Dubai: The slump in sales so far this year is posing challenges for clothing retailers across the GCC region. As last year's boom balks at drops in mall footfalls and sales, industry players are both keeping an eye on trends across the GCC markets, and adopting plans to stay on top.
Anil Menezes, general manager of the fashion brands division at Jawad Business Group, pointed out the importance of monitoring specific markets.
"[The situation] is different in different markets," he said. "The Bahrain and Oman [markets] have taken a bit of a beating.
Established in 1987, the Bahrain-based Jawad Group hold franchises for a number of fashion brands including Monsoon, British Home Stores (Bhs), and Adams childrenswear. Menezes said that although the current tough economic climate was a factor, Bahrain and Oman's slump was also a result of 'cannibalisation' as more new shopping malls open their doors.
"Qatar and Kuwait are showing growth," he added.
In the UAE, he says, there's an overall drop in footfall compared with last year in Dubai. "We're looking at between a 10 to 15 per cent drop in footfall. Abu Dhabi is holding this year."
Low-end entry price point fashion brands that are less well-known are suffering the most, said Menezes, as 'young fashion' loses out to globally recognised and trusted brands such as Monsoon.
"The challenge is in the fashion market," he said. "Especially in the mass market fashion, the mid market. This is where we have seen the biggest drop, around 15 to 20 per cent."
Menezes believes the drop in sales in certain Gulf countries, and in Dubai, is not simply a result of the economic crisis, but it is also related to mindful shoppers who have become more accustomed to waiting for sales before spending in uncertain times.
"There's a huge amount of discounting at the moment," he said.
"The consumer has realised that this is happening every month."
As a result, he said the Jawad Group is hopeful that a dip in sales so far this summer will be compensated later in post-Ramadan sales as mall-goers finally begin to spend more.
A notable reaction to slowing sales by retailers is the challenge of keeping rents in order. As last year's boom cools, so too should the price of retail space, said Menezes.
"We are now challenging the landlords on rent," he said. "They've got to be part of what is going on with our trade. When the going was good everyone was increasing rents."
His company is going to landlords with their sales figures when challenging any possible rent increases, and the response is much more pragmatic than last year.
"Today is not the time for any rent increases," said Menezes. "You can see the difference when you talk to the landlords and they are realising that we need to be partners in the long term."
Although he remains upbeat the current challenges are temporary, the Jawad Group's expansion plans for next year are cautious.
Including restaurants and clothing shops, last year the group opened 140 stores in the GCC.
Last year it had planned to open around 80 more, a figure that now stands at around 50.
Bearing in mind the current market trends, the group is holding back on less recognised brands and less high-profile malls. However, stressed Menezes, where an opportunity presents itself to open in a prestigious location, they are still going ahead.
"Given the environment today we have said that we should hold back on average malls and average brands," he said.
"We've got a commitment to 50 stores this year and 40 to 50 for next year."
By Jane Ferguson
© Gulf News 2009
