In Conversation With: Colm McLoughlin

Dubai

 

When we talk about the success of the duty free industry, the first name that comes to mind is Colm McLoughlin, Executive Vice-Chairman and CEO of Dubai Duty Free (DDF). The Galway native has been instrumental in positioning DDF at the top of the global duty-free hierarchy. From $20 million sales in the first year of its operations in 1983, DDF registered $1.93 billion in 2017, making the leading airport retailer a star jewel in Dubai’s crown.

Born in Ballinasloe in 1943, Colm is one of five with two older brothers and two younger sisters. His father Tadgh was a local historian and taught Irish dancing right up to his nineties. Colm attended the village boy’s national school and Garbally College where he enjoyed sport including hurling and went on to play rugby for Galway. His two older brothers, Ray and Feidlim, both played rugby for Ireland, so sport is very much in his blood.Colm McLoughlin

Where did you begin your working life?

My career began with a variety of summer jobs when I first went to live in London in the 1960’s with the intention of returning to Ireland to become a dentist, which was my mother’s wish. After a number of jobs, I settled into retail and joined Woolworths in Acton, London. I started at the bottom, moving boxes and cleaning floors and worked my way up. Within a short time I was made a manager and was the youngest manager at Woolworths, before moving back to Ireland to work for Shannon Duty Free. Shannon of course is the birthplace for airport duty free, which was set up by Dr. Brendan O’Regan in 1947. When the Dubai government was looking to set up Dubai Duty Free it was to Shannon that they turned their attention.

How did you end up working at Shannon Airport?

When I was on holidays in Ireland some years later, I saw an advertisement for a manager at Shannon Duty Free and I applied. I had no idea what the job entailed but I felt that it was something that I would enjoy. I became General Manager of Shannon Duty Free some years later and I was part of the original team that was sent to Dubai at the request of the government to set up Dubai Duty Free in 1983. When we opened for business on 20 December 1983, there was a great sense of achievement. I was asked to stay on to head up the new operation as GM, which I accepted and have never looked back since then.

Was it a difficult decision to move over to live and work in Dubai?

10 of us from Aer Rianta, the Irish Airport Authority, were contracted by the Dubai Government to set up and run a duty free operation at Dubai international Airport. At that time, there were around 200,000 people living in Dubai and the airport had around three million passengers. Our job was to set up the operation in a space of around six months and then leave, but I was asked to stay on. So I did, along with two colleagues, John Sutcliffe, who became my deputy before he went on to Bahrain Duty Free and Aer Rianta International, and George Horan, who was also my deputy and retired as President of Dubai Duty Free in 2016.

What challenges did you face when you were setting up such a huge operation?

There were enormous challenges facing the team back in 1983. We had to source new products, set up a supplier chain amongst local traders as our brief was to buy from local distributors wherever possible, and of course, every single one we visited said they were the official supplier! There were practical obstacles as well. We needed refrigeration for goods like chocolates, we had to train the staff, many of whom never worked in retail before and had not seen a dollar bill. I am very proud of how everyone pulled together to make Dubai Duty Free one of the largest airport retailers in the world today, with a turnover of US$1.93 billion last year.

Colm McLoughlin
Did your role in the business change once it opened to the public?

After Dubai Duty Free opened I was asked to stay on as General Manager, which I did, and later became Managing Director before becoming Executive Vice Chairman and CEO. My deputy, George Horan, also stayed on along with another colleague John Sutcliffe and we were known as the Irish Trinity. George retired in June 2016 while John, who was the youngest, retired a couple of years ago.

How did you cope with the extreme heat and cultural differences?

I remember arriving in Dubai on July 15, 1983. It was the eve of my 40th birthday and my first impression, having arrived from Ireland, was how incredibly hot it was. I had never experienced anything like it in my life. My second impression was one of admiration for the ‘can do’ attitude that we encountered as we set about our task.

How did you know that the market in Dubai was different? That there was even something to build on there?

Dubai was a very different place in 1983 than it is now. Both myself and my wife Breeda, who is from Co. Clare, marvel at the changes in just three decades. From a business point of view, we expected Dubai Duty Free to do well. In fact, we were tasked by the ruling family and in particular H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to make it the best in the world. Even back then, Dubai was ambitious and eager to grow and I count myself very lucky to have been part of that growth. Sheikh Ahmed was instrumental at providing both his support and encouragement of our operations and I admire him a great deal.

Do you analyse customer habits and carry out profiling to see what they actually want to buy?

We undertake regular research and boarding card analysis to identify who is buying what brands and products and to ensure that we are geared up for these demands. We listen to our customers and their comments. When it comes to our retail offering, our purchasing team do a great job in identifying trends and new products and do their best to ensure regional, and even global, exclusivity wherever possible. There have been a lot of changes in the spending habits of passengers over the years. Shopping online is another major new development. Last year we launched our online service which has over 8,700 products that can be ordered online for collection at Dubai Duty Free.

Did the economic downturn have a significant effect on business?

The global economic crisis did impact our business which saw a slight dip in sales in 2009, but overall Dubai recovered very well and projects continued. There has been no year when traffic through the airport hasn’t increased. Traffic through the airport in 1984 was three million people. Last year, it was over 88 million. It might break 90 million this year so we must be doing something right!

You have travelled all around the world with your job. What was your favourite destination?

Ireland will always be my home which I am able to visit quite frequently. My two daughters live in Brighton, along with my two grandchildren, and we have a home there so we always look forward to visiting them whenever there is an opportunity.

We enjoyed travelling around the USA very much and find the American people very kind and courteous. Myself and Breeda love living in Dubai where we have lived for 34 years and enjoy all aspects of life here. From the great weather to the social and sporting side of things, there is always so much to see and do. Our son Niall and his wife Sherly also live in Dubai also so we can see them frequently. Similarly, when we go to our home in Brighton, I enjoy seeing my two daughters, Tyna and Mandy, along with my son-in-law Mike and grandchildren Erin and Ethan.

Colm McLoughlinDoes the huge growth the company has experienced show any signs of slowing down?

We’re showing no signs of slowing down! Our company is on track to reach its targets this year to US$2 billion, and the airport expansion in the city will spur its next three decades of growth. In comparison to the duty free industry in general, we market ourselves more and promote Dubai in our marketing and sponsorship campaigns.

What kind of sales were recorded in 1983 compared to 2018?

In our first full year of business our turnover reached US$20 million. It’s incredible to think that this figure was achieved in one single day on our 25th anniversary in 2008. Today, Dubai Duty Free is a billion-dollar business with sales turnover of US$1.93 billion in 2017. By year-end, we are on track to exceed our sales target of US$2 billion.

What rate of growth is planned for the future?

Dubai Duty Free continues to invest in its retail space with a major renovation of its fashion offering this year. At the end of this year, DDF will open several new fashion shops in Concourse B – the airport’s busiest area – which represents nearly 35% of the total business. Concourse C is also being redeveloped and when completed will result in about 4,500 squares of brand new retail area. The new perfumes, cosmetics, liquor and tobacco areas that opened in Concourse C in December of last year have led to a 35% growth in the business compared to 2017.

DDF has a great reputation for treating employees very well. What incentives and policies have the HR team implemented to date?

When Dubai Duty Free first opened 34 years ago, it employed just 100 management and staff, and, astonishingly, 26 of those original employees still work here today. We have an internal training section in our HR department, and we have a policy of internal promotion within our company – many of our senior people are long-serving staff who started with us in a junior capacity several years ago.

DDF is an employer of choice for prospective employees, and this is reflected in the fact that we received 55,649 CVs last year. We make our employees part and parcel of everything. I personally meet and talk to every single new staff member that joins DDF. Internal promotions are very important to keep staff motivated and our low staff turnover has proven that over the last several years. In most industries like hospitality, tourism and medical, the staff turnover is 28%. Our turnover is just 6.3% and that figure has remained the same for the last 10 years.

How have the changes in tax and VAT over the years affected sales?

With the onset of VAT, the departures business has grown by about 10.75% (Jan-May 2018) whereas arrivals has declined slightly due to the introduction of VAT and excise duty on arriving passengers.

How do you stay ahead of the competition?

Dubai Duty Free has implemented a number of procedures in the past year, including negotiating prices with suppliers to retain the operation’s competitive pricing policy, which has been successful. DDF continued its partnership with a number of entities, including Emirates Skywards on a miles redemption programme that has been very well received. A year-long campaign with C-Trip and UnionPay also ensured that the operation reached the important Chinese travellers when planning their trip to or through Dubai. All these initiatives have helped DDF return to positive sales growth in 2017, and a 9% increase to date in 2018.

Dubai International Airport is now officially the busiest airport in the world. What is the airport doing to boost capacity to meet the increasing passenger numbers?

The fact that Dubai Duty Free works closely with airport authorities and other stakeholders at the airport ensures that plans are very much in line with the overall expansion plans at Dubai International and Al Maktoum International Airports. We make sure that our staffing levels, our technology and our product offering are on par or exceeding our growth.

 Is the future of aviation as strong as ever?

Yes, the future of aviation is certainly as strong as ever. Dubai continues its investment in the aviation sector with both Dubai International and the Al Maktoum International Airport project – this new major airport will have the capacity to serve over 120 million passengers when it opens between 2025 and 2030. Dubai Duty Free will be an important part of the passenger offer at Al Maktoum and expects to have over 80,000 square metres of retail space when the development is completed. Airports Council International forecasts passenger numbers to double between 2016 and 2031 and grow at a rate of 4.9% per year during this period. ACI also expects 15 billion people to go through the world’s airports by 2031 and predicts that China will be the world’s biggest air travel market by 2040.

How are you adapting to meet the changing needs of customers with the latest advances in technology?

DFF stays relevant in the e-commerce and mobile world by increasing the level of engagement with customers and by adding functionality and implementing processes both in-store and online. In this way we are providing customers with a wider choice of channels with which they can communicate. Continuous engagement with our customers through personal or digital means is one of our key objectives going forward.

Colm McLoughlinHow is the euro performing against the dirham?

The strength of the US dollar has put pressure on the dirham/euro rate, particularly in recent weeks, with rates not seen since July 2017 (down from their recent highs in January and February this year). This means increased buying power for the dollar-denominated currencies when traveling to or buying euro-denominated products and services.

Do you find that major changes in currency, and actions like Brexit, have a big impact on business?

European travellers make up almost a quarter of Dubai Duty Free’s business. The big effect of Brexit from our point of view is the exchange rate. If it makes travel more expensive for people, it will have a negative impact.

How does life in Dubai compare to Ireland?

Myself and Breeda are very happy to have lived in Dubai for the past 35 years and to have seen the UAE grow so dramatically during that time. We enjoy meeting new people and hearing about their work and lives. I enjoy attending events, particularly those that are organised or supported by Dubai Duty Free. Being Irish, we got involved with the Dubai Irish Society (DIS), which is the oldest society in Dubai. We organised the St. Patrick’s Day Ball and practically everyone Irish attended. I am glad to see that the DIS is joined by the Irish Business Network (IBN), the Dubai Irish Golf Society (DIGS) and the Dubai Celts.

You have received so many honours and accolades over the years. What is your most memorable achievement to date?

My proudest moment was in 2014 when I was honoured to be named as a recipient of the prestigious Irish Presidential Distinguished Services Awards in the Business and Education category. It was an honour to be the first Irish person living in the UAE to be recognised by the Irish government for my contribution to Irish business and communities abroad. It was certainly a proud day on October 30th of that year, when, accompanied by Breeda and my family, I accepted the Irish Presidential Distinguished Services Award from An tUachtaráin na hÉireann, Michael D. Higgins, at Áras an Uachtaráin. Of the various personal and business accolades I have been honoured to receive, I still hold dear my Garbally College Alumni Award which I was delighted to accept along with fellow alumni in 2012.Colm McLoughlin

 

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