Business Irish

Thursday 18 July 2019

Colm McLoughlin's call of duty free

Irish CEO of Dubai Duty Free has seen sales grow from $20m to $2bn since he joined it in 1983, writes Samantha McCaughren

Colm McLoughlin, CEO of Dubai Duty Free, at the K Club in Straffan. Photo: Frank McGrath
Colm McLoughlin, CEO of Dubai Duty Free, at the K Club in Straffan. Photo: Frank McGrath
Samantha McCaughren

Samantha McCaughren

When Colm McLoughlin first moved to Dubai in 1983 to set up the airport's duty-free operation, the emirate had a population of 250,000 and its hospitality industry was in its infancy. Golfers like McLoughlin had to make do.

"When we moved to Dubai, we played golf on a sand course," recalls McLoughlin, in one of the many plush drawing rooms of the K Club in Co Kildare.

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"We carried a little bit of astro turf around with us and if you were on an area designated as fairway, you put the ball on the astro turf and hit it off to what was called the browns. And any golfer will know there are always signs on greens saying, 'please repair pitch marks'. There was a sign on the browns saying, 'please brush the browns'."

Players then used the back of a yard brush to wipe out footprints and the line of the ball in the sand.

Dubai has been transformed since then, with a population of more than 3.1 million. "Now there are 12 world-class golf courses in Dubai," says the Galway man, who is in Ireland for some of his business's high-profile sponsored events.

The growth at Dubai Airport and Dubai Duty Free has been exponential since McLoughlin was first asked to set up the retail travel business in the emirate. He had been running Shannon Airport's duty-free business and Dubai wanted to learn more about the relatively new airport retail trade, a concept that had originated in Ireland.

"There was a contract between the Dubai government and the Irish government, and I went as part of a team on a six-month term to set up Dubai Duty Free. During that time, I was asked to stay and I agreed to stay for two years. Now I am in year 36 there," he says.

"When I started there in 1983, the traffic in full-year 1984 was three million people. Last year, it was 89 million people."

Dubai is now the largest airport in the world for international traffic and, overall, the third largest in the world for traffic after Atlanta, Georgia, and Beijing.

"In the first year we had 100 staff and our business that year was $20m (€17.6m). If you roll forward 35 years, we still have 25 of those original staff, we now have 6,200 staff, and our business last year was in excess of $2bn, which makes it the single largest duty free in any airport in the world."

The volume may be one thing, but what is most striking about the Dubai Duty Free numbers is the level of people actually making a purchase at the airport.

According to McLoughlin (75), leading airports such as Heathrow are happy if they sell some products to around 20pc of passengers. "We sell something to in excess of 40pc of passengers," he says.

He is a great believer in marketing and is in Ireland at the moment for its two major sponsorship events here: yesterday's Dubai Duty Free in the Curragh and the Dubai Duty Free Irish Open in Lahinch. "We spend 2.5pc of our topline on promoting Dubai Duty Free, which is far in excess of what other operations do," he says.

But he believes the publicity and recognition that these events generate are the reason why so many people associate the airport with shopping and make planned purchases there. The sponsorships have also led to several new business ventures for the group.

"We own two tennis tournaments and because we own them, we built a tennis stadium. Because we built a tennis stadium, underneath it we made a thing called the Irish Village, which is a bar and restaurant, and it is one of the busiest in Dubai. Because of all that, we built a hotel and we own a 292-bedroom, five-star hotel, which is managed for us by the Jumeirah hotel group," he says.

The business is now on its third pub, with the chain popular with Dubai's thriving expat population.

There is also a charitable foundation which supports the Jack and Jill Children's Foundation in Ireland and other charities around the world.

Although McLoughlin was due to spend only six months in Dubai, he has made it his home with his wife Breeda, a Clare woman. But it was not the first time he had stayed longer than planned in a job.

McLoughlin was born in Ballinasloe and his parents had originally planned for him to become a dentist. His brother Ray, who went on to be a rugby international and businessman, had been to university and qualified as a chemical engineer.

McLoughlin didn't follow his parents' plan, however. He says: "I went to London for the summer of 1961, as many boys used to do at that time, earning pocket money for the winter period. I went for three months and I stayed eight years.

"I did not come back to university, I did not save any money over that summer, I did a variety of different summer jobs and was in a pea factory, a canning factory. I picked hops for one month.

"I was in the civil service for a while, I sold encyclopedias door-to-door for a while. I was a house painter for a while, I was a bus conductor for a while. All of that was in a year. Then I joined Woolworths as a trainee manager."

After such a wide array of jobs, McLoughlin found he was happy to settle on retail and learned from the ground up.

"You packed the boxes and you swept the floor and you learned the system. There were 32 departments in Woolworths and you had to learn something about all of them. You eventually came to a stage when you were described as a ready man," he says.

He joined the Oxford Street store, the group's largest and most high-profile location.

When still a manger at Woolworths, he was on holidays in Ireland when he saw a job advertised for the duty-free business: "I had no idea in the world what it meant. I went for an interview and I was offered a job and I took it."

It was a job in Shannon Airport, where duty free was first started in 1947 by Dr Brendan O'Regan. In the very first year, sales were $10,000. Now, sales in the duty-free industry around the world are $76bn.

In the late 1970s, the turnover at Shannon would have been about $6m a year, so it was a big jump for him when he went to Dubai, where even in the first year, sales were $20m.

Over the years, McLoughlin has seen many trends and continues to keep abreast of the latest developments, as well as predicted trends. For a time, a surge in Russian customers was a feature of the duty-free trade. Now, Chinese visitor numbers are growing.

He says: "Our third biggest group right now is Chinese. We have 850 Chinese staff now working for us because of what's happening with the Chinese traffic, and this is happening all over the world. China-based traffic in Dubai Duty Free last year was 4pc of the total. It accounted for 17pc of our business. There are 16 flights every day of Dubai to Chinese destinations; that is very positive."

Given the international nature of the airport, staff from 45 nationalities work at the duty-free.

Digital trends are also impacting on retail, but travel retail is less affected. Dubai Duty Free has established a 'click and collect' service but it is a small part of the business, accounting for sales of $20m last year.

There has been an uplift in technology purchases. "iPhones have become the masters of the world, for example," he says.

"So in our electronic shop, Apple products last year accounted for 42pc of total electronic sales, which meant we sold 47,000 iPhones last year. And we sold 46,000 of these little AirPods."

McLoughlin's disposition is naturally positive but, of course, there have been some difficult moments for air travel along the way. Among these were 9/11 and the SARS outbreak in 2003. "There are twists and you just have to adapt a little bit," he says.

Political stability is always an issue for foreign travel. US President Donald Trump's trade war with China could hit the confidence of Chinese travellers, for example. And growing tensions between the US and Iran could affect stability in the region.

Dubai keeps a close eye on these international tensions.

McLoughlin says: "When something like that comes up, it is debated a lot, and any efforts that can be made to avoid it or help it are done.

"The government in Dubai is very positive about ensuring the safety continues as it is. They are involved in talks all the time to make sure nothing upsets not just the economy, but the lifestyle."

Dubai is developing a new and expanded airport which will vastly increase its capacity over the next decade. This will provide further opportunities for the duty-free business.

"When we opened in Dubai first, our total area was about 1,500 sq m. We now operate 38,000 sq m in the airport with 184 outlets," says McLoughlin.

It is expected to increase to 80,000 sq m in the larger airport, with staff numbers rising to 10,000. Despite environmental concerns, McLoughlin and Dubai are betting that international travel will continue to grow.

As for McLoughlin, he has still not settled on a retirement date at the age of 75.

"I have enjoyed very much what I have been doing; there are no strict rules about retiring," he says.

"I talk to myself about it every year and then I let it pass for another year."

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