5/4/2012

Tamimi Consultancy FZC

Retail Market

Adding in Jordan, Lebanon, Egypt, Syria, Iran and Iraq, the pan-Middle East retail market is projected to top US$ 100 billion. With a combined Gross Domestic Product (GDP) expected to reach US$ 600 billion (in 2006) and a population of 34 million people, including about 500,000 high-income professionals, the GCC is the world's 17th largest economy. It produces 16 million barrels per day (bpd) of oil and exports 13 million bpd generating about US$ 250 billion in annual revenue.

In a recent survey report by retail international, 5.3 million square meters of retail floor space is already available and the retail sector is estimated to be worth $US 100 billion annually. Currently the four main drivers behind this retail phenomenon are the cities of Dubai, Abu Dhabhi, Riyadh, and Jedah. Dubai remains at the core of this development, hosting 1.3 million square meters, with Abu Dhabhi, Riyadh, and Jedah each having between 750,000 and 800,000 square meters. This is set to double in few short years with an additional 4.6 million square metres of Gross Leasable Area (GLA) currently under construction. Dubai Festival City, Dubai Mall, and Mall of Arabia will add some 1.2 million square meters alone. Elsewhere in the region another 750,000 square meters will be added through developments in Doha at Le Villaggio and The Pearl-Qatar, in Kuwait with the Mall of Kuwait, Al Shobily Grand Mall in Khobar, Saudi Arabia, and the new Bahrain City Center project in Manama.

5/4/2012

Tamimi Consultancy FZC

Retail Market

The justification behind this extraordinary acceleration in retail development is twofold. Firstly, the world tourism organization estimates that the number of tourists visiting the region will grow to 68 million by 2020. Again, Dubai has taken lead with 5 million visitors in 2005, which will climb to 15 million tourists by 2010. Secondly, the population throughout the GCC countries is estimated to be 36 million, with the average annual projected population growth set at 3% (world development indicators 2005). Therefore, the regions population should increase to over 50 million (up 40%) by 2015; Riyadhs population alone will treble to over 15 million inhabitants.

5/4/2012

Tamimi Consultancy FZC

Evolution

With good reason, Dubai is regarded as the Shopping Capital of the Middle East and increasingly dedicated consumers regard the emirate as a top-class shopping destination. Shopping is undoubtedly one of the citys greatest draw cards. It is largely divided into two main typesthe old souks in Deira and Dubai Souk in Bur Dubai, and the glossy new shopping malls around Beniyas Square, Al-Rigga, and Al-Hiyafa Road. New shops and malls seem to pop up every other month, to cater to the seemingly insatiable desire for retail therapy. What will be the worlds largest shopping mall, The Dubai Mall, is slated to open in 2007 with over 1,000 outlets. The airport is also a shopping paradise, with excellent duty-free facilities. The beginning of this world class shopping destination is marked by the opening of Al Ghurair City. Launched in 1981, Al Ghurair was the first shopping mall in the Middle East and now one of the top five destinations visited by tourists in Dubai. Throughout its 20-year history, Al Ghurair City has acted as a pioneer in the regional retail business. Combining the culture and tradition of the city of Dubai with a modern shopping experience, it has played an integral role in providing for the shopping needs of the local population as well as for the thousands of visitors to Dubai who flock through its doors every year. While the region was basking in the sunshine of this one-stop shopping destination, along came another red letter day in the history of Dubais retail front: the opening of Deira City Centre under the banners of Majid Al Futtaim Group. After the Dubai City Centre created history, next was Sahara Mall in Sharjah, which again changed the scenario of retail in the UAE. Sahara Mall did not have any hypermarkets; they had only good shops, a major food court, and a childrens play area. Sahara Mall relied on the fact that children decide the buying behavior of the parents
Tamimi Consultancy FZC

5/4/2012

Evolution
After the Deira City Center and Sahara Mall, a lot of shopping malls started mushrooming all over the UAE, that were in the league of the Deira City Center. Things changed with the arrival of Ibn Battuta, which came up with the concept of the specialized mall. Mega malls and high-end malls started targeting high-end consumers; Burjuman and Wafi City Mall are examples also. Major changes in Dubai Retail happened with the arrival of the Mall of Emirates, which caters to high-end users, and they offered the unique option of skiing.

5/4/2012

Tamimi Consultancy FZC

Innovation & Uniqueness

Deira City Center kick started the concept of Carrefour, as it was a new concept for the UAE people and has since become an enduring trend the hypermarket started. Dubai followed in the footprints of Singapore, and they are not only presently successful but in the future they might surpass it. Malls are being built regularly and have been striving to create a niche for themselves. Examples of criterion for creating those niches are as follows: Malls not only provide a rich shopping experience but a mode of relaxation: Sahara Mall has created an image of a family destination with a magnificent area dedicated to children. Without any hypermarketing attributes, it has been doing quite well. These types of malls have evolved with time and major changes have been made in the name of progress.

5/4/2012

Tamimi Consultancy FZC

Innovation & Uniqueness

Theme Based Malls:

Started with the opening of Ibn Battuta, which is based on the travels of the great explorer, Ibn Battuta. They have created a unique experience in the mall. Mall of the Emirates has a ski slope, which transformed it into a landmark for Dubai, and people who come to Dubai from all over the globe make a point to visit it. It helps in attracting high levels of consumers to the mall. New malls like Marina and Dubai Mall are creating more experience-based shopping. Dubai mall is offering the concept of Jurassic Park and Space travel that will enrich the shopping experience for visitors. Dubai is labeled as the Favorite tourist destination, and subsequently, in coming years its malls are going to focus on being major tourist attractions.

5/4/2012

Tamimi Consultancy FZC

Dubai being projected as a business hub

As Dubai is also becoming a major player in international conventions, people who visit will also want to experience all the malls. As one industry insider explains, Initially, whoever visited Dubai would like to visit DCC for shopping. This is becoming very true with the other malls also. As initiated by DCC, the hotel and mall together concept has made them major players. Others are following that trend: MOE has Kempinski with them and Ibn Battuta is planning to build a five star hotel.

Shopping FestivalsDubai has two festivals in a year, the DSF and DSS. In both the cases Dubai has been showcased so well that people all over the world come to Dubai. Both of these events are held to attract travelers, and great deals are available in all the possible retail outlets. All retailers actively participate in the bonanza.
Dubai is growing at a very rapid pace and the policy makers of Dubai have been progressive with reforms. According to the last strategic plan, the goals they set for 2010 were achieved in 2005, and they have a new vision for 2015. With this pace they are sure to achieve much before the targeted schedule. Mega projects like the Palm Jumeriah, Palm Deira, and The World, will augment the shopping experience and increase the GLA of retail space in UAE. Dubai claims that it is larger than life and they are succeeding with that vision. Considering that increasing numbers of tourists are arriving, the future is bright for at least the next 4-5 years.

5/4/2012

Tamimi Consultancy FZC

Dubai now on par with London as global shopping capital

Dubai's rapid rise as a leading retail destination has reached new heights following the release of a new survey which shows that the emirate now shares the top spot with London as the most popular retail city in the world. In its annual survey, real estate analysts CB Richard Ellis mapped the global footprint of 323 of the world's leading retailers across 73 countries and found that 56% of brands are present in Dubai, matching London at the top of the list. Michael Leighton, a retail analyst at CB Richard Ellis, said the reason that Dubai has been able to grow rapidly as a retail hub is because of its franchise model, which makes it possible for retailers to enter the market with local knowledge and minimal investment. "So it's quite a low risk play for retailers with very high returns," he said. Dubai's location and its focus on building world-class malls have also been driving forces in the emirate's evolution as a leading retail presence. The recession also prompted more retailers to enter Dubai as they were forced to focus more on emerging markets and locations where consumer spending is still relatively high, he noted.

5/4/2012

Tamimi Consultancy FZC

US Retailers top incoming brands

Of the six brands that entered Dubai last year, all were from the US, where retailers were particularly hard hit by the recession. Noting that 98% of operations in the UAE are franchised, compared to just 6% in the States, Leighton said it has taken a while for US retailers to get comfortable with the way of doing business in Dubai. "The mentality of US retailers has always been to operate your own business, in your own country, and be in complete control. So it's been an education process to get them comfortable," he noted. Among the US retailers that have entered Dubai over the past year were Crate & Barrel, Pottery Barn, and Cheesecake Factory. While acknowledging that Dubai may have reached a limit in terms of its capacity for new mega malls, Leighton says there is still an opportunity for new brands to be added as malls try to stay ahead of the competition.

5/4/2012

Tamimi Consultancy FZC

UAE second biggest retail market

"Yes, Dubai has probably reached a saturation point in terms of grade A shopping malls, but growth happens in different ways. For landlords, it's about asset management and repositioning their malls, so you see a lot of them refreshing their tenant mix in an effort to keep their products ahead of the market. So rather than just expanding, they have looked at their portfolio and their units and in some cases pulled out their lesser trading stores. So it is more of a consolidation exercise rather than expansion from a retailer's perspective," he said. Thanks mainly to the tremendous growth of Dubai's retail sector, the UAE is the secondbiggest retail market in the world, just behind the UK, the survey noted. However, as Abu Dhabi emerges as a major retailing destination in its own right, it is very possible that the UAE could overtake the UK. "I don't see why the UAE couldn't pass the UK in the coming years. Franchise operators are still very hungry to take on new brands, and brands are becoming much more interested in coming to the region. And Dubai is benefitting mostly because it is the first port of call and the hub for expansion across the region," he said.

5/4/2012

Tamimi Consultancy FZC

Conclusion

Dubai has achieved a Singapore-type success with great efficiency. For example, Dubai is sponsoring festivals like Dubai Shopping Festival and Dubai Summer Sale in the same way Singapore has the Singapore Summer Sale and Uniquely Singapore. Dubai also replicated the model of offering the best shopping malls with best brands available, much like Singapore. As achieved in Dubai, Singapore also targets major conventions and exhibitions; Dubai is also bringing in other major events happening. Other than retail, Global Logistics is also very efficient considering that Dubai is a port city, like Singapore. So it is quite clear that Dubais goals replicated Singapores model. With the space and money available Dubai is creating a larger than life experience, and hopes to surpass everyones expectations. On the other hand, Dubai has been able to differentiate itself, as we have discussed in-depth above.

5/4/2012

Tamimi Consultancy FZC

LONG TERM SUCCESS

What Dubai should do to sustain successDubai has a 96% population of expatriates, so retail efforts should cater to them. But for at least the next seven years they need not to worry as there is enough demand and to sustain success. The government policy is to make sure that the tourist inflow is maintained. Then, it will become one of the most visited cities in the world. "Dubai's retail sector is likely to grow by 5.5 per cent in 2011. The key factors behind the optimistic forecast are attributed to the strong underlying economic growth, increasing household consumption and the inflows of tourists to the emirate. With its steady rise, the retail sector has emerged as one of the most important economic sectors associated with the growth of modern Dubai. Dubai Chamber Director-General Hamad Buamim "Dubai is among the nine main shopping destinations of the world including New York, London, Paris, Milan, Singapore, Hong Kong, Tokyo and Shanghai. The emirate has earned this position due to the unconditional support of its leaders and the hard work of the business community" Binhendi said. Dubai is poised to become a global fashion hub, due to geographic positioning and favourable domestic demand for luxury goods. The Emirate already hosts many international retailers and designers, and represents the second largest retail market globally.

5/4/2012

Tamimi Consultancy FZC