Department stores are back in fashion in region

Majid Al Futtaim Group confirms plans to align with global name for its new malls

Image Credit: Arshad Ali/Gulf News
MAF Fashion CEO Rajiv Suri said the Majid Al Futtaim Group plans to close a deal with a globaldepartment store brand by the end of next year.
Gulf News

Dubai: The department store is back in fashion in the Gulf.

The upcoming launches of Macy’s and Bloomingdale’s in Abu Dhabi [at the in-development Al Maryah Central] as well as that of Singapore’s Robinsons [at the Dubai Festival City expansion] represent a strong revival of interest in the concept. And there could be places for more to come.

The Majid Al Futtaim Group is on the lookout for an alliance with an international brand and which could potentially be fitted into some of its bigger malls under development. Of particular interest would be to find one for its malls in Saudi Arabia, where the UAE company is building two such destinations at a combined SR14 billion.

The head of Majid Al Futtaim Fashion, Rajiv Suri, declined to mention the identity of the department store brands it is talking to, or whether they were American or European in origin. But he said that the local group will be aiming for significant synergies from being the owner of the property where such a store would be located as well as being the local/regional partner.

“There are a lot of reasons why we think it’s good to get into that area,” said Suri. “We could integrate the design [for the department store] at the time of building a mall.

“If you go to Harrods or Harvey Nichols, what you get is an experience in terms of a wide selection of goods and in the number of F&B options available within. You see stores that are 120,000 to 150,000 square feet. Here it usually tends to be half that. Then you only have half the things [in merchandise availability].”

The Group hopes to close a deal with a department store name by the end of 2017 or so. Wouldn’t that cut into the time required to build up the concept within the malls under development?

“It’s a long process [to seal a deal] — if we begin discussions with some people, we could get an idea of what needs to be done [on the development side],” said Suri. “If they want to come to Saudi Arabia, they will typically rely a lot on local advice. That’s what we can provide because we have those projects in development.

“But it’s still three to five years before the Saudi malls are complete, and that leaves enough time to align with a potential department store owner.

“The Saudi landscape is ideal for department stores — it only has one Harvey Nichols while Saks has closed. For a market of that size, that’s nothing.”

Until the last 10 years, department stores were seen as an ideal fit for the Gulf’s retail scene, with consumers able to pick up many of their choices from a single store. But then came the mono-brand revolution, where every label worth its name wanted to have its own stand-alone outlet rather than share space in a multibrand department store.

But then came the entry — in quick succession — of Macy’s and Bloomingdale’s as well as that of Galeries Lafayette into the UAE, and having a department store as a destination in itself was back in vogue. Similar trends were at play at mall developments in Kuwait and Qatar, and now it looks set to be shipped into Saudi Arabia as well.

With all of the big names already represented, who is Majid Al Futtaim Group going to pick? “There are still a few brands left,” said Suri. “In the US retail landscape, there are 1,500 such stores. This number pretty much has remained the same in the last eight to 10 years, some of them have changed and others have closed as they moved from the high-street to retail parks.

“On the one hand you have a market — the US — that is saturated. On the other, there’s Saudi Arabia where a department store presence is a near zero. There’s certainly some space there for global department store brands to grow and where we can provide the local know-how.”

Suri made it clear that a new brand will not be accommodated at any of the existing malls in its network, as that would only end up hitting sales of existing tenants.

“We have eight or nine malls in various stages of construction (and) we are looking to bring them to these malls,” said Suri. “That would build on our own or licensed anchor tenants — the others being the (Vox) cinema, Magic Planet and Carrefour.”