DUBAI: While Dubai is known for its luxury retail brands, middle-market alternatives are seeing higher demand than in the past with the current economic upswing.

Demand was sluggish in 2009 and 2010, but strengthened with the recovery of the local economy in 2012 and is being driven by increased spending by the middle-class, explained David Macadam, chief executive and vice-chairman of the Middle East Council of Shopping Centres.

Nikola Kosutic, research manager at research firm Euromonitor International, said the number of hybrid shoppers, those who buy products across different segments, will grow.

“More and more luxury buyers are buying more products from the economy and mid-market segments,” he said.

Some of the mid-market players recorded a surge in sales last year, indicating the positive sentiment in the market.

“Some of the mid-market brands were up 40 per cent in their sales [2013 over 2012],” Macadam said on the sidelines of RECon Middle East and North Africa 2014, a three-day retail event in Dubai.

As the market becomes more favourable, investment companies are looking at franchising opportunities with international mid-market brands that are yet to enter the region.

For instance, Al Ghurair Retail, part of Dubai-based Al Ghurair Investment, is expanding its portfolio of mid-market retail brands, adding the likes of French clothing label Morgandetoi and Prenatal, which sells clothing, accessories, toys and toiletries for mothers and children.

Also, Landmark Group is expanding its mid-market brands, such as Babyshop and Home Centre, in the region. In the UAE alone, it expects to open 50 stores by next year.

Start-ups are jumping on the bandwagon and are launching brands in the mid-market segment.

“There are some coming into the market — there have been a number of operators that I have seen in Dubai in the last year and a half,” Macadam said.

Currently, the share of economy and midmarket brands in the Dubai retail market is “lower than the global average by a lot. This is a consequence of the luxury segment being so developed,” Kosutic said. Dubai takes the third spot globally in terms of spend per capita on luxury goods, he said.

Euromonitor forecasts the growth of economy and mid-market brands in Dubai to be higher than that of luxury over the next five years.

The UAE retail market is expected to be valued at Dh121 billion in 2014, of which the economy and mid-market segment represents 94 per cent, according to Euromonitor.

While mid-market brands are likely to grow their presence in Dubai in the coming years, they face challenges, particularly a lack of suitable locations.

“The biggest impediment to mid-market brands expanding as quickly as they want is a lack of suitable shopping centres. The biggest shopping malls, like The Dubai Mall and Mall of the Emirates, have a line-up [of tenants],” Macadam said.

He added that many such brands have debuted in Abu Dhabi malls, such as Deerfields Town Square. He expects Yas Mall, which is expected to open next month, to attract mid-market players.

“In 2015, when we get new venues, there will be a lot more opportunities for more brands. When that happens, you create an opportunity for more sales — I think we will look at another 5 per cent [in gross annual sales],” he said.