Dubai Duty Free (DDF) has reported a fall in revenues for the second year in a row as the strong dirham continued to dent retail sales at the emirate’s two airports, including Dubai International, the world’s busiest for international travel.
Sales at the duty free outlets at Dubai International and Al Maktroum airports declined by 3.2 per cent to Dh6.67 billion last year from Dh6.89bn a year earlier. DDF’s 2015 figure, showing a 1.5 per cent decline on the previous year, was the first drop in revenue in more than two decades.
DDF is posting lower sales despite a 7 per cent uptick in passenger traffic at Dubai International in the first 11 months of last year to 75.9 million travellers. It also added a further 7,000 square metres of retail in February last year at Concourse D in Dubai International. Many UAE retailers are suffering because the strong dollar, to which the dirham is pegged, has been on a multiyear bull run making the UAE an expensive destination for visitors.
“It has been a challenging year for retail overall and for the travel retail industry worldwide, mainly due to currency fluctuations,” said Colm McLoughlin, DDF’s executive vice chairman and chief executive. He said the new Concourse D expansion had helped to grow the business, representing 17 per cent of its overall sales and generating Dh1.1bn.
“Our sentiment remains cautious but still we have positive expectations for 2017, since our industry has always proven to be a very robust one,” said Mr McLoughlin. “We have collaborated more with our suppliers to ensure that we are delivering the right products at the right prices wherever possible as well increased our online presence.”
Perfumes were the number one product sold, contributing Dh1.1bn and representing 16.5 per cent of total sales. Alcohol came second with sales of Dh1.06bn and tobacco in third place with sales of Dh578.53 million. “DDF is 3 per cent down on nearly Dh7bn a year, that’s a problem most retailers would like to have,” said David Macadam, the chief executive of Middle East Council of Shopping Centres.
The UAE’s retailers are approaching a year of consolidation with the strength of the US dollar showing little respite as the US is forecast to accelerate hikes in interest rates this year and the UAE’s consumer confidence is still low with job insecurity and the cost of living weighing on many pockets.
ascott@thenational.ae
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