Wednesday, Sep 15, 2010
Gulf News
Industry is using slowdown lessons to prepare for future
Dubai With residents less willing to splurge and having lost a major chunk of the business from tourists, the high-flying retail sector felt the full impact of the recession.
But the industry and its players are now using the lessons learnt during this period to be better prepared when the turnaround comes calling.
Topping the list of such lessons would be not to spread themselves thin by having as many stores as possible during the good times. Far too many retailers were caught out by their overreaching ambitions and are now working overtime to rectify it.
“The emphasis these days is on manageability of the store network, and whichever location doesn’t work will be jettisoned,” said Ajai Dayal, general manager of the Easa Saleh Al Gurg Group. “It’s very much an on-going process within the local retail sector and will continue for some time. There will be constant reworking by each retailer of what will work best for him.”
And, fortuitously, retailers got the space to tinker around, helped in no small part by the opening of The Dubai Mall and Mirdif City Centre within months of each other. But both openings took place when the recession was really starting to bite into the local economy and, by extension, of its shoppers.
“Without these openings and all of the activity that took place alongside, the retail sector might have had an even tougher time of it,” said Dayal. “But their openings created new destinations and pulled in the footfalls, thus creating a certain momentum and expectation. That was a major help for the retail sector at large.”
All the leading retailers were represented, and more importantly, both malls brought in labels that were totally new to the market. Their entry reinforced the belief that for an international brand worth its name a location in Dubai was imperative, recession or not.
Though no one says that consumers are back to flocking the stores and making purchases, the leading malls in Dubai are starting to report a lot more activity in recent weeks. They may not be about to raise their discretionary spending levels, but this sentiment has not precluded them giving the malls a visit.
Raising spending
“At some point in time, they will start raising their spending patterns in line with an improvement in the economy,” said Yousuf Ali, managing director of Emke Group. “As far I am concerned, it’s going to be sooner rather than later.
“That’s one reason why we are going ahead with a new hypermarket in Dubai on top of all the outlets we already have here. The recession is a great time to invest in new ventures, and we are talking about one in excess of Dh250 million.”
If further reiteration was required, it can be found in the Al Futtaim Group joining forces with two leading Qatari entities in a Dh6 billion mixed-use development in Doha.
“Our knowledge in the region’s retailing and leisure industry has taught us to do the uncommon, uncommonly well,” said Robert Willett, group CEO at Al Futtaim, in a statement to announce the venture. “Our involvement symbolises Al Futtaim’s desire to remain innovative across all markets.”
The leading powerhouses are not going to let a recession get in the way.
By Manoj Nair?Associate Editor
Gulf News 2010. All rights reserved.
