Egyptian duty free shops are working on establishing themselves as shoppers' heaven. Amirah Ibrahim goes shopping While better facilities at Egyptian airports are now a reality, duty free shops are not the dreamland passengers hope for. So much so that some travellers -- including Egyptians -- seek any chance to briefly visit duty free shops of nearby Dubai airport to buy European products at lower prices. They are unenthused by local duty free perks such as purchases within 48 hours of arrival and $200 of goods exempt of customs. Apparently, Egyptian duty free shops are unable to shake off their bad reputation of dreary shopping. The national carrier EgyptAir had been monopolising the duty free business at Egyptian airports until a few years ago, when the government allowed investors to enter into the business. Two duty free companies set up shops at Cairo International Airport, but EgyptAir remains the leader at other main airports around the country such as Alexandria, Sharm El-Sheikh, Hurghada, Luxor and Aswan. "Our business is mainly based on concession agreements with the management of main Egyptian airports," started Tawfiq Assi, chairman of EgyptAir Tourism and Duty Free Shops Company, one of the nine sister companies affiliated to the national carrier group. Assi explained that an overhaul of duty free shops began five years ago when EgyptAir became a holding company, and its various activities were separated into affiliated companies. Since then, new shops opened at Cairo International Arrival Hall 3, City Stars Mega Mall, Luxor Airport's new terminal, Borg Al-Arab Arrival Hall and the Red Sea marina resort at El-Gouna. Egyptian Duty Free launched its revamped look at all new outlets, with shop assistants sporting new uniforms. "To correct mistakes of the past, we had to start with reorganising the house from the inside," confided Assi. "Then we had to deal with the fact that competing investors were enjoying much better conditions than us." He continued that the image of Egyptian duty free shops is seriously harmed in comparison to the competition due to media promotion. "Competitors seem to have better products and prices, no one cares if we are working under similar conditions and enjoy the same privileges," complained Assi. "Especially, with regards to obstacles introduced by customs." The senior official blamed tough custom restrictions for the poor image of EgyptAir duty free shops in the past. "While a passenger can get his favourite bar of chocolate at any airport around the world, our shops are obliged to attach a print of the product's components in Arabic for it to be displayed," he noted. This is to comply with foreign trade regulations controlled by customs and other governmental bodies, such as Imports and Exports Control Authority. Moreover, Assi revealed that customs authorities have forced his company to pay customs on some items that are usually consumed by customers. "Buyers cannot test perfume or make up at our shops because I have to pay customs for all testing samples, even if we get them for free and they are labelled 'not for sale'," he protested. Customs authorities believe that permitting any product into the country falls under their full control, even if it is only for display in duty free. Retailers who desire to display famous international brands at EgyptAir shops usually provide their standard displaying equipment similar to those used at world airports. "Customs officials actually make us pay tariffs for this expensive equipment, even if they are used inside the airport duty free shops," Assi stated. On the contrary, the two new duty free companies operating at Cairo International Airport do not comply with these rules, because they were created according to the investment law. "To avoid such discrepancies, we recently moved to establish a new duty free company under the investment law, so we can be competitive with others," he added. Taxes are another major hurdle on the road to duty free superiority. For example, alcoholic beverages are subjected to an exorbitant tax of over 600 per cent. While each passenger has an allowance of purchasing four bottles of wine tax free, any extra bottle is taxed six times over. Despite the obstacles, Assi asserted that EgyptAir Duty Free Shops have enjoyed considerable growth in both sales and profits over the last two years. During the fiscal year 2005- 2006, retail sales increased by 13 per cent by achieving $70.8 million, compared to $62.6 million the previous year. Overall profits increased from $8.4 million to $11.2 million during the same period. "There are very strong indications that figures for 2006-2007 will be a satisfying success," predicted Assi. "Our outlets at Alexandria Airport achieved 111 per cent of sales last year, while the new shops at City Stars Mega Mall have also hit target sales for fourth months running. In fact, it promises to cover its costs within two years only." According to Assi, there is an ambitious plan to develop the duty free business and position of the company as Egypt's number one duty free retailer through marketing. "For too long the effort to improve performance was not accompanied by organised marketing campaigns to motivate passengers," he said. "Hence, we created a new management for promotion activities, to offset the company's negative image." Management then moved to put its duty free shops on the map of the world's biggest retailers. Other than offers and prizes, the marketing campaign, funded by sponsors costs $150,000, also includes printed material, banners, advertisements inside airports, and video advertisement on 1,500 screens around City Stars. "Now all retailers who exhibit at main airports in the world display at our shops," Assi indicated, adding that the company launched new promotions for departing passengers during July and August at Cairo International. Travellers who purchase goods for as little as $100 have a chance to either win a gift or $2,000-$5,000 in prize money. July's lucky winners were a German passenger who walked away with $5000, and a Nigerian family who won $2000. As a result of this promotion campaign, revenues at Cairo International TB1 outlets hit a record high, exceeding $2 million in one month for the first time ever. It achieved a 40 per cent increase compared to the average for the same month last year. "For August, I confidently expect a 100 per cent increase in comparison to the same period last year," expected the official. Assi cited the company's efforts to improve performance as the reasons behind it winning two international bids despite strong competition. "We won the bid for the concession at Sharm El-Sheikh Airport's new terminal against seven companies, some of which are listed as the world's biggest and most prestigious duty free operators," stated Assi. The other concession contract was signed for Hurghada Airport's new terminal and construction will start by the end of this year.
