should be reflected in the currency fluctuations. We are looking at them to understand our problem and share it with us and, of course, this works both ways.”

The early morning sessions were concluded with insights from Dag Rasmussen, Travel Retail Chairman and CEO, Lagardère, who offered a glimpse of its innovative shopping features, such as the Oud Sensorium and the interactive Liquor Discovery Desk, which is planned to open in Abu Dhabi in 2018.He described the need to view the businesses an omni-channel retailer that has to ‘speak’ to the customer before they reach the store and afterwards.

Downloading strategies for the future

After the morning’s business networking session, Joseph Francis, Managing Director and Executive Creative Director, Almost Impossible DMCC, provided a glimpse into the future possibilities surrounding mixed-reality shopping experiences. He pinpointed some developing technologies that could have an impact on the retail sphere, such as smart mirrors that allow customers to preview outfits and have the results pushed to their email to help inform the buying process.

“Innovations that are blurring the lines between the physical and the digital world will be a game-changer for retail,” he said. “Retailers need to treat their brick and mortar stores just like their e-commerce stores. Imagine shoppers in your stores being directed to a selection of products that fit their lifestyle,” he said.

His thoughts were echoed by Jason Ming, Lead Consultant, ThoughtWorks who threw some topical thinking points to the floor, such how retailers can utilise technology to put the customers at the centre of the business and deliver smart solutions to problems. Creating a single app for your company, or instance, is no longer the way to go.

“There is a shift in the mobile space towards using fewer apps that combine a number of different services and capabilities, such as WeChat, which has 700 billion users on a daily basis,” he said, pointing out how advancements in the travel discovery area could provide some of the most meaningful ways for retailers to engage with passengers.

Awaking Africa

In two informative sessions focusing on the great emerging market of North Africa, six speakers discussed the challenges facing the region and the various reasons why brands should consider investing. The panelists highlighted the dynamics that are influencing the market and the nuances that travel retailers need to grasp when it comes to doing business in the continent.

Sherif Toulan, Chief Executive Officer, International Duty Free painted a picture of the state of play in Egypt, with hotels in Sharm El Sheikh closing down and high number of people in the hospitality and travel industry being made redundant.

“A lot of skilled labour is venturing into the GCC which is going to be a nightmare to bring them back and train them,” he said. “But of course, Egypt has the pyramids and the Nile, so tourism has to come back.”

A similarly positive outlook was presented for Morocco.

“We have the beaches and the vibrant people, GDP is growing and so is tourism – I believe travel will pick up again next year.” Ahmet Kötehne, Chief Strategy Officer, ATÜ Duty Free.

Despite the vast size of the continent, it’s not just a destination for the most dominant players.

“Being bigger is not always better, as being small means we can react faster than our competition,” said Christopher Tantoco, Executive Vice-President, IDFS Morocco.“Our advantage is that we are more flexible and, as our head office is based in Morocco, we can deal with anything straight away.”

Taking the supplier perspective, Suzie Wokabi, Founder of Suziebeauty, emphasised the rapidly emerging market for beauty in Africa.

“It’s a great time to be doing business in Kenya right now,” she said. “The beauty category is recession proof and 65% of the African population is female and young. There is also a huge growing middle class with disposable income and African women have a higher spending power, supported by more international brands coming into the market.”

Blacky Komani, CEO, Tourvest Ground Duty Free, based in Johannesburg, joined in the discussion explaining how there are “no quick fixes in Africa”.

“Nigerians are big spenders but when we found that Nigerians were not trusting of our products – they thought they were fake so we carried out a campaign with Heinemann to raise awareness that are offering is authentic.”

In terms of development, Paul Topping, Director and Board Member of Flemingo International, offered an expert view.

“In Africa it’s easier to hop on a plane and go to Europe than travel around the country but there is huge investment happening,” said Topping. “Airports are being upgraded and are coming up to the mark. There is massive spending on perfumes and cosmetics and it is exciting to be in a continent where beauty is so strong.”

He also reminded the audience that a big part of the proposition is showcasing availability.

Gulbahar Tobacco International was the Gold Sponsor in MEADFA . The MEADFA played pivotal role in terms of connecting GTI to Duty free representatives across borders. The conference was an eye opener since a lot of issues concerning the trade between various countries were addressed.

Mr.Wahid Habibi, CEO Gulbahar Tobacco International emphasized on the Global presence of GTI among different regions during the MEADFA conference and concluded by saying

“GTI will go full frontier in addressing & fulfilling the gap in duty free and Travel Retail market ”

Gulbahar Tobacco International at MEADFA conference at Le Meridien Dubai, UAE.

GTI has announced its presence in a two-day conference in MEADFA which will be held in Dubai, UAE on November 28-29 , 2016 in Le Meridien Dubai Hotel and conference Center. Speaking with the CEO

of Gulbahar Tobacco International, Mr. Wahid Habibi. “MEADFA commits to promote the business potential and global standing of the Middle East & Africa Duty Free industry. At present, the focus is on grouping together as many Middle East & Africa based duty free retailers as possible to not only

facilitate the growth of the region’s industry, but to establish standards for quality a hallmark of duty free trading in the Middle East and Africa. GTI is very keen in exploring the duty free markets and

within these markets we need to establish a channel to Global retail market and its diverse sector.” GTI has confirmed as a Gold Sponsor in MEADFA which is actively managed by TFWA.