INTERNATIONAL. As Managing Director, Anthony Chalhoub heads the Kuwait and duty free retail arm of the Dubai-based Michel Chalhoub Trading. Together with brother Patrick he leads one of the Middle East's largest retailers and traders in luxury brands. For companies with trader origins such as Chalhoub, direct retailing is becoming more a strategic choice, not a mere interest to support or complement other activities. Here we catch up on the recent trends in some of the many markets where Chalhoub is present.
Q: What are the main ingredients to the recent success story in regional duty free shops: partnerships, great looking stores, fast promotions?
Chalhoub: It is a combination of several factors that are all interconnected. Good relationships with the local airport authority are vitally important from the start, as they are the body that needs to believe in what you are doing in the airport and that it is in the mutual benefit of both parties. This has been witnessed in several GCC airport authorities where all parties are working for a common goal. Meanwhile this has led to suppliers supporting it by developing high quality personalised display fixtures and with regional retailers, developing and building the cutting edge design of the shops that we have today.
On top of this, promotional activity is second to none in this region. Middle East retailers are constantly being recognised by the travel retail industry by picking up marketing awards over the past few years. On top of all this ingenuity and development, regional airport authorities have delivered high quality spending passengers of all profiles that have used these great facilities, and this has brought in the revenue.
Q: In Kuwait, we see a lot of new business confidence and travel growth. How much of that do you think is due to the situation in Iraq? What are the sales trends you are seeing in Kuwait Duty Free and can you give any statistics on penetration rate and results from recent promotions?
Chalhoub: Actually departure passengers numbers are down 2% for 2005, and our sales are down by 8% due to the retail mall at the entrance of the airport, before and after passenger check-in. Moreover a large number of these passengers are military personnel on their way out of Iraq, but these same passengers do not enter the departure area of Kuwait International Airport when they are leaving, they board the aircraft off-airport and this was having an adverse affect on our penetration figures last year. We have been working hard to convert flyers into buyers this year.
Q For example if you had more space at Kuwait Duty Free, what changes would you like to make? And what new product categories and brands do you think are ready to be introduced?
Chalhoub: Space is the critical factor at Kuwait International Airport and we currently are only allocated 500 square metres. We would ideally like to have much more space to give to our suppliers for their special personalised areas. For this we would need a lot of space as we have a quite a number of suppliers right now in our duty free shops. We also have some more waiting in the wings for a little additional space. We would also like to increase some of our divisions like toys, watches and electronics.
In toys we would like to add some new brands. In watches we would like to have more luxury brands like Cartier, Rolex and so on. In electronics we would also like to have more space to enable us to have a bigger choice of electronics brands, because we feel that we need to have a larger variety. For all this, we should have at least double the space we have right now.
Q: Can you give any comment on the announcement of a new Kuwait International Airport? How will yourselves and Habchi & Chalhoub be a part of the plans?
Chalhoub: A team of consultant has been appointed to work on the project of an eventual Kuwait airport. As long as there is no project, no need to speculate at this stage.
Q: Please can we talk about Traveller. How is the inflight sector growing and what plans are there, for example to work with the new airlines, or in the area of food & snack packages?
Chalhoub: Traveller Limited continues to grow steadily over the past three years despite the decline of business of specific airlines: Kuwait Airways, Gulf Air. Traveller Limited has been able to establish reliable business relations with its airline partners, supporting them with a wide selection, rapid deliveries, competitive prices and supported with extensive after-sales programs that includes training to direct sales force of cabin crew, promotional activities and new launches of products, and attractive incentives to both passengers and cabin crew. Traveller Limited has a direct link with the regional airlines that makes its business even more comprehensive.
Our plans are more to strengthen our position and to share with each airline company focused on the best-sellers, to ensure the returns to both the airline and the passenger, and to attract passengers to different categories of products, other than fragrances and cosmetics.
Traveller Limited certainly follows every opportunity of a new account or client and there are several different projects on line. There is no intention to go into food & snack packages as these are not our expertise, but rather we are developing other fields.
Q: What are the sales trends in Cairo now and what are your hopes to grow your involvement there to the new terminal and other parts of terminal one and two?
Chalhoub: Our sales trend in Cairo Airport Duty Free is growing, as our sales increased from 2004 to 2005 by average 15%, which we consider a very good result after one year's work. Regarding our future plan in terminal one, our main concept from the beginning was: how to be different in providing the ideal services, assortments, and quality? After one year of working we believe we are on the right track and we hope that our success could be continued in terminal three which will be finished by the end of year 2007. As for terminal two, soon domestic flights only will be flying from that terminal .
Q: Since you opened in Cairo in January 2004 can you make any conclusions about how the business there is different to Kuwait? What changes have you been making to the store recently?
Chalhoub: Speaking about how business in Cairo is different to Kuwait, we have to keep in mind that we are talking about different passengers profile, as in Cairo we depend on foreign passengers (tourists) with different needs in different seasons. In the same time as we are part of Chalhoub Group, we all believe in providing a unique service to achieve our goals and ultimate dreams.
Q: Please can you comment on the domestic retail business and Faces in Cairo. Is the market in Egypt really starting to boom now after your years of hard work there?
Chalhoub: Yes, the local market is booming and it is very clear from our results and investment, turnover is increasing by a premium percentage. Meanwhile all the competitors have started to invest more in their outlets, as the retail scene has started to require more brands that did not exist in the Egyptian market .
Q: Does the group have any plans for Iran or the duty free shops in Saudi Arabia or even other emerging markets for luxury goods such as Iraq?
Chalhoub: The group has a lot of projects in a lot of countries. As long as there is no bidding document in our hands, we cannot make any serious comment.