Fashion retailer plans to increase the number of stores to 300 from 125 now by end 2008
Liwa Trading Enterprises, one of the leading fashion retailers based in the UAE, clearly seems to be on an expansion spree. This year the company has already opened six stores in Festival City, four stores in Al Wahda Mall and two stores in Raha Mall.
The company's general manager, Aniss Baobeid, is very excited about his company's growth. "We are planning to open four more stores in Khalidiyah Mall and three stores in Marina Mall Extension next month. By the end of September, we would have opened around 15 stores in the UAE," he told The Business Weekly.
Liwa Trading Enterprises is a part of Al Nasr Holdings, a major business group incorporated in Abu Dhabi in the year 1977, with main business interests in the oil sector. Apart from Liwa, the group has 14 subsidiary companies.
Man of vision
In 1987, the chairman of the group, Abdulla Nasser Hawaileel Al Mansoori, felt the need to diversify the company's activities in order to reduce the group's dependence on oil-based projects. He conducted a detailed study of the market and found that there was a big gap in retailing. And towards the last quarter of 1987, the company took the franchise of British Homes Stores (BhS) and thus the first organised retail department store in the UAE was established in Abu Dhabi.
"When we opened the first Liwa Trading store, people here were very much used to discounts and bargaining. Slowly they started understanding organised retail and accepting fixed price sales," Baobeid said.
Eventually, Liwa Trading signed up with many world brands like JC Penny, Gant, Florsheim, Premaman etc. The company opened its stores Dubai and Sharjah and gradually expanded its wings into other GCC countries like Bahrain, Qatar, Kuwait and so on.
Currently Liwa operates and manages in excess of 250,000 square feet of retail space in the region. "Now we are present in all the GCC countries besides Egypt, Jordan, Lebanon, Yemen and Pakistan. We are also planning to go to northern Africa and CIS countries shortly," Baobeid said, adding "Today we have 125 stores and our aim is to have 300 stores in total by the end of 2008."
Baobeid denied any plans by the group at present to go public or invite private equity participation and said all the expansion moves are being funded only by internal accruals.
"However, I can not speak on behalf of the whole group. But as far as Liwa is concerned, as of now there is no such plan," he said.
Though the company has grown by leaps and bounds since it opened its first store in 1987, the growth has not been without any setbacks. In the year 1991, when the Gulf War broke out and, like all other business sectors, retail was affected very badly and Liwa suffered huge loses. But once the war ended, business started picking up in a very big way and competition intensified. Many shopping malls came up at several locations in the region and tourism started growing. Since then, the company has had no looking back.
Though Baobeid doesn't want to comment on for how many years this kind of a growth will continue, he is very optimistic about the boom and has full confidence in the country's well-studied development projects.
Though he was reluctant to reveal the exact figures of the turnover of the company, he said the company has been witnessing more than 30 per cent growth every year in the recent times. For the last two/three years, because of the economic boom and high tourist inflow, the growth has been up to 50 per cent, according Baobeid.
He said Liwa Trading's aim is not to become the largest retailer in the country. "We are not the largest retailer. We do not want to be the largest either. But we are surely one of the best in the UAE and want to remain so. We want bring in good brands, give good service and good value to our customers," he said.
Regarding brands, Liwa Trading is very much focussed on what it wants to achieve. "We don't want to bring in 40 to 50 brands, because 70 per cent of them are not making money. They are a waste of time and effort for us, as well as for the customers," Baobeid said. "If we bring in a brand, it has to be a really good one that is appreciated by people worldwide," he added.
This year, Liwa Trdaing opend three Nautica stores in Dubai and will be opening two stores of another major brand called Le Sanza Express, a new concept from the famous Le Sanza brand. The first store will be opened in Marina Mall extension later this year. The company is looking at opening new stores in some other existing malls in Dubai as well. "We will be investing up to Dh100 million to open new stores in the next two years," Baobeid said.
Liwa trading will have its presence in all the new malls that are coming up in Dubai. "We have already reserved very large spaces in Dubai Mall and Mall of Arabia for all our brands," Baobeid said.
Besides opening new stores, Liwa Trading plans to bring in some more world-famous brands to the UAE very soon. "We are working on some new brands, the names of which I can not reveal at this stage," he added.
Baobeid ruled out any plans by his company to enter India or China, two other major retail markets, in the near future. "However, we are present in Pakistan, where it has been a good experience. We have five stores over there," he said.
Employees have always been the strength of the group. In the UAE, more than 550 employees are working in 80 stores now. In total, the company has around 800 employees in all the outlets.
Competition
Baobeid is not worried about the intensifying competition in the market. "We are happy about the increasing competition. It is better for the market and it keeps us on our toes. We keep learning from our mistakes and improve our services accordingly. So, we are not afraid of competition. On the contrary, we are happy that the market is improving."
Major challenges
Shortage of skilled personnel and 'exorbitant' rents are the two major challenges the country's retail sector is now facing, according to Baobeid.
"Landlords are charging very high rents for space in shopping malls because of the huge construction costs," he said.
"The other major problem we are facing is the non-availability of experienced staff. We are always in contact with colleges and institutes to get new people, whom we can train and take forward," Baobeid said.
Diversification
Baobeid does not rule out the possibility of Liwa Trading getting into areas other than fashion retailing. "In retail, everyday you learn something new. I can't say what we will do tomorrow. We are always getting into something new. It is too early to say what exactly we are planning to do in future."
By Pradeep Palat
The Business Weekly 2007
