Max, the UAE-based value clothing retailer, is investing $80 million in opening 75 stores across the Middle East and North Africa (Mena) and India to capitalise on high-growth markets and large populations, according to Max’s chief executive officer, Ramanathan Hariharan.
Max, which currently has 225 stores in 15 countries, is on track to hit a revenue target of $1.25 billion (Dh4.59 billion) in the financial year ending June 2013, he said. The company achieved 23 per cent growth last year and plans to sustain this rate in 2013 while working towards becoming a $2billion brand in the next two to three years.
Its growth strategy is to reinvest some of this revenue in existing and new markets, he said.
This year, Max is set to open stores in existing markets like Saudi Arabia, Egypt and Nigeria as well as new markets in Africa including Tanzania and Kenya, according to Hariharan.
Saudi Arabia is the fastest growing market in terms of revenue growth for Max, raking in $600 million last year, while Egypt had the biggest growth rate with a potential of 80 per cent increase in business, he said.
Business in Arab Spring countries like Egypt has seen some “ups and downs” but the company stands by its investments there, he added.
“As a group we had taken a long-term view of the country. We entered before the revolution and expanded through the crisis. We continue to invest there,” he said. “We have not seen any interruption to business.”
Buyers from Iran, Iraq and Africa who make wholesale purchases from Max to resale back home, make up an small part of Max’s local sales. UAE residents, rather than tourists, make up 95 per cent of local sales, he said.
Last year, Max added 10 stores in the UAE, bringing its total outlets to 25. It positioned itself in Deira City Centre, Mirdiff City Centre and Dubai Mall for better brand recognition, which helps break the preconceived notions some people may have about value clothing, he said.
“Value fashion is a great market. It makes it aspirational for people who shop at discount outlets [such as hypermarkets]…it is doing very well,” he said.
The challenge now is to stay competitive amid the growing number of retailers entering the market, he said. “If markets don’t improve, this could put pressure on retailers to discount and this could be an erosion on our margins. We have not reached this stage now, there’s still room to retain our margins,” he said. “There are no new malls so supply won’t go up.”
How does he see the retail sector’s performance this year?
“2013 should be better than 2012. Investments are coming back, this should help economic activity and consumption, which should help retailers.”