Older Dubai malls change retail mix to win consumers

Dubai: Malls here that were once bustling with shoppers are trying to maintain their lustre as new malls open in the city.

The malls are faced with lower footfall as shoppers flock to the newer shopping centres. So to be relevant and appealing to consumers, older shopping malls are expanding or changing their offerings to be in line with what consumers want, industry analysts say.

“Many of the older malls are suffering as a result of the increased competition …[so they] are repositioning themselves to offer a distinct and different offering to other malls. In recent years we have seen a number of the “first generation” of malls add major extensions or refigure their original offering significantly — these would include Wafi, Burjuman and Festival City,” Craig Plumb, head of research at global real estate consultancy JLL, said by email.

The pressure to reconsider their retail mix and overall positioning also comes as international brands, especially those in the high fashion segment, focus solely on high footfall malls, according to Matthew Green, head of research and consultancy for the Middle East at CBRE.

Al Ghurair Centre, one of the city’s pioneering mall destinations, underwent a Dh2 billion expansion in 2013, adding 130 outlets. It said last year that it will invest an additional Dh60 million for more renovations, including a Carrefour hypermarket, more than 50 new retail brands, as well as a youth zone, consisting of fashion brands such as Billabong, Roxy, and Elements.

Expansion

The Dubai Festival City Mall, meanwhile, is undergoing a Dh1.2 billion expansion that will raise its retail and entertainment offerings.

The multiphase expansion, expected to be completed by the second quarter of 2016, will increase the gross leasable area to 2.4 million square feet (from 2.1 million square feet). There will be 420 new outlets open after the expansion.

The new additions are expected to boost footfall from the low 20 million a year into the mid-20 million.

Also, older malls on Jumeirah Beach Road are changing their tenant mix to create different offerings to attract customers, Plumb said.

“One of the features of these older malls is their higher percentage of [specialist] ‘mum and dad’ operators compared to larger malls elsewhere in Dubai which are dominated by larger brands. This provides the smaller and older malls with a ‘point of difference’ which attracts consumers from all across Dubai,” he said.

Popular hang out

Jumeirah Beach Road, which has shopping centres like Town Centre and Mercato Mall, is becoming an area where people socialise rather than shop, according to Jarmalaite.

“Jumeirah Beach Road has now been translating its image to a popular place to meet or hang out, while a decade ago it was a popular shopping area,” she said.

While retailers in older malls do not get the high footfall in newer malls, they enjoy lower rental rates. Store rentals in Dubai’s prime malls range from around Dh5,500 to Dh8,000 per square metre per annum, depending on factors like the unit size, floor, retailer type and positioning within the centre, Green said.

“Prime malls are able to achieve significantly higher rentals rates than the wider market, whilst also generating higher sales and footfall as a result of their appeal to the leisure and tourism markets,” he said.

Even with new malls set to open in Dubai, such as the one at the Mall of the World project and Meydan One mall, older shopping centres can still survive as long as they offer “independent and well respected brands”, Plumb said.