Iraq Duty Free

invests in airport network and eyes expansion

Financial Links-operated Iraq Duty Free is upgrading its store network in Baghdad and beyond, with new airport locations planned and ambitions to grow in the airline retail business. By Dermot Davitt.

Fouad Jabbour: “Our aim is to compete with the rest of the region in terms of space and quality with our duty free shops”

Iraq Duty Free, owned by leading Iraqi retail and distribution company Financial Links, is building on a contract extension captured last year with investment at its key airport locations. The company – the exclusive duty free retailer at Iraq’s major airports of Baghdad, Basra and Sulaimaniyah – gained a vital extension in 2017 for its duty free concessions, which now run until March 2029. And it has been investing for the future over the past year.

Iraq Duty Free is to open a refurbished departures store at the Iraqi Airways-dedicated terminal at Baghdad International Airport by late November, complementing the new arrivals terminal that opened in March.

The departures terminal was closed for refurbishment in August and will reopen with a modernised design, new space for key categories and a series of shop-in-shops across 508sq m. Fashion & accessories will be a particular focus of the new-look store, renderings of which can be seen in these pages.

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Iraq Duty Free General Manager Fouad Jabbour tells The Moodie Davitt Report: “The first step was the Iraqi Airways arrivals terminal in Baghdad, which was completed in March. That was enlarged from 90sq m to 135sq m, with an offer driven by wines & spirits and confectionery. Now the departures terminal is being renovated, with the store trading in just 100sq m temporarily.

“When it opens we’ll have a much improved layout with a new assortment. Our aim is to compete with the rest of the region in terms of space and quality with our duty free shops. New brands will include Samsonite, Lacoste and ST Dupont among others. We will also have a wider sunglasses offer. We’ll improve the electronics range and have a special area for wines & spirits.”

Iraq Duty Free aims to upgrade the look of its retail real estate, led by the new departures store at the Baghdad Airport Iraqi Airways terminal (above and other pages)

As reported, the last-named category has been reintroduced this year after a 13-year absence, and is helping to deliver double-digit growth across the business today. Before the category was banned from duty free sale by the government in 2005, it was the second biggest by value after perfumes & cosmetics.

Jabbour says: “With the reintroduction of spirits we felt the positive impact immediately. It is one of the main categories in duty free worldwide, and in Iraq it prompted extra sales. The Iraqi customers trust the brands they find in duty free more than those they find on the local market. Also, many visitors on business who spend two to three days might buy liquor in arrivals, for consumption in their hotel.”

The other major category to be developed at Iraq Duty Free’s latest stores is destination merchandise. The company says that it is increasing its emphasis on Sense of Place across the business.

Jabbour says: “We wanted to show to the Iraqi customer that duty free is not only about international brands. We will introduce many Iraqi brands, either traditional souvenirs or confectionery, dates, nuts or other goods. We are working with local Iraqi companies to cater to this demand, which is high, especially from ex-pat Iraqis who visit and from those who go overseas and need a gift.”

Baghdad is not the only focus of investment. The retailer is increasing space for its Basra Airport arrivals store from around 15sq m to 36sq m, mirroring the upgrades in Baghdad in design terms, if not in space. Basra Airport has also allocated a terminal for Emirates Airline flights, where Iraq Duty Free is building a departures shop.

In Sulaimaniyah, where the retailer runs arrivals and departures stores, business has been tough, with conflict in the surrounding region (Iraqi Kurdistan).

Uncorking the opportunity: The return of wines & spirits to the offer after a 13-year absence has buoyed the business

Beyond this, Jabbour confirms that the company plans to open stores at three more Iraqi airports in 2019, with more details to emerge once contracts are signed. “These will add to the image of our business in Iraq in the eyes of all travellers,” he says.

In a further development, the company is plotting its imminent entry into the airline retail business.

“We are directing our business now towards Iraq’s major airlines,” says Jabbour. “We will begin managing the business for Al Naser Wings by year-end. Our contract signed with them gives us the right to provide them with the products to be sold onboard, the cart design and the layout of the brochures onboard. Their staff will be trained in product knowledge by our training department, we will replenish the stock sold, and at every month end, Al Naser Wings will be paid the percentage of sales agreed with them from net sales.”

Beyond this, he says, the company is keen to expand its services to other Iraqi carriers that do not currently have onboard sales.

The business in Iraq continues to grow as the country finds its feet after years of conflict. There are few visitors yet, but Iraqis are reliable shoppers, whether they live locally or are returning to visit.

Jabbour says: “Iraq is more stable politically than it has been in the past decade and more. People travel with more confidence today. We still have to convince people on price, but they do trust in the integrity of goods in this channel and they do buy.”

Fouad Jabbour: “We still have to convince people on price, but they do trust in the integrity of goods in this channel”

The company says that it also supports the efforts of the authorities to upgrade infrastructure and airport services.

“We are moving in the right direction, with our support of the Ministry of Transportation and Civil Aviation. Iraq Duty Free is supporting these governmental organisations with investment in upgraded seating in the airports and allocating trolleys to the airport in Baghdad, with similar services to follow at the other airports,” Jabbour adds.

He concludes: “The Iraqi travellers have money and they love to spend it. In the period from January to August 2018 sales increased by around +25% compared to the same period in 2017. Part of this is driven by the reintroduction of liquor, but also by P&C as the number one category, followed by confectionery. For the full year, we expect sales to rise by around +30%.

“Next year we aim for double-digit growth too, even with some closures for renovations. New spaces and new locations will compensate, we hope.”

The Moodie Davitt Report • The Online Magazine • MEADFA 2018