Dubai: Financial uncertainty coupled with tightened customer purse strings have created opportunity for value retailers such as Redtag, which recently opened its 53rd store in the Gulf.
Having thrown open the doors to its new store at Dubai's Al Wasl neighbourhood, the brand aims to double its outlets within three years. By offering quality clothes and home items at relatively more affordable prices than their higher-end competitors, Redtag says it is enjoying rapid expansion thanks to customers who are searching for ways to stretch their dirham.
For example, high-quality T-shirts commissioned from manufacturers by Redtag are flying off the shelves at Dh17 apiece. The format is working, said Ernest Hosking, CEO, in an interview to Gulf News.
"I hate to say this but in some ways, the recession almost played into our hands because we are so affordable," said Hosking from the outlet at the Ibn Battuta Mall in Dubai.
When the financial downturn hit in late 2008, "people started looking for alternatives," said Hosking, and for the last 18 months a segment of converted shoppers have subscribed to the cheaper business strategy. Hosking said that Redtag's slogan, ‘Rediscover Value' reflects the latest trend by consumers hunting for better buys that fit within tighter household budgets.
Solid future
For proprietary reasons, Hosking declined to divulge the increase in footfall and the corresponding spike in sales. But, he said the company is capitalising on the present to lay a more solid future for the company and its 1,500 employees.
"In the last two years we are becoming more confident [and] getting nearer to our target," he said, noting the company is planning on a raft of new store openings in the coming months.
"An additional 16 stores will open by next February, six opening in the UAE. Three will be in Abu Dhabi, one will open in Fujairah, one in Al Ain and another is set to open in Ras Al Khaimah."
The six new stores will bring the Redtag outlets in the Emirates to 12. There will also be additional ones in Qatar and Oman as well.
With such an ambitious timeline for store openings in the new year, one might believe there would be little time left in the working day for forward planning. But Hosking said the company is planning another 14 stores by 2012 with even more planned in the coming years.
"We really do feel that within the next three years, we should see 100 stores and this is not just us throwing numbers around," he said.
Most of the new stores will be in the order of 1,600 to 1,800 square feet based on the consumer tested Redtag model now in place. The retailer has also gone for smaller footprints of 1,300 square feet to meet existing mall spaces.
"We have modified our format, rationalising our assortment to squeeze it into smaller spaces," he said, pointing to the Ibn Battuta store as a prime example of a downsized model that works.
Senior Redtag executives are eyeing markets farther afield as well as expanding beyond the GCC region. The company has created a new international division which will focus on the Mena region. "We've already has some exploratory discussions with people in Jordan, Egypt and Yemen," the CEO said.
The other task is to standardise all stores within the network owned by BMA International, which also owns the Géant hypermarkets franchise.
In 2006, BMA officials decided to create one standard brand, Redtag, for all of its stores. For the last four years conversion of its other well-known stores over to the new brand name has been taking place.
There are now 36 Redtag stores, but "17 other stores are still under the old format," said Hosking, under brand names such as Sana, Jamil Fashion, Discount Home Stores, Last Chance and S'maa.
Unique identity
The new synergy of the Redtag brand matched with intensive trending efforts to find a unique identity for the chain is helping, he said.
Contracted trending companies spend a great deal of time, he said, monitoring fashion and home trends in the marketplace to give Redtag's decision-makers the latest on what's in and what's not.
"We spend a lot of time trending. Using outside fashion services, you have to interpret it correctly for our customers. You need to be consistent with your stock."
Striking the delicate balance between offering products that people will use and that they can also afford is the absolute key to a sound tomorrow. "The driver for me is one thing - value," said Hosking.
"Being in value retail, you don't want to be perceived as cheap and nasty."
