Gold’s share of sales at Dubai Duty Free has increased significantly since the pandemic.
The main duty-free retailer at the world’s busiest international airport, Dubai International, has reported a new all-time revenue record with sales in 2023 reaching 7.885 billion UAE
UAE
The strong result from Dubai Duty Free—the biggest airport retailer operating in a single country—was helped by healthy demand for gold; from jewelry items to lengths of gold chain.
Gold has become the third biggest category for the retailer at its mixed-offer stores behind liquor. Perfumes took the top spot. In 2023, passenger demand for the precious metal led to sales of 773.5 million UAE dirhams ($212 million), contributing 10% of total revenue.
This is a big increase in share since the pandemic. In 2019, gold was only ranked eighth as a product category. While last year’s 10% share is the same as in 2022, year-over-sales have risen by 23.3% from $172 million. Among the top three categories—which account for more than 40% of Dubai Duty Free’s revenue— gold’s growth easily outshone the rest.
Fashion was another big riser, but has not been included in the ranking because the revenue comes primarily from boutiques at the airport, not the main duty-free stores.
Indian passenger preferences
One of the reasons for gold’s rising popularity has been the changing mix of nationalities and their preferences. Before the pandemic, the Chinese and Russians were key shoppers, on the hunt for luxury labels and high-end beauty.
Indians were always a major nationality too, and currently number one, spending $266 million in 2023. They came into their own during the Covid years when the Chinese were grounded by their government. India, on the other hand, opened up its travel market much faster, first domestically and then further afield. Mumbai is a top-three route for Dubai International.
According to Dubai Duty Free’s chief operating officer Ramesh Cidambi, the Indian airport shopper is looking for very different things. Wine and spirits, especially whisky, are top-of-mind, taking about 30% of their spending, followed by gold at 17%, and perfumes at 11%.
The Chinese mindset is vastly different, with fashion in the driving seat (24%), then watches and jewelry (18.5%) and cosmetics (16%). The Chinese bounced back last year to become the third most important nationality for Dubai Duty Free buying $154 million, behind Russians at $208 million.
The vast majority of Dubai Duty Free’s revenue is derived from Dubai International Airport. There, across the whole business, it is departures area that drives the vast bulk of retail transactions. The retailer raked in $1.93 billion last year from departure stores—about 90% of all sales, while arrivals shops delivered $168 million, representing 8%.
Dubai Airport traffic is expected to have beaten pre-pandemic numbers when the official count is in. … [+]
While official numbers have not been released yet, the management at operator Dubai Airports said in November that it expected traffic in 2023 to have exceeded 2019’s record and hit almost 87 million passengers, helped a little by the United Arab Emirates hosting COP28.
The traffic outlook is promising for the Emirates hub, however, Dubai Duty Free—a big tennis and horse racing event sponsor globally—has forecast sales for 2024 at $2.16 billion, not much more than last year. This is partly due to a softening in spend per head of passengers after the highs seen in 2021.
As more people have taken to the air post-Covid, interest in online shopping has also flattened somewhat. Online accounted for just 2% of overall sales ($45 million) down from 2.5% in 2022 when they reached $44.2 million. In 2021, during the pandemic, online sales achieved 5% of overall sales and came close to $50 million.
Nevertheless, 2023 was a banner year for the company. The business recorded over 20 million sales transactions—about 55,000 per day. Dubai Duty Free’s, executive vice chairman and CEO, Colm McLoughlin, described the past year as “fantastic” not least because the government-owned company achieved a new sales record in its 40th anniversary year.
McLoughlin also picked up the Pearl Achievement Award for Outstanding Contribution to the Travel Industry which was created to mark the 30th edition of the Arabian Travel Market trade exhibition which took place in May 2023.
