Dubai Duty Free is icon of old school retail in a modern world

Profile: Dubai Duty Free has become synonymous with the emirate's success. Colm McLoughlin has built the business with an approach that harks back to years gone by, when service came with a smile and the customer was king.

Dubai, December 18, 2012 -- Colm McLoughlin, executive vice chairman of Dubai Duty Free, is photographed in his office in Dubai, December 18, 2012. (Photo by: Sarah Dea/The National)

Colm McLoughlin talks about online shopping with entertaining disdain. Facebook and Twitter are given the same screwed-up face treatment - like they're dull dinner guests invited out of politeness.

Not many people could get away with it. But when you run one of the world's most profitable retail operations, you don't have to be permanently "on message".

He knows he will need to ask the Web to the Dubai Duty Free party sooner or later. He just doesn't want to be sat next to it all evening.

"It's no substitute for 'Hello, can I help you?' he says of the monochrome online shopping experience. Nonetheless, developing online duty free shopping will be a priority for the group this year, he acknowledges.

The Galway man is an old school retailer. The customer is king and service should come with a smile. There is a nostalgia in his approach.

It harks back to a more personable past, lost in the age of the mega mall. There are hints of this in the Irish Village dining and entertainment complex that is also owned by Dubai Duty Free and located close to its headquarters.

Its faux village facade features a replica post office from Ballinasloe, his hometown in the west of Ireland. He himself has the manner of the chatty shopkeeper, a characteristic that has clearly played well in the commercial world of the Arabian Gulf, where relationships are everything.

The old village shop may not be so obviously evoked by the luxury-lined aisles of Dubai Duty Free.

But look beyond the Rolex watches and gold jewellery and you will find products stocked by corner shops from Mumbai to Shanghai - such as Tang, a fruit drink (1,195 tonnes sold last year) or Nido, a children's milk supplement (686 tonnes sold last year). Giving customers what they want has been central to the success of the brand.

At the Dubai Duty Free head office close to the city's international airport, almost every wall is decorated with photographs dating back decades. They track its evolution from desert outpost retailer to a globally recognised brand and sponsor -funding events such as the Dubai Tennis Championships and the Irish Derby.

Among the photos is a sales graph that doesn't look like it's from the real world - rather something a cartoonist might etch to show earnings at Acme Corp.

It records a steady year-on-year increase starting in 1983 and rising like a black run ski slope to the present day, through regional wars, global recessions and the Arab Spring.

It is a remarkable timeline of resilience - a sign that even as regimes topple and markets collapse, the jumbo Toblerone still sells.

"There was a bit of a blip after the Kuwait War," he says, as if the receipt roll had run out on one of the cash registers temporarily.

What the graph does not show is how Dubai Duty Free's model has been able to build such an effective brand. Clearly, good fortune as well as judgement, has played a part.

The exponential growth of Emirates Airline has meant more and more passengers are walking past the shop on their way to and from departure gates.

When Mr McLoughlin set up DDF in 1983, a little more than 3 million passengers passed through the airport every year. Last year it handled 56.5 million passengers, expected to rise to 98 million by the end of this decade.

But the growth of Dubai Duty Free has not just been about footfall or just about luck.

It has been better than its rivals at getting passengers to spend. About half of the people that pass through the airport buy something at Duty Free. The global average is 20 per cent. It generated record sales of Dh5.9 billion (US$1.6 billion) last year. Its brand has also achieved worldwide recognition.

"Dubai Duty Free has become synonymous with the success of Dubai," says Hermann Behrens, the chief executive of The Brand Union. "Dubai is very good at getting people to open their wallets. It is a place that has become associated with spending and Dubai Duty Free has capitalised on that very effectively."

Part of that brand-building has been about sponsoring major sporting events in the UAE and overseas. An active sportsman in his youth, Mr McLoughlin is still a keen golfer, playing with a handicap of nine and captaining Dubai's two best known courses at different stages over the past two decades.

He first landed at Dubai airport 30 years ago, before Emirates Airline was even born, walking out into the searing summer heat without his suitcase, which had not made it on to the plane.

His first taste of the Dubai retail scene was a midday visit to the Al Ghurair Shopping Centre to buy some fresh clothes.

With his new suit, his next mission was to source products for the new retailer.

But every importer he met claimed to be an agent for each product he asked about - cigarettes, perfume, chocolate - nobody said "no" in the city of traders.

"We can get you that, they would all say," he recalls. So his next purchase was a Chamber of Commerce directory that presented a more accurate picture of who the genuine distributors were in the city at the time.

He started in retail in London in the 1960s with the Woolworths high street chain, before returning to work at Shannon Airport in Ireland, then a key stopover on transatlantic flights, which pioneered the Duty Free concept in the 1950s.

A half-century later, many of the senior personnel running Duty Free shops around the Gulf started their careers with the company that owns Shannon - Aer Rianta. Other senior managers at Duty Free are also old Aer Rianta hands - including the president George Horan, part of the original 10-man consultancy team.

John Sutcliffe, who would go on to build Aer Rianta's business in the Gulf, worked closely with Mr McLoughlin in the original team that established Dubai Duty Free. He describes him as a mentor.

"He was always very conscious of the people around him. Often when people become successful there is a tendency to become separated from the workforce. The opposite happened with Colm. He also believed anything was possible."

Within the company itself, 47 of the original 100 employees still work there.

When we meet, he has just returned from welcoming the latest batch of 100 fresh recruits.

He talks enthusiastically about the importance of looking after staff and how that has helped the company succeed.

Trumpeting the worth of human capital may have become something of a management cliché - but it's not just blarney in the case of Dubai Duty Free. The retailer's staff turnover of just 9.9 per cent was noted by the Global Federation of Competitiveness Councils last month.

As Dubai Duty Free turns 30 this year, Mr McLoughlin will be celebrating his 70th birthday.

But he is still the poster child of competitiveness in the emirate and has no immediate plans to retire. Recalling those early days in 1983, he says: "I'm not sure I knew what I was doing."

Three decades later, it would seem he did.