Business | Retail

Virgin looks to expand in UAE

Success of Dubai Mall store spurs firm to consider opening in Abu Dhabi and Al Ain

  • By Aya Lowe, Staff Reporter
  • Published: 00:00 October 25, 2011
  • Gulf News

  • Image Credit: Francois Nel /Gulf News
  • Nisreen Shocair with Simon Marshall, Mohammad Al Fahim, Mohi-Deen Bin Hendi and Milesh Khalkho during a discussion on the ‘Shape of the Middle East retail 2011-15’ at the Index 2011 exhibition in Dubai.

Dubai: Following high footfall and sales at its new store in The Dubai Mall, Virgin is looking to expand to Abu Dhabi and Al Ain in the next 12 months.

"We thought the opening would take away our customer base in the City Centre and Mercato locations, but The Dubai Mall has its own specific footfall," said Nisreen Shocair, president of Virgin Middle East.

"We are doing exponentially compared to 2008 and when profitability is there you need to invest more cash where possible. Dubai is quite saturated at this point, so we're looking at Abu Dhabi, Al Ain and, after that, countries in the other areas."

Developments

Where Virgin does not have a location, the company will look at the new mall developments in the country, according to Shocair. Within Dubai the company is looking to increase its presence by opening more standalone stores of about 100 square metres.

Virgin is looking to open three outlets in Doha and three in Egypt, with their first to open in December in Mall of Arabia. Shocair said they are also considering branching out into Central Asia to markets such as Azerbaijan and Kazakhstan.

Based on market research done some time ago, "we found our customer demographic was made up of 90 per cent males over 35 and we wanted to change it," said Shocair.

"We've made the place more fun and family oriented and now the ratio is 50:50 male to female and 50:50 singles to family."

Following a drop in tourist footfall during the downturn, Shocair said they also concentrated on promoting their products to the local market and relying less on the waning tourist traffic.

Big lesson

"Year 2008 taught us a big lesson in regard to tourists and the local market — today 60 per cent of our customers live in the country. We changed the product name and location to target people living in the area."

While music stores continue to do badly in the UK and US, at the launch of their Dubai Mall Megastore, Virgin reported a 30 per cent spike in sales following an increase in Gulf shoppers who opted to visit Dubai because of the various conflicts in the region.

This year, Virgin Megastore made its debut at Gitex Shopper offering discounted accessories and bargain bin products.

Shocair says that sales weren't as good as expected and they only reached 50 per cent of their predicted targets. "It will be better next year; it's very competitive and we should have had a better set-up," Shocair added. "Next time we'll have a bigger exhibition and we'll focus on accessories. This year we were offering 2,000 products, next year we'll have 20,000."

Nokia recognises Mena market's potential

The Middle East and Africa markets offer a lot of potential for retail brands, according to Mark Kotze, Nokia's director of sales for the Middle East and India.

The market is worth $1 trillion (Dh3.67 trillion) and holds six out of the ten fastest growing GDPs between 2010 and 2015.

However, it is a market of massive polarisation comprising the richest and poorest consumers in the world and is also the most politically unstable area in the world, he said.

"The opportunity in the market is there, but it's also an easy market to make a loss in," Kotze added. "Governments are difficult to deal with and can change their rules quickly.

"There are also different languages which represent a major challenge for retailers who want to get local in the market."

High-end brands

From a consumer perspective, Kotze said a lot of high-end brands do well in this market where an estimated three million households earn more than $300,000 a year.

This is reflected in a recent report by CBRE which labels Dubai the most popular retail city in the world, attracting 56 per cent of all international retail brands surveyed.

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