The Middle East Retailing Scenario

With an attempt to further analyse the Retailling sector in the Middle East, we interviewed Gautam Chandra, Leasing Manager at Emaar Group in Dubai, United Arab Emirates. He is a well known retail industry professional with vast experience & knowledge in the field of retail leasing and franchise business management.

Q: What is your company all about?

A: Emaar Malls Group LLC is a wholly owned subsidiary of Emaar Group and is focused on creating lifestyle destinations offering unique customer experiences in shopping, leisure and entertainment.

Emaar’s master-planned developments generate a state of the art ambience and provide unmatched community living which are considered benchmarks in the real estate industry. We create world class shopping centres and community centres that blend design, access and a retail mix offering all the amenities, services and leisure options all within your reach.

Q: What is the market size and scope of the business?

A: Emaar Group is a global real estate major having offices in almost all major countries across the world covering different geographies across many continents.

In terms of defining scope of business specifically for Emaar Malls Group at present we create lifestyle destinations which include shopping malls and community centres across UAE, Syria, Turkey and Egypt.

Q: What are your growth plans?

A: In the next few years we will be shortly launching our retail and lifestyle projects in Syria, Turkey and Egypt.

Q: Who are your major competitors and how would you differentiate yourself?

A: Majid Al Futtaim Group (MAF Group) and Nakheel in the UAE are our major competitors. In terms of strategic differentiation we build better projects in terms of quality in record timelines. We differentiate ourselves by providing need based customisation in line with the requirements of the social geographical zone we serve across various countries and continents.

Q: What are possible short and long term threats to your business?

A: Growing competition in terms of advent of new shopping centres in UAE is a constant threat. Many new malls are being developed by our competitors across UAE which will gradually try to eat into our market share.

In terms of long term threats we are keeping a constant watch on the economic volatility in global financial markets. This is with specific reference to the recent downgrade of US ratings leading to loss of investor confidence worldwide.

Apart from the above, within the UAE the real estate industry has gone through its own share of ups and downs. Instability in the real estate sector in UAE adversely affects our growth prospects.

Q: Could you please share with us your views on the retail industry in the Middle East?

A: The retail industry in the Middle East has experienced rapid growth over the last decade. Many top notch brands across the world including Europe and the United States have shown keen interest to setup shops in UAE and other Middle Eastern Countries. With specific reference to UAE in shopping centres like The Dubai Mall and Mall of the Emirates you will see a consortium of the best international brands in the businesses who are servicing the socially well heeled and multicultural citizens of the country. Dubai is also a very sought after tourist destination as it is considered a haven for shopping, leisure and world class entertainment.

Q: Who are the major players in the Middle East retail industry?

A: In the shopping centre industry, Emaar, Nakheel, Qatar Foundation, Mubadala, Aldar and MAF (Majid Al Futtaim) constitute the majority.

On the retailer side Al Shaya Group, Bin Hendi Group, Al Tayer, Chalhoub Group, Azadea,Landmark, Liwa, Al Fahim Holdings and Sharaf Retail are the major players in the retail market.

Q: What are the emerging trends in the Middle East and which factors are driving growths in the retail sector?

A: In terms of ongoing trends, specifically speaking about fashion retailing I observe a noticeable shift in consumer spending towards value brands. Many brand savvy customers are beginning to switch their brand preferences to other value brands which are available at more affordable prices.

In the non fashion segment the focus of customer spending is gradually shifting from high end luxury to affordable/premium luxury segment. This trend is also supported by the global economic conditions that are being expressed across the world.

Increasing growth has been observed in the F&B Retailing sector in the Middle East. Despite the economic downtown no major drop has been observed in the customer spending on F&B and outside dining.

Many new F&B brands are coming from other countries to setup their business in the Middle East as there is considerable business confidence to invest and ensure profitable returns in this sector. In my opinion, F&B franchising opportunities in Middle East will see an unprecedented growth in the coming few months.

Q: What are the opportunities and challenges faced by retailers in Middle East?

A: The Middle East Retail Industry during this stage is going through a consolidation phase. Most retailers who entered the market many years ago are looking to consolidate their market share and are trying to keep their profit share stable.

In terms of opportunities many big size retail corporations are focussing on extending their business verticals as many mergers and acquisitions are happening across the retail industry. Time is now ripe to acquire new business verticals as many small time and struggling retailers are willing to sell their ownership stake in their business at fair market value. However, this acquisition process has to be selective and has to done after thorough research and homework. Only then will a retail company look to consolidate its gains.

Since the market in the Middle East has become more price sensitive than in earlier years, new opportunities are available for value merchandise retailers. The Landmark Group is a very good example of a retail company which has capitalised on retailing value brands to become a market leader especially in times of economic instability and recession.

There are many challenges being faced by retailers as well. In these times, retailers have to think out of the box to counter the increasing competition and retain their market share.

Many brands are working to reposition their brand strategy and a close watch needs to be kept on this especially as we have entered an era of retailing when brand loyalties cannot be taken for granted. Constant innovation in store design, visual merchandising and product portfolio are essential to survive the challenges of retailing today.

Retailers should also focus on enhancing their human resource efficiencies. This is vital during the period of economic downturn when the spending/demand is low. Efficient customer service across the retail counter by a staff member who has complete product knowledge will induce a purchase transaction in favour of the retailing company. It is important to secure the limited spending surplus from the customer by efficient customer handling or else the same surplus will go to another brand and will become a cost of foregone opportunity.

Q: As a player in retailing in the Middle East, what advice would you like to give to Entrepreneurs looking to expand in the Middle East?

A: Entrepreneurs who are looking to expand in the Middle East need to focus on the following parameters: