Friday, Oct 23, 2009

Gulf News

Dubai Dubai is well known for its love of entertainment and its consumers are well known for their ability to spend vast amounts of cash on music, gadgets, cellphones and laptops.

Nisreen Shocair, president, Middle East, of entertainment retailing giant Virgin Megastore, tells Gulf News the company's plans in the GCC, why the Mall of the EmiratesMall of the Emirates is an anomaly among malls and how Michael Jackson is still top of the pops.

GULF NEWS: Describe a little bit if you could Virgin's presence in the UAE and the wider Middle East and whether you think this region is becoming the new hotspot for the Virgin brand.

NISREEN SHOCAIR: The UAE is the hub. The office and the regional team are based out of the UAE. We currently have 75 employees in the head office, six stores in the UAE, two in Qatar, two in Egypt, one in Kuwait, one in Bahrain and one in Jordan.

We have obviously our entertainment retail stores, but are also experimenting with other concepts now, such as a straight-to-kids catalogue, a mail order that's more focused on education. We're doing smaller kiosks, we've tested them in Mall of the EmiratesMall of the Emirates and [Deira] City Centre and they're doing quite well. And we're now thinking of community stores as well. This is a very different concept, so it's not like an express or anything like that, it will be a very particular offering.

And what do you mean by community stores?

It could be something like... So we would know that customers is the right clientele and we do a fine balance between what they would want to get out of Virgin. So we wouldn't sell laptops, we'd sell more covers, we'd sell more batteries, more chargers, paper, toners — things they would need for their everyday so they can come in and get it.

Or you need a gift, a last minute thing, and they will know that store is there to cater to them. I'd say [in] six to eight months we'll probably launch the first one.

We're also working on a purely merchandise concept, called Red Box. And Red Box is, a lot of the gift items in the stores, T-shirts, actions figures related to best-sellers and that would initially be a store-in-store and then we'll see where we'll take that.

And how has business been this year, especially with sales?

It's been fluctuating. I can't say that we have a definitive read, although we do a lot of internal analysis. We had an immediate effect November/December of last year, so in my opinion we were one of the first retailers along with luxury to feel the hit. But then January, February, March were very good, I mean exactly the same as 2008.

For this market that was very good, actually up until April. Then we started seeing early signs of summer.

I think summer and Ramadan we all expected to be bad, but judging from the traffic in the malls, I count bags generally, and I can tell you just from our estimates, that traffic is down 20 and 30 per cent in the malls that we're in, since April [until] now and even more severe in Ramadan.

Were you expecting this, given the financial situation coupled with Ramadan?

Not this bad. We have certain malls that to me are more effective than others. Mall of the EmiratesMall of the Emirates still holds its own, City Centre to some extent, even though I think the demographic is switching, is really changing. BurJumanBurJuman, I think, have gotten the bad end of the deal because of the construction and the [Dubai] Metro and there's only so much population that can handle the expansion of malls.

The way that this region works is that it's very much about the flavour of the day. So there is a lot of excitement and curiosity about Dubai MallDubai Mall and I think that drove a lot of traffic, not necessarily buyers, but a lot of traffic starting in April. So I think maybe these new malls have really taken away from the more established ones and that's something you don't see so much abroad.

Do you think this is likely to last?

Mall of the EmiratesMall of the Emirates is an anomaly. The other malls do not react the same way. It has a very unique positioning, it's been maintained perfectly and it has a fantastic population around it that can sustain it — all the way from JBR or Marina, Emirates Hills, all the way to Arabian Ranches to Emirates Road. You've got that whole population who will always prefer to come to Mall of the EmiratesMall of the Emirates and Dubai MallDubai Mall. So I think the demographic is going to be split eventually. The customers who live in Downtown and that area will end up going more towards Dubai MallDubai Mall but then that will affect BurJumanBurJuman, City Centre, MercatoMercato and all the rest.

Do you think the UAE needs more malls?

The number of population growth necessary to sustain the square footage of mall space existing today, so even the current population cannot sustain the square footage of retail space that we have today.

Then you've got Mirdif that will directly impact Festival City. I think the ones that will be really affected will be BurJumanBurJuman and MercatoMercato.

Why do you say MercatoMercato?

I asked them whether they're seeing a trend shift away from Spinneys, because when we were affected in that November/Dec-ember period, we wanted to see if consumers were shifting groceries as well, because that's the first indicator. And they did say that they saw a shortfall at least in that time.

Because Carrefour Express opened up on the other side of the highway, so I wonder if people would think, ‘I might as well go to Carrefour Express.' And a big traffic driver in MercatoMercato is Spinneys.

How are the other GCC states performing and do you have plans for new stores?

Yes, we do. We're definitely opening up in Mirdif in March and Qatar is emerging as a true winner for us. It's the second country as far as performance. Egypt we're extremely excited about and Egypt has been experiencing a boom the last one year and all the brands are moving into Egypt quite aggressively now, so Egypt is the new hotspot for retailers.

We've been there for five years, but we're expanding so the growth plans are focused on the UAE and Qatar and Egypt.

Every now and then we think about Oman, but I still think the population is too small. Virgin is a very particular brand — it's not Zara, it's not H&M, it's not a fashion store, it's not for any market. You need a good disposable income, you need a cultured population, you need people who are willing to spend money on culture and I think the country [Oman] needs a while before it can really appreciate the concept.

Is it possible to give us an idea of total sales, a comparison perhaps between this year and last year? Or whether you're expecting growth towards the end of the year?

The only reason I'm cautious is nobody else has. But no, I'm not expecting growth. I'm expecting some level of de-growth in business this year in the UAE. In Qatar we're growing, in Bahrain we're growing, in Egypt we're growing. The UAE is the only market affected, the rest are doing fine. And we project flat sales over last year and I think that judging from [what] we're hearing and seeing, third quarter not so much, but fourth quarter will be better for us over the fourth quarter of last year. See, last year it was Eid and so people went out and they still spent on clothes. But I think this year will be a very different story.

Can you tell us what the most popular products are in the different areas of the Virgin stores?

Software and accessories are doing better than hardware. We're selling more games than we are consoles. So people are buying the PS3 games rather than buying the PS3.

Is that partly because as people are trying to save money, they'll buy these games so they can stay at home and play?

I experienced a recession in the US and people buy the TV because they can't travel. Not the same here. It could be because people don't want to spend so much on a new console.

It also could be that the consoles have been out a long time so by the third year of the PS3 being out, how many people haven't bought it yet? Wii, for example, is the absolute winner, as the whole family can use it. That, actually, I subscribe to your theory, because it's a family game, it's exercise and fun for everyone. That console has definitely seen growth.

In gift items, like T-shirts and so on, those have shown growth, 15 to 17 per cent, depending on the segment. A mother will come in and buy her kid a toy rather than a game. And because the toys are cheaper, they can have two toys for one game. That is definitely happening and we're playing a big part in that. We shouldn't put parents in a tough situation when times are tough or they're feeling insecure and the kid wants to feel he's still at the same level — we need to play a very appropriate role in that and we do.

So what's the overall winner? What is the most popular thing you're selling?

Apple. A lot of Apple iPods. But I'll give you the top sales in each segment: on a dollar value, we're selling a lot of laptops and a lot of mobile phones and iPods. In music, definitely Michael Jackson. In merchandise, Michael Jackson is up there, but random gadgets like the spaghetti-twirling fork are doing really well. In books, it varies, but self-help and non-fiction tends to do better depending on what's the new title.

By Suzanne Fenton, Staff Reporter

© Gulf News 2009. All rights reserved.

 

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