Region-wide tour of developments and trends in one of the GCC's most dynamic sectors.
The Retail Evolution
Consumers or Generation C are evolving into a new species of shoppers, and retailers who fail to adapt just wont survive. Portlands Ibrahim Ibrahim catalogues the emerging trends.
One of the truest sayings must be the famous adage: The only constant in life is change. In the world of retail, this has never been as relevant as it is today.
If we just think of what life was like say 1015 years ago, we lived in a world without internet shopping and the likes of Amazon, Google, My Space, iPods and PDAs. We now embrace recycling, organic food, electric cars, home delivery, cheap flights, spas and massages, art galleries and museums. From these examples we get a sense of how much and how quickly our social and commercial environments have changed.
So how will brands and their retail environments change in the next 1015 years?
To address this question we should look first at the lifestyle, habits and behaviour of our consumers in the future and assess how this will influence their expectations from shopping.
Currently, consumers can access thousands of songs, video clips and photos in any order, instantly, while on the move. We casually use the internet to learn, speak to friends, form new social groups and create our own media content.
Kryders Law states that in 12 years the mobile devices we carry will have the capacity to store all commercial video and music ever created. These devices will be the remote controls of life, as well as computers, phones, video recorders and navigation aids, they will be our keys and wallets. They will have the capacity to video a users entire life and access vast amounts of online content. This will give consumers of the future the power to choose like never before.
While shopping, consumers will be able to try, view comparative products and read reviews online, share opinions with their friends, get comparative prices and buy the product online, while in the store.
In this new paradigm, stores will have to re-think their roles. Shopping will no longer be about stores. It will be about stories. Consumers will turn their attention to those brands with a story, and they will have to offer a compelling narrative and raison dtre, whether that is about provenance, processes or care for the environment.
Added to this, consumers have an increasing thirst for learning, they want to improve themselves and be more interesting.
According to the National Center for Education Statistics, in the USA, 50% of 3554 year olds take personal enrichment courses aside from work-related training; 32% of festive presents bought in the UK last year were for doing things as opposed to receiving things. Visits to the Tate Modern gallery in London rose by 45% between 20042005, according to Pompei AD LLC. These are some examples that suggest that people will no longer just want things, rather, they seek meanings.
There is a developing shift from people seeking status from status symbols to status skills. Consumers will want to master the skills to make the most of what they buy and be able to tell the story that comes with it.
Shopping will no longer just be about buying a brand, but about buying into a brand
Consumers will no longer be content with being passive buyers, they will want to learn, partake and influence. I have spoken at length about the experience economy: we are now entering the being economy where consumers will desire places to be.
On threadless.com consumers submit their own T-shirt designs, the online community vote for its favorite design and the winning one gets produced and sold on the site, with the winner being paid for the design.
Our new customers are the C Generation, they want to create, contribute, connect with like-minded people and expect things to be custom-made. They also have a developed conscience, they will be riddled with fear and guilt. They care about the environment, health, human rights and their local communities and will turn to those brands and retailers that can prove their CSR credentials.
What has happened in the online retail world will filter down to the physical retail environment. This trend towards social shopping already happens online and has moved offline (in-store). Its a growing phenomenon that will turn the retailcustomer relationship on its head.
Today, there are an increasing number of consumer groups and communities, which take advantage of their buying power to negotiate group discounts. For example, Dutch United Consumers negotiates mass discounts on insurance, petrol and electricity on behalf of its 250,000 members.
In China the tuangou (team purchase) involves strangers organizing themselves around a specific product or service. They then meet up in real-world shops on a co-ordinated date and time and negotiate a group discount on the spot.
Stores have started to harness some of the techniques that e-retailers use. Location-based SMS marketing will become an important weapon in every retailers armoury where they communicate on a one-to-one basis with a potential customer and create instant, bespoke offers for them on the spot.
Pop-Up stores or guerrilla stores are not new but have moved into the realm of mainstream, global brands. Here retail brands take up temporary space where they sell products along with putting on performances to create a theatrical experience where spectacle comes first. The whole concept of Pop-Up stores gives consumers something that is limited, exclusive, discovery-driven and of the moment. Retailers following this trend range from American Apparel and Target to high-end fashion brand Comme des Garcons.
As well as developing cleverer ways to market to potential consumers, stores need to offer more compelling reasons to visit and linger as the internet will be where we buy stuff and stores will be where we do things. So, how will stores respond to this challenge?
Londons Selfridges has been a pioneer of retail theatrics with its seasonal campaigns of Tokyo Life, Brazil and Las Vegas. As well as having the odd wedding ceremony in-store, more recently it has unveiled a sound and vision installation in its Ultralounge, designed by Brian Eno.
Maybe this is because Selfridges knows that the Olafur Eliassons Weather project, which was, exhibited at the Tate Modern in London, attracted more visitors a day than the store did.
Brands will also need to embrace a tangible commitment to ethical and green retailing.
Timberland now has put nutrition labels on to its shoeboxes. These give information on environmental impact and the number of hours and holidays taken by its workers.
American Apparels marketing proposition is that it does not use sweatshops and provides a very progressive employment policy that is not typical in its industry.
So authenticity, provenance, transparency and ethics are now expected and are no longer aspirations, these are important components of the brand story and customers will need further reassurance.
All this points to a world where consumers will abandon ubiquity and seek bespoke, personalized experiences. In this new world the idea that we are time-poor is a lie, we are willing to wait for those things we deem worthwhile, a freshly squeezed juice or an explanation of a new gadget we want to buy.
Brands will no longer control their message. Consumers will turn away from mass media to personal media where peer-to-peer communications will be more trusted than brand communication.
Brands and stores will become ever-more specialist following Chris Andersons Longtail theory, creating a world of Massclusivity. Added to this, stores will become social networking environments where consumers will record and share experiences with like-minded people. They will become brand communities built on strong relationships between customers while merging on-line and off-line.
As conventional stores lose their appeal, customers will turn their attention to those that demonstrate social responsibility and offer the magic of immersive, tailor-made, curated experiences that encourage participation, social networking, sharing, exploration and indulgence, and allow customers to feel good about the store and feel good about themselves.
In the travel retail environment, people are captive for a fixed amount of time and are usually bored, restless or stressed. Relevant, bespoke retail offers and services can help to alleviate this problem and make peoples dwell-time enjoyable and productive, rather than being seen as dead time.
In the new retailing landscape, the old success criteria of price, variety and convenience will be replaced by customization, learning, authenticity, story-telling and sharing where the winners will be those that are most responsive to the new consumer.
As nineteenth century naturalist, Charles Darwin famously wrote: Its not the strongest of the species that survive, nor the most intelligent, but the one that is most adaptable to change.
KSA real estate homes in on malls
Sarah Abdullah reports from Jeddah
A key player in the Kingdoms non-oil economy, Saudi real estate has recently been estimated to be valued at as much as nearly $240 million, according to a report by the Saudi Arabian Investment Fund, a division of SAMBA Financial Group.
Further data from the same report showed dramatic increases in 20022006 with housing growing by 13.7%, land by 16% and commercial office space by15% a year.
Perhaps the most striking aspect of the report, however, and one expected to add even more heat to the already rising Saudi real estate fever, is the shift by developers interest towards large-scale projects, thus bringing into focus shopping malls and hypermarkets as the prime target of real estate investment.
Of the 2.5 million sqm of retail space currently under construction in the Kingdom, most of the shopping development has been divided between Riyadh and Jeddah, with expansion potential for franchising experiencing an annual growth rate of approximately 8% making the cities some of the fasting growing in the world.
Further estimates on mall development and increase in retail space forecasts an increase of up to 56 (56 what? ) amounting to a total of 6.95 million sqm Kingdom-wide, raising Saudi Arabias per capita Gross Leasable Area (GLA) by 350% in the next two years.
So what is causing the mushroom-effect of malls all over the Kingdom? A combination of factors are said to be creating mall fever including high liquidity, increased bank lending, low interest rates, and high yield of return on investments have lead forecasters to predict an increase in total new real estate construction projects expected to exceed $129 billion in revenues by 2010.
One such company that predicted the potential for growth through real estate is Al Maddahia Group. Beginning as a small grocery business some 30 years ago, the company has had a long history of struggle to develop itself into one of the most well known real estate investment companies in Jeddah, with a paid up capital of nearly $24.5 million.
Among Al Maddahia Groups initial developments, is Le Mall completed in 2001, followed by Le Dome and Etoile Centre. Current development will see the launch of two new malls promising the latest in cutting edge architectural design and construction and all produced by the groups own construction company, Behar Construction.
The new malls, Le Maison and La Vague, located on King Road are expected to be opened by years end with the introduction of La Chateau to be ready for shoppers by January 2008.
Al Maddahia Groups executive manager, Mohammed Al Madani said: We have done a lot in terms of shopping mall development focusing primarily on Jeddah with plans to begin constructing projects in other cities across Saudi Arabia. Right now we are working to expand our existing branches while providing new job opportunities for Saudi youth.
He added that future plans also include possibly entering the retail business stating that because of globalization the retail market and franchise opportunities are flourishing and are expected to soon make everything available everywhere.
Another such enterprise which has taken retail business and mall development to a whole new level in Saudi Arabia is Arabian Centres, headed by Eng. Salman Al Hokair. Arabian Centres is the mall management arm of the Fawaz Al Hokair Groups real estate business responsible for the companys growing mall network and, at present, responsible for operating 11 malls across the Kingdom with another 12 planned in the next five years.
At present is managing more than 1 million sq m in use and under development of which 700,000 sq m is GLA.
Our mission is to states the companys website and it certainly looks like Arabian Centres is on the right track currently gaining control of nearly 30% of the total GLA in Saudi Arabia. The division has also been negotiating in signing with the Marriot Group to develop a number of four and 5-star accommodation set to begin with the hotel at the Mall of Arabia, under development in Jeddah.
The last five years have been important ones for the development of Arabian Centres beginning its real estate interests with the earliest of its developments launched in 2002 through the introduction of the Sahara Plaza in Riyadh followed by the opening of, three malls in Dhahran, Jeddah, and Riyadh in 2005 including the largest of the companys flagship real estate developments, the Mall of Dhahran, set for expansion within the coming months.
GCC retail real estate to top 6 million sqm
Results of a survey conducted through 250 shopping malls by retail consultancy Retail International show that retail real estate in the GCC may exceed six million sqm this year.
Leading the way in retail footage, Dubai is utilizing some 1.3 million sqm, densely accounting for approximately 1,100m of shopping space per 1,000 shoppers.
The next major cities in terms of retail occupancy are Jeddah and Riyadh, ranging between 750,000800,000 sqm, while Manama, Doha, and Abu Dhabi ranged from 600,000700,000 sqm, sharing the third highest countries on the survey.
Despite the ever increasing supply of retail space, demand continues to be high with rents taking a leap in the UAE by as much as some 22%. Mall developers in Dubai are said to be asking for as much as $98/m, (AED 400/m a month) with developers in Doha quoting $60/m a month (QR 200/m a month): a price hike of up to $10/m a month.
The survey concluded that this may well be just the beginning of the GCC retail real estate explosion with an additional 5 million sqm of shopping space expected to be added in the next few years.
Dubai again is projected to account for the bulk , much of which is long made up of the awaited Festival City, Mall of Arabia, and Dubai Mall comprising of a total of 1.2 million sqm.
In the longer term, rising forecasts project that the GCC retail real estate sector could hit the 1516 million sqm mark in the next ten years.
This is a direct result of Riyadhs growing population expected to triple to 15 million; Qatars rising GDP increasing from $42 billion to as much as $60 billion; not to mention Dubais booming tourism sector credited with pumping a record amount of surplus revenue into the GCC economy.
Simon Thomson, owner of Retail International and director of the Middle East Council of Shopping Centers (MECSC) told GMR: So long as the primary demographic drivers of population and economy continue to grow then there is unlikely to be any significant slow-down barring any unforeseen geo-political events occurring that could impact the situation.
One major factor in the demand for GCC retail space is the daily flood of international brands aided primarily by global franchising and the technique of mall management networking.
Such Saudi retail powerhouses as Fawaz Al Hokair and Savola Group have been major influences in the Kingdom, in terms of retail real estate occupancy introducing such brands as Zara, Promod, Almo, Marks and Spencers and HyperPanda.
Speaking about the countrys potential for growth. Fawaz Al Hokair, Owner and CEO said, Saudi Arabia is emerging as a high growth and opportunity market. It is taking on a bigger role on the world stage than ever before. We continue to build our image as serious partners and offer un-paralleled investment opportunity, not only in the Gulf but, at a global level.
For the last nine months, Fawaz Al Hokair has been posting net profits of $55.5 million, a rise of 9%.
Savola Group also posted net profits for 2006 of $307 billion, an increase in operating profits of 55%. The group plans to expand its HyperPanda markets throughout the GCC opening 30 new stores by 2010 with up to 100 new stores planned in the KSA, with five of those for construction by the end of this year. Each HyperPanda market will be between 7,000 sqm12,000 sqm of retail space.
Nawaf M Yamani, direct marketing manager, Savola Group added: Modern trade is the future format with studies indicating that customers are demanding better shopping environments and lower prices, which are the true drivers of this increase and shift to modern trade.
Franchising in Saudi Arabia
Franchising is fast becoming the method chosen by small and medium size retails to build their businesses into the next big enterprise. Sarah Abdullah reports from KSA.
According to industry analysts estimates, the Middle East generates a whopping $30 billion of franchise-driven revenues a year with the sector reportedly experiencing an increase in annual growth at a rate of 27% and Saudi Arabia showing signs of no exception with its own franchise market racking up as much as $67 million a year.
Within the last five years, the growth of franchised and licensed businesses have penetrated many sector industries including transportation, tourism, and education, but perhaps the most evident impact has been in the countrys booming retail sector.
Since Saudi Arabias entry into the World Trade Organization (WTO) nearly two years ago, the accession has prompted an easing of investment rules, allowing foreign investors to control up to 51% of local companies. And, with a population of more than 27 million of which 60% is under 25 years old, demand for brands has taken Saudi retail by storm. So much so, that franchising has increasingly become the method for more SMEs to build their businesses into enterprises.
Second only to real estate, the fastest growing franchising sector is fast food with outlets now accounting for 60% of the total retail franchising market. Fashions not far behind. Womens and childrens wear reportedly topped sales of all previous years in attracting an increase in the number of fashion-conscious regional consumers.
So, whats driving consumers to shop till they drop? With Saudi women, shopping has become a surefire way to let off a little steam. And they certainly have the means too, claiming 60% of Saudi Arabias total assets and an astonishing $27 billion of hard cash in the Kingdoms banks, market strategists are ever finding new ways to cater to Saudi women and capture some of the wealth for themselves.
And it doesnt matter where the franchisees are from. As one might expect the initial debuts of the US, UK and European franchises were all received, but recently international brands such as Bonita of Malaysia and of India have given even more proof in changing the minds of investors to the fact that, these days, anybody can make it in the Saudi Arabian franchising business.
In the last few years companies from France, Austria, Denmark, Sweden, Spain and even Indonesia have all joined the ranks of well-known brands introduced to Saudi shoppers.
But minds are not the only thing that have been changed. Being the fastest growing population in the Middle East with the majority of youth wishing to adopt a more Western lifestyle the Mall has been positioned as not only the place to be, but the place to be seen.
But the unanswered question still remains: is adopting a western lifestyle necessary to adopting a better-quality lifestyle?
Its because the franchise market is growing at such an unprecedented rate, that Saudi Arabia has managed to actively acquire international franchise companies which have had a positive impact on upgrading our economic system and social lifestyle as well, said Rola Badkook executive manager at Franchise Development Services, a franchise consultancy firm in Jeddah.
In my opinion franchising has been successful in exposing Saudi youth to brands offered on other markets but, at the same time, has given them a glimpse into another culture. Now all that is left for Saudi Arabia to do is to focus on expanding our local successful concepts in turn to reach other nations. Badkook concluded.
According to sources it has already started to happen. Saudi brands have been spotted popping up mostly in Asia with the international launch of such fast food restaurants as Tazaj in Malaysia, which sells barbequed-style chicken meals and sandwiches, and tourism giant Kanoo travel recently opening in Singapore to cater to Saudi travellers abroad.
What does this mean for the franchise market domestically in the Kingdom and worldwide? Said Baaghil, marketing strategist and creative designer of Jeddah-based Logic Holding Company, summed it up: Its just a matter of time until global brands have completed a 360 degree turn in becoming present on every market, in every country, everywhere.
In any case, the best of the brands are yet to come.
Retails Golden Era
MECSC president sheds light on trends, challenges and opportunities in the Gulfs mall sector. Precious de Leon reports.
Whether its because of the limited leisure alternatives, the weather or the ripple effect from the booming realty sector, retail development has significantly grown to become an integral part of the GCCs fast-rising economy.
The sectors influence continues to reach impressive heights as international ventures pour billions into the region. To date, the Middle East Council of Shopping Centres (MECSC) estimates investments at more than $100 billion throughout the Gulf.
Investments are only part of the story. Theres also the creation of business volumes and the added-value like the amount of sales generated from the malls, the tourism footfall and the jobs created from setting up and maintaining malls, says Mohammad Alawi, MECSC president and country headSaudi Arabia, MAF Shopping Malls, which is part of Majid Al Futtaim (MAF) Group.
Indeed, Alawi aptly describes this time as the golden era of shopping malls in the Gulf particularly in Saudi Arabia and the UAE.
As this phenomenon spreads throughout the rest of the Middle East, shopping malls are also rapidly evolving; almost leap-frogging ahead of retail development trends in the US and Europe.
Trend shopping
Among current and future retail development trends, Alawi forecasts retail brands consolidation going forward, which is already occurring in Europe and North America. As more retail brands enter the GCC, he believes the bigger retailers and retail developers will try and acquire these new labels.
Meanwhile, continuing the past years retail-tainment trend, Alawi sees the global shopping mall development move away from big box retailers still a new concept here and by definition large freestanding, generally single floor store averaging no less than 50,000 sqft into lifestyle and boutique malls, where its not just about selling product but delivering experience as well.
This experiential retail phenomenon also means that the malls not only offer retail spaces but more leisure spaces, as well as accommodation, such as a 5-star hotel and residential buildings. The intention is to build a community around the shopping centre.
In general, malls are social windows. In this part of the world where entertainment is minimum compared to other countries, its a larger window. This is especially true in Saudi where people go to shopping malls to spend time with family and friends, says Alawi.
Themed retail destinations have cropped up throughout the Gulf: Dubai Festival City, Kuwaits The Avenues and Saudis Dareen Mall are a few examples. The challenge of implementing this strategy is the cost of operations. The weather, for instance, is a major consideration. Because of the heat, any themed or lifestyle environments would most likely be indoors. This would require more cooling solutions as well as costlier and more complex maintenance systems. In this case, the developer has to balance creating a unique experience with reducing or maintaining costs of operations.
With boutique malls becoming the popular choice, how will the mammoth malls survive?
The bigger malls like Ibn Battuta and Mall of the Emirates are more than malls. Their catchment area covers wider ground, says Alawi. He talks about the international reach that some of the bigger destination malls have created for their brand, which results in large tourist footfall numbers. This is when the mall itself becomes a sightseeing landmark.
In addition, the number of foreign retailers entering the market will continue to grow.
The brands are not only coming from Europe but from South Africa and the Far East. Alawi admits that US retailers have been slow to enter the market, although he suspects it would only be a matter of time.
Meanwhile, economic cities are also showing strong growth. Similar projects are being constructed in cities throughout Kuwait, Saudi Arabia, as well as in Dubai and Abu Dhabi.
In Saudi alone, developers are building five new economic cities, which will open up to four million sqm of leasable space.
Special issues
There are, of course, market conditions unique to the region. For instance, before indoor skiing and amusement areas became the centre of revenue for malls, hypermarkets were used as anchors to create constant footfall in the shopping centres.
However, now that experiential branding and leisure is gaining more momentum than ever, will hypermarkets continue to be a staple in the regions malls?
Today, almost every mall in the region is linked with a hypermarket. This is primarily because most of the hypermarket franchise holders are the mall developers themselves.
Examples include Majid Al Futtaim Group with Carrefour, while in KSA Savola Groups has the license for HyperPanda and the Al Hokair Group has Geant.
Alawi forecasts that hypermarkets will begin to create a separate identity and will eventually move out of malls to become a separate destination.
Youll find that a mall with 50% retail and 50% hypermarket, usually wont succeed, says Alawi.
If you tell me the hypermarket of a mall is not more than 15% and has a variety of well thought-out tenant mix, it will succeed.
This unique relationship is also found between retailers and mall developers. Alshaya Group, for instance, handles brands like Boots and H&M and at the same time owns Mabanee, the company behind The Avenues, the newly launched mall in Kuwait. Other examples are the MAF Group. Al Hokair Group and Al Ghurair Group.
Are retailers supposed to be shopping mall developers? Weve been asking this question for up to five years now, says Alawi. Theres a strange mix in this region where you have the developer who is at the same time a retailer, a tenant and a promoter.
Alawi believes that this universally unusual one-sided relationship is brought by the limited involvement banks have in the regions retail investment.
This is in contrast with whats happening in the rest of the world, where banks often finance shopping mall development because the developers do not have the resources to finance it themselves. The regions wealth is essentially what makes this market a unique one.
So is this a bad thing? Not necessarily. Its just a unique situation, says Alawi. Someone once told me that the GCC is the best place for business because the financing is from the landlord himself.
Formula for success
In an increasingly competitive retail environment, keeping the tenant mix fresh and dynamic is equally hard to execute.
Its ideal if a developer can bring at least 4050% new brands into the tenant mix. We are more likely to find in malls, however, that only 2530% are new.
Delivering new brands and experiences, it seems, is the main challenge for todays mall developers, which is why international retail brands are more in demand.
This, Alawi says, causes local brands to get the impression that malls are not paying attention to them. Local retailers dont realize that its about the value that particular store or space is going to give us. If they already have 20 shops in the community, the mall wont get much value from their 21st store compared to an international brand, which is entering the market for the first time.
The best formula for success is good location, the right tenant mix, a clear idea of your target market and differentiation, says Alawi. The region, he says, is unique in that it offers one of the largest mix of cultural retailers with brands coming from China to France.
Even as the golden era of mall developments rises on the regions retail landscape, the general view is that there will still be winners and losers it all depends on how much anticipation the retailer-cum-mall developer has when it comes to the real reason behind why customers visit malls.
Cashing in on Dohas lack of competition
Marketing, it seems, is way down the shopping lists of Dohas mall developers reports Anne Turunen.
Malls are busy, well-lit and noisy open spaces that can present a challenge for marketers. Effective mall marketing is about capturing peoples attention in this tough environment. There are various, universal ways to attract peoples senses while they are leisurely strolling around special promotions, PoS, displays, checkout shelves to name a few.
But the Gulf is a unique region when it comes to shoppers mall behavior. Time spent in the Gulf malls is less about shopping but more about shoppertainment a hybrid of entertainment and shopping, according to Dubai-based Himanshu Vashishtha, from AC Nielsen. Due to this nature of peoples behavior, marketing efforts should be focused on the shoppers mindspace rather than what is on offer in the aisles, Vashishtha said.
Its not about just doing the shopping, its all about the experience. People in the Gulf view their trip to a mall like a leisure activity during which various services, such as restaurants, play areas, banks and so on, are being used. This is where the marketing focus should be, not just on products.
Doha boasts a highly developed mall culture with seven large, multi-functional malls and it offers varied shopping experiences to the citys diverse population.
Walid Khoury, mall manager at the upmarket Landmark Mall, said that overall marketing efforts in Doha are focused on making the shopping experience a more holistic one. Families come here for a day out, rather than a just to shop. They spend on average about five hours in a mall. Mall marketers have been looking to capitalize on the fact that they have more time to capture the shoppers attention, he said.
Marks and Spencer (M&S), one of the key retailers at Landmark has certainly done its homework. The UK-based enterprise is a brand recognized worldwide and it has been operational in Qatar since 2000.
The flagship store in Doha has successfully translated its British image into a trusted brand but with a detailed eye on local flavor.
Most of our customers are local Qataris who were familiar with the brand before, either from their trips to Europe or the Emirates. We didnt have to do much brand marketing here, said Hany Hashem, store manager in Doha.
He said that the store is differentiating itself from its rivals with its efforts on customer service. We invest heavily on our staff training to ensure our customers get individual service and feel they are valued by us, he said.
He added that in-store efforts are more focused on individual events rather than mass marketing material.
PoS literature doesnt work here as people would not want to read about the store while they are shopping.
Fashion shows are an effective way of attracting peoples attention and showcasing new collections, he said. They can be tailored to seasons and local cultures.
Its all about knowing who your customers are, he added.
While the majority of M&Ss customers re local Qataris, the store is not ignoring other nationalities.
We may have a focus on our loyal local customers but we take into account other cultures too and build our in-store and shopping experience to our customers needs, said Hashem.
Seasonality and taking cultural differences into account works for food product marketing, he added said.
We put special food displays around different times like Ramadan, Eid and other festivities, and this has worked quite well for us, he said.
Food tasting is another in-store effort that we have found effective in Doha, he added.
Gift vouchers and price reduction campaigns built around special offer stalls are also a good way to boost sales. We did a buy a suit and get a tie and a shirt free campaign and this was very successful, said Hashem.
But some challenges remain for M&S in Qatar. Dubai is miles ahead of Doha when it comes to mall marketing efforts. Regular fashion shows, permanent stalls and displays and even high-tech displays have been utilized in the Emirates malls for years.
Many mall-based stores use tie-ins with local coffee shops and restaurants, and taxi advertising and large outdoor banners in Dubai.
Here in Doha we could use more of similar campaigns to boost the brand,
said Hashem, who has previously worked in the Emirates.
Other problems exits. One retailer wishing to remain anonymous said that mall owners in Doha are not responsive enough to marketing efforts. Two of the largest malls here Landmark and Villagio have a total market share of over 70% in all of Qatar.
The owners feel no need to put money in marketing since they dont see any tangible return from it. Many mall retailers find this frustrating as the lack of healthy competition means sales can suffer as no specific marketing efforts can be made, he said.
Khoury said that Landmark and Villagio, also the two most upmarket malls in Doha, are already tailoring their in-mall marketing to attract its target clientele, but there is room for improvement.
We have seen an emergence of multi-channel marketing here but things are happening slowly. Culture of spending money in marketing is not intrinsic to Qatar but it will eventually catch up, he said.
On average, mall marketing budgets in the Gulf are around 1520% of total marketing costs, according to Khoury. In Doha, the figure lingers at around 3% he added.
Its culturally different from other Gulf countries since there is a total lack of competition here. We tried to do a campaign with one of the newspapers but got turned down and the paper gave no specific reason for the rejection of our efforts, said the unnamed retailer. He also said that he tried to place a standalone table outside his store for seasonal promotion but he was asked to remove the table.
Every time you try to do something different or innovative, it gets knocked back. But I remain optimistic, he added.
One of the reasons for the lack of healthy competition could be the fact that Qataris in particular are very loyal to international brands. Upmarket brands like Gucci, Armani and Rolex have high brand awareness among the Qataris. The campaigns by global brands are executed at an international level and brought to Doha where they get a certain local flavor, so mall specific efforts are not really seen as necessary, said Khoury.
They knew our brand well before we launch and used to shop at M&S stores in Dubai before we opened in Doha, so we didn't have to do much brand awareness campaigning, Hashem said.
Generally, businesses in malls are responsive to new ideas and the shift from viewing mall visitors as consumers instead of shoppers is slowly happening. All large retailers are now realizing the importance of mind space rather than shelf space, but in Qatar this shift is still in its infancy. Opportunities to develop this exist in a wider scale, said Vashishtha.
Whether Qatar will eventually catch up and start deploying innovative, fresh marketing ideas, remains to be seen. But for the time being, Doha malls are still wide spaces open for customers and indeed open for marketers imagination.
The Villagio people
Gina Coleman visits Dohas first suburban mall.
Carrefour and Al Shaya Group were the first to open outlets in one of Qatars newest shopping mall, Villagio, in the Al Azizya district of Doha and just walking distance from Sports City, Khalifa Stadium and Aspire Dome.
Both were major venues for the Doha 2006 Asian Games.
Originally scheduled to open in 2005, Villagio had a soft opening but is attracting residents from the surrounding area who also visit the adjacent Hyatt Plaza mall. Today it is completely up and running.
Villagio, as its name implies, has been designed to resemble village streets both externally and internally with shop fronts set into mock building facades in the wide walkways of the sprawling complex.
The internal ceilings are painted to resemble the sky and the lamp post lighting gives the impression of shopping at twilight.
With a built-up area of 145,000 sqm, Villagio overtakes the countrys previous record, set by City Center-Doha, and is reputedly Qatars largest shopping mall, offering what the Landmark Group says is a comprehensive, yet focused mix of major retail outlets, services and entertainment activities.
They include bowling, a fun park, a roller coaster, ice rink, a six-theatre cinema, fast-food outlets and restaurant areas.
Villagio and, indeed Hyatt Plaza, are typical of the new trend in Qatar of taking hypermarkets and malls out to the suburbs and to other towns outside the capital. One of the retailers is Damas, operating in Qatar in partnership with Al Mana. Damas has tackled the market at several levels: there are separate shops selling 18 carat or 22 carat gold, all of which are located outside malls or shopping centres, and then there are jewellery boutiques, through which Damas sells its branded jewellery.
V.V. Raghunath, area manager for Damas, says: We had 14 outlets in Qatar but plan to take that to 20 and were planning to open in Ras Laffan, Wakrah, Messaieed and other cities. More and more we see that people want to shop in areas close to where they live or work.
They dont want to drive long distances or be stuck in traffic. Its our policy to go where the customers are.
Carrefour, which already has an anchor store at City Centre, opened at Villagio last August, when many expats were on leave. It took a while for people to realise the store is open, but footfall now seems to be on the increase. Independent reports have estimated the area of the new store at 20,000 sqm. However the Dubai headquarters refused to provide GMR with any details about either of the Doha stores in terms of area, staffing, footfall or retail policies.
Al Shaya opened a number of outlets in Villagio last October, with River Island, Faith, Evans, Oasis, Top Man, Top Shop, Limited Too, Body Shop, Milano, Wallis, Dorothy Perkins and Starbucks all along the same stretch on the outer edge. Virgin is one of the latest entrants.
Its early days, but business is not bad as a start although as yet its not as busy as Landmark or City Centre but once the entertainment and restaurant zones are open, I think it will take over as the most popular venue in Doha, said one manageress.
Other outlets that had opened in Villagio by last November included Claires, Reserve Naturelle, Pearle Opticians and Coffee Shop.
Bahraini cinema company CINECO recently announced its second mega project at Villagio.
Undoubtedly Villagio will benefit from its proximity to major sporting venues and from the sports hotel currently named Aspire Tower which is adjacent to it and will be the venue for major sports conferences once it is completed in 2008.
Omans Brand new opportunities
Nathalia Jones reports from Muscat on Omans dynamic retail scene where global brands are finding an increasingly warm welcome.
Omans retail scene is a buzz of activity with major investments planned over a wide spectrum of real estate development projects in the sector. This year alone saw a number of projects that included the $58 million phase-I extension of Muscat City Centre reach fruition, and more are in the pipeline.
These developments have ushered in a range of multi-national brands heralding a new dawn in retail development that has catapulted the Sultanate into the top slot as a destination of choice for many big brands.
Graham Dreverman, CEO, Majid Al Futtaim (MAF) Shopping Malls, couldnt have phrased it more succinctly when he said: Oman with its steadily improving economy is ready for a massive retail boom, at the unveiling of the phase one extension of Muscat City Centre, which is part of the MAF Group, earlier this year.
And Wayne Scherger, VP, Divisional Asset Management, MAF Shopping Malls, Oman who was also present, described the Sultanage, as an emerging market in retail and one that holds immense opportunity. The mega chain has reported 20% growth so far for this year and will introduce 60 new global brands to the Oman market.
When the expansion is completed, Muscat City Centre will have 144 outlets and a multi-level parking lot that will accommodate 2,250 cars. A dedicated flyover will directly bring customers from the Sultan Qaboos Highway into the car park. And yet this is not even the beginning of Omans retail renaissance.
In the middle of the boom, however, a question that crops up is: what is the implication of all this development for the marketer? What sort of product mileage does Oman guarantee to a brand and what business parameters does it define to justify the large scale of investment?
Its going to be a brands market in Oman, says Vineet Mehrotra country head of electronics boutique EMAX. He cites the example of the burgeoning industrial hub of Sohar that is triggering a developmental chain reaction. Oman, he adds, makes a lot of business, primarily because of all the developments in Sohar that are triggering a number of downstream industries.
The impact of this on business, he says, is phenomenal sales, since the electronics showroom opened shop in March this year at Muscat City Centre. He declined to give figures but the brands ambitious expansion plans is enough indication of its growth in numbers.
We are planning to open four more stores over the next two to three years. In fact right now we are looking for space to open an electronics standalone box in excess of 80,000100,000 sqft, he says. He does acknowledge, however, that Oman is still an emerging market and consumers though brand conscious are still price sensitive.
According to some industry sources, the other positive fallout of Omans retail boom is the growing appeal for international brands among local residents. With the widespread real estate development in retail, the Oman market has now gone global giving brand owners better mileage for their products and wider market reach.
Oman is getting to be a very interesting market obviously because of the huge development taking place and we expect more to come. We are getting to see more interest from the local crowd and Nationals who are increasingly going out to popular restaurants for instance and therefore want to bring that experience home, says Kim W. Jepsen, GM, Oasis Life Style LLC, which markets the Zone and Bodum luxury lifestyle brands.
Whereas earlier the market leaned more towards the expatriate crowd, now its an even split between expatriates and locals, he says. Zone for instance has seen an increase of 39% over last year and Bodum has increased turnover by 22% for the same period.
According to Jepsen, sales have been doubling every year over the last two years.
Catering to jet-setting Omanis who want to savor international flavors on home turf is a business opportunity few in the retail race would pass up. The tremendous response from the local market, has sparked a chain of expansion projects for popular Australian brand The Crepe Caf also located at Muscat City Centre.
Weve seen 70% growth since we opened in March this year and there are six more outlets planned for Oman over the next four years, says Ibrahim Shamsudeen, operations manager, adding one more outlet is scheduled to open this year in the chic locality of Shatti Qurum.
So far, then, Oman is playing generous and benevolent host to the plethora of brands that are expanding their market to the Sultanate for all the reasons weve discussed here.
And the good news for these brands, at least from the vantage point of all the multi-sector development taking place, is that the only way from here on is up.
Bahrains emerging landmark
GMR catches up with Bahrain City Centre, billed as the Kingdoms first entertainment, shopping and leisure resort.
Nearly 96% of outlets at Bahrain City Centre (BCC) have been leased out more than a year before its scheduled opening date report owners and developers at MAF Investments.
The three-level shopping and leisure destination, due to open Q2 2008, will have almost 330 retail units, spread out over a GLA of 150,000 sqm. A total of 317 units have been taken up since marketing began, with tenants ranging from the global brands to popular local retailers, catering to all tastes and budgets.
The latest tenant is Saks Fifth Avenue, choosing Bahrain as its third regional site after Dubai and Riyadh.
Saks Fifth Avenue Dubai GM, Rusi Motiwalla, said that since Bahrain is one of the most important emerging markets in the region, it was only natural for them to set up shop here. We consider this a very important market and one that is well-versed with the latest in fashion.
(The Saks Fifth Avenue store in Bahrain as well as other Gulf countries will be operated by Style Avenue Middle East FZCO, a company owned among others, like Damas Jewelry, KAPICO Group, Chalhoub Group Ltd, and the Al Mana Group.)
The retailing industry recognized that the BCC, with its spacious yet contemporary and visitor friendly design, is bound to be a tremendous hit with locals, expatriates and visitors to the Kingdom, said Maher Al Shaer, VP Asset Management and Business development, MAF Investments Bahrain.
In addition to being the largest shopping centre in Bahrain, BCC will also have the largest concentration of F&B outlets, numbering 54. Bahrains first Carrefour Hypermarket will be located here, as well a Virgin Megastore.
The multi-use destination will also feature the largest cinema complex in the Middle East, with 20 screens, and the biggest indoor/outdoor water park, important additions to Bahrains leisure scene.
We have attracted retailers at the cutting edge of fashion, jewelry and home ware products, including many top international brands, said Al Shaer.
What is unique about BCC is that it will cater to all income brackets. Luxury fashion brands, such as Saks Fifth Avenue, Ferragamo, Burberry, Ralph Lauren, Rolex and Roberto Cavalli, will exist alongside other popular brand names, such as Kiabi and Max Fashion, which will target shoppers who want the latest fashion trends at great prices.
About 55% of the retailers will be completely new to Bahrain, raising the Kingdoms profile as one of the most attractive retail and leisure destinations in the Middle East, he added.
Other major destinations include Debenhams, Centrepoint, Home Centre, Paris Gallery, Zara, H&M, Mango and Massimo Dutti. It will also include two hotels, a 4-star and a 5-star, offering a combined 550 rooms.
A family entertainment centre Magic Planet and a 10-pin bowling centre totalling 5,600 sqm will be another main anchor destination.
Exploring new Avenues in kuwait
GMR discovers Kuwaits newest and largest mall.
Kuwait-based real estate developer Mabanee is investing a total of $2 billion into what is touted as the largest commercial development venture in Kuwait.
Construction of The Avenues started in 2004. The mall has four phases, each one catering to a different market segment while all being built as destinations rather than just a static retail space, Fatma Al Bader, CEO, Mabanee told GMR.
The first phase, which already opened in April, offers low to medium brands, she says. With 170,000 sqm of GLA, it houses the countrys first Carrefour hypermarket, the regions largest IKEA store, a cinema complex and 39 F&B concepts.
Expected to open in early 2008, the second phase will add 60,000 sqm of leisure and retail space. It will carry bridge or middle brands such as MaxMara and Diesel.
The third phase, opening in late 2008, will be more upmarket. It is essentially a boutique mall with a spa, themed restaurants and an entertainment complex.
Lastly, the fourth phase will be completed by 2010 and covers up to 33% of the total development. The mall will feature a state of the art business centre, with four-star and five-star hotels, office space, a convention centre and a theatre.
Were building a city within a city, said Al Bader, who also estimates the retail-leisure ratio as 60-40, including the F&B concepts into the mix.
Mabanee (Arabic for buildings) currently holds in excess of 700 tenant applications from prospective tenants for the future phases.
Looking ahead, Bader added that Mabanee would pursue similar large-scale projects across the region. Company profits for 2006 are estimated at more than $34.7 million (10 million Kuwaiti Dinars).
Hanging out in the malls
Sarah Abdullah checks out of some the latest developments in Jeddah and Riyadh.
Le Mall
Developed by the Al Maddahia Group, its interior design and services are big attractions for companies and shoppers. Located on Prince Mohammed bin Abdul Aziz (Tahliya) St, a popular shopping destination for a variety of domestic and international brands.
Le Mall in detail:
Showrooms: 60+ shops and kiosks
Brands: Starbucks Cafe, The Body shop, Next, Springfield, Swatch, Claires, Office.
Etoile Mall
Contains three buildings adjacent to each other with three floors and showrooms at the front side. The mezzanine floor at the center of the building houses the head office of Al Maddahia Group while the other two floors are for offices of firms and business groups including The First Clinic, which houses 57 specialty clinics and a state of the art laboratory.
Etoile in detail:
Land Area: 20,000 sqm
Floors: Ground + 2
Showrooms: 22 + four American and Chinese Restaurants
Brands: Moschino, Boss, Christian Dior, Mamdouh Mussalli Jewellery, Jean Paul Gaultier
Mall of Dhahran
Taking only 11 months to complete and regarded as one of the most outstanding success stories of retailing in Saudi Arabia, the mall is anchored by Geant Hypermarket, Debenhams, Zara, and City Plaza. It benefits from a strong retail mix of more than 200 stores offering an array of international brands and retailer disciplines including primary franchise operators and leisure and entertainment provided by a large food court and a Sparkys Family entertainment area.
The extension is built 190,000 sqm and features 108,000 sqm of built up area resulting in 81,000 sqm of commercial space available for rent. In addition to, and with the full support of, the malls existing 21,000 sqm anchor tenant Geant, the new extension will highlight a 20,500 sqm Kika facility.
The Mall of Dhahran in details:
Land Area: 220,000 sqm
Built up area: 92,000 sqm
GLA: 70,000 sqm
Units: 331
Levels: 1
Parking: + 2,300 spaces
The Mall of Dhahran extension:
Site area: 190,000 sqm
Built up area: 108,000 sqm
GLA: 81,000 sqm
Car park: 2,850 spaces
Number of stores: +310
Expected weekly footfall: +220,000
Le Chateau Mall
The latest project by Al Maddahia Group, Le Chateau is on the Western end of Tahlia Street and is expected to be a genuine landmark for Jeddahs shoppers situated as it is in the heart of the citys brand boulevard. It will be launched by the end of 2008 with plans to lease full occupancy to international fashion houses.
Le Dome Mall
Located in Al Rouda District surrounded by embassies and offices of such as public and legal accountants, law firms and PR agencies.
Le Dome in detail:
Floors: Ground + two
Showrooms: 6 + Chinese restaurant Bamboo
Offices: 20
Malik Road Project
Reaching a new milestone in elegance and architectural design the mall is being built on King Abdul Aziz Road, also known as Malik Road, which has been witnessing a huge number of construction projects and mall development. The project is expected to launched at the end of the year.
Sahara Plaza
Riyadhs Sahara plaza was the first shopping mall to be developed by Fawaz Alhokair Group. It opened in 2002 offering a wide choice of womens fashion and childrens wear from the popular international brands. Its success is due to a constantly evolving retail mix, allowing it to continually reinvent itself and promote new brands. Additionally, the mall features a small but sophisticated electronic games zone and food court.
Sahara Plaza in detail:
GLA: 10,000 sqm
Units: + 70
Levels: 2
Car park: 1300 spaces
Weekly footfall: + 50,000
Salaam Mall
The stunning and unique faade of this first floor and basement mall offers Geant hypermarket as its main anchor store and a broad selection of international and local brands including Zara, Nine West and Xanaka. Several cafes including Seattles Best Coffee and Starbucks support an excellent food court. Leisure and entertainment are provided by Sparkys Family Entertainment area. Parking and access to Salaam Mall ensures a high and balanced flow of traffic at all times.
Located in southwest Riyadh, Salaam Mall is the sole major retail complex and services one of the most densely populated residential suburbs in KSA.
Mall of Arabia (under development)
Expected to make its debut in Jeddah in January to offer a wide selection of international brands, the Mall of Arabia is will also house facilities including an office complex furnished apartments, healthcare facilities and an international brand hotel.
The mall will be sited on one of Jeddahs primary properties near to King Abdul Aziz International Airport and is said to be scheduled to facilitate the debut of Kika, a franchise agreement between Fawaz Al Hokair Group and the one of the largest Austrian furniture chains in Europe. The mall will also host the debut of Best, a multi-brand speciality electronics retail store, which carries more than 20,000 items from more than 200 international brands.
Mall of Arabia in detail:
Land area: 109,000 sqm
Built up area: 261,000 sqm
GLA: 115,000 sqm
Floors: Ground + 2
Unit: 320
Food and entertainment area: +15,000 sqm
Parking: + 3000 spaces
Weekly footfall projections: + 300,000
Anchor stores: Geant, Zara and Debenhams
Hotel: + 250 rooms
Office complex 4 levels: 14,000 sqm
Mall of Arabia extension:
Land area: 54,000 sqm
GLA: + 70,000 sqm
Kika: 25,000 sqm
Best: 5,000 sqm
Retail: + 35,000 sqm
Apartment complex: 200 units
0ffice complex: + 14,000 sqm; 4 levels
Dubais Deira City Centre $95 million redevelopment
In line with its $95.3 million redevelopment strategy, Dubais Deira City Centre (DCC) will be opening 24 outlets by September. Brands include Splash, Shoe Mart, Mothercare, Pablosky, Wrangler, Borders, Bateel and Boots.
The project to house the new stores alone is said to cost around $1 million. With the new additions, the total number of retailers in the centre will rise to 370. Facility upgrades started last year and aims to improve customer experience and retail mix. DCC already houses the biggest Next store outside the UK and will accommodate Gap and Banana Republics first full range stores in the region.
Despite the building activity, the centre has met its targets for last year in terms of visitors and sales, Fareed AbdelRahman, VP, DCC.
In the first quarter of 2007, we welcomed more than 5.3 million visitors which is 3% higher than the same period last year and our retailers have recorded a 6% increase in sales compared to last year.
Quick off the mark: DSC offers 1.7mn sqft of retail space
Dubai Sports City (DSC), described as the worlds first integrated sports city, is planning to develop more than 1.7 million sqft of retail space across three distinctive destinations: the Arena Mall, North Point retail and commercial hub and South Point retail and commercial hub.
All three are expected to open fourth quarter 2009.
The largest, The Arena Mall, covers about 1.4 million sqft of GLA spanning two floors. Tenant mix will consist of speciality stores, everyday shopping outlets, and sporting and lifestyle products. Fast-food outlets and CDRs, along with a multi-screen cinema and a sports-themed entertainment zone are also included.
An estimated 70,000 individuals are expected to live and work within DSC.
Besides being linked to the 10,000 multi-purpose indoor arena, The Arena is close to the cricket stadium and the multi-purpose stadium.
With an exciting calendar of sporting and cultural events planned for these venues, tenants at the Arena Mall are in a great position to benefit from strong brand exposure, said Khalid Al Zarooni, president of Dubai Sports City.
The second area is the North Point, DSCs larger retail and commercial hub. It will have a combination of up-scale casual dining and boutique shopping with views of the waterfront promenade, outdoor seating and a Riviera-style atmosphere. It will offer a GLA of approximately 210,000 sqft across 92 retail units.
Close to offices and the residential area, North Point is positioned as a destination for staff and residents. With investments of up to $3 billion, the 50 million sqft DSC is the cornerstone project of Dubailand. It will be surrounded by four stadia with capacity ranging from 10,00060,000 seats.
DSC will also house The Dunes, an 18-hole championship course designed by golf legend Ernie Els.
In addition, the development will feature a series of major sports academy facilities including the first purpose-built Manchester United Soccer Schools.
Chilling in the UAE
The UAE sees its first sub-zero cafe lounge with the opening of Chill Out at the also recently launched Times Square Center (TSC).
The first retail development venture for Sharaf Group, TSC is positioned as a community and family-oriented centre.
The malls anchor is the Sharaf DG store, which is claimed to be the largest one-stop electronics store in Dubai. As for Chill Out, the own-brand concept has been designed completely in ice from its interiors to its utensils.
Other outlets at the shopping center include a mix of new and established names such as ToysRUs, InterSport, Joebloggs, Duxiana, Nayomi, Bayti, Karisma, Mikyajy, and Caribou Cafe.
Bahrain City Centre: Fact file
Biggest shopping centre in Bahrain
Ownership: MAF Investments
3-level centre
Mixed-used regional shopping centre
Contemporary design with traditional elements/ quality finishes
GLA:150,000 sqm
Biggest indoor/outdoor water park in the Middle East
Biggest cinema complex in the region
First Carrefour Hypermarket in Bahrain
Wide selection of international and local brands
Exclusive fashion brands
A must-see destination for both residents and tourists
The One finds second home at The Avenues
Home fashion brand The One is settling into its second home in Kuwait home at the recently launched shopping centre, The Avenues.
The first boutique theatre in the country is at the Marina Mall, which opened in 2002.
Thomas Lundgren, inventor of THE One attended the opening with his partners, Rashed Al Mazroui and Shakir Abal.
Debuted in 1996, UAE brand THE One Total Home Experience has also expended into Bahrain, Jordan, Qatar and Sweden.
Gulf Marketing Review 2007
