Nestlé: Food Reimagined
Food Reimagined – Evolving the category at Dubai Duty Free
Welcome to the latest instalment of a thought leadership column in partnership with Nestlé International Travel Retail that aims to raise the profile of food and highlight its potential as a key growth driver in the travel retail mix. In this issue Dubai Duty Free addresses the strategy that is driving this vital category forward.
Since Dubai Duty Free opened its doors just over 40 years ago, on 20 December 1983, food & confectionery has been a mainstay of the business. The category has been built around an engaging offer that attracts local, regional and international travellers, with strong promotional programmes and multi-buy offers blended with premiumisation and increasingly, Sense of Place though local brands.
Senior Vice President Purchasing Sharon Beecham says that the category maintains its key role in growing basket sizes.
“There are two main ways to achieve this,” she says. “Either we increase the average spend within the confectionery category or we run cross-category promotions or displays.
Sharon Beecham
“First, historically, we have been successfully executing multi-buy promotions to tempt shoppers to spend more. The confectionery category at Dubai Duty Free, on average, has seen +30% incremental growth in sales through such promotions. The biggest spenders in confectionery are shoppers travelling to the Indian subcontinent and Middle East for sharing and informal gifting segments, and they usually expect to find products on promotion and pre-plan their purchases in the confectionery category.”
The retailer has also developed bundle packs that have an assortment of products in a bag of 1.2kg to 1.8kg priced at a discount, with savings of around -25% to 30%. Twin or tri-packs with seasonal themed gift boxes appear for Chinese New Year, Ramadan and Diwali.
“For cross-category promotions, we usually have a limited confectionery display from one or two brands every month in the liquor shops with strong promotional mechanics as a last-minute purchase. We also have confectionery in arrivals as an impulse next to exit points,” Beecham adds.
A key focus for all travel retailers lies in the evolving purchasing habits of Gen Z and Millennial travellers.
Of this segment, Beecham comments: “There is anecdotal evidence that Gen Z and Millennials are less inclined to shop for sharing gifts compared to baby boomers, while they are more inclined towards self-indulgence, whether it is for an impulse or premium gift.
Promotions around heavyweight global brands continue to play a vital role in driving category sales at Dubai Duty Free
“Gen Z also likes to see more engagement from retailers, such as sampling activities, and to find exclusive launches, new flavours and something unique to take back as a memory from travel.
“In that sense, souvenir confectionery, premium gifts, and indigenous sweets are of the utmost appeal to them. They are also tech-savvy, so having different payment options and self-checkouts is a plus.”
This means ensuring enhanced flexibility as a retailer that addresses consumer needs. For example, Dubai Duty Free recently struck a partnership with cross-border digital payment platform Alipay+ to deliver a more seamless checkout experience for shoppers.
Through this, consumers from China and other Asian countries can access promotions and use their own choice of payment without any cash exchange.
The retailer has also introduced self-checkouts in its newly renovated liquor shop in Concourse B as a trial and aims to launch this solution more in other shops if that proves successful.
With the vast and diverse audience of travellers at Dubai International Airport, consumer demand is shifting constantly. So how is Dubai Duty Free encouraging newness and attracting fresh attention to the offer?
Beecham says: “Sharing gift and informal gift segments represented the highest share of the confectionery pie in 2023, with 30% and 25% respectively. Although we have seen the informal gift and premium gift segments grow by around +30% each in 2023 compared to 2019, sharing gift growth has softened with a mere +7% increase during the same period.
“We have seen many brands introduce tablets and smaller snacking options in traditionally larger boxes or bags to cater to the emergence of Millennials and Gen Z travellers. This may, to a certain extent, cannibalise the sales of existing products, but it will also ensure that we do not miss out on those sales.
Premium and destination gifting will help drive the category in the years ahead, says the retailer
“We also need to be extra cautious with prices, as we have already seen multiple price increases in 2023 that had a knock-on impact on average spend as well as impacting sales of some high-ticket items significantly due to high price elasticity.”
Another key opportunity that demands attention is local products. Dubai Duty Free sells many tons of dates, chocolate dates, Arabic and regional sweets, as well as regional chocolate brands – among the best performers are Patchi, Bateel, Al Nassma and Chocodate.
Underlining the importance of Sense of Place, bespoke Dubai packs, some with landmark images, are also highly popular, and reinforce Dubai’s positioning as a destination. To boost destination sales, some souvenir food is displayed and sold together with non-food souvenirs, as these go hand in hand.
The retailer also assesses the growth drivers for food & confectionery. Innovation is one, with brand owners playing a critical role.
To maximise investment in this area, Beecham says, “it is important to align the goals and expectations while having full transparency in communications. We sometimes see brands launch new products and inform us when they are already finalised and have been produced. That may put the retailer on the back foot, as no feedback was taken during the product development process to understand if it fits changing consumer demand in that region and whether the product meets retailer and customer expectations.”
More broadly, there remains tremendous opportunity in the category. Within this, Beecham singles out the premium gift and destination gift segments.
She adds: “While we are confined to the limited space, which has become tighter in recent years with the constantly evolving retail environment with more emphasis on luxury boutiques, we still believe there is an opportunity to trial new brands and concepts, but on a smaller scale while minimising opportunity cost. Suppliers need to understand this limitation, as we cannot offer similar spaces to what they would normally receive in the downtown market.”
A walk through Dubai Duty Free’s food & confectionery environment offers the visitor a keen sense of how this category engages, surprises and adds theatre for the traveller in generous, well-branded space. A strategy built around appeal to multiple consumer groups, power-packed promotions and a blend of local and global brands should see the sector prosper in Dubai Duty Free’s fifth decade.
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The Moodie Davitt eZine
Issue 331 | 12 February 2024
The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com