It's all in the detail

There is no doubt that the retail sector throughout the Middle East is currently experiencing its most dramatic and exciting period of expansion and maturity.

Yet there are some question marks that arise over both the level of retail space that is coming on-line, and the way in which this space is taking shape in the retail outlets and malls.

Although the levels of retail-based real estate developments are testament to the fact that the growth we are witnessing is setting new benchmarks, (not only throughout the GCC, but also around the world), it would appear that the sector is lacking in 'attention to detail' with respect to the long-term strategy of the many mixed-use developmental and structural monoliths coming up.

In Dubai it is very easy to run out of fingers on which to count the number of such developments that are due to come on-line in the next five years or so, especially when considering multi-tower development sites such as Business Bay, where many of these buildings are on top of retail-based podiums.

Strong brands

However the future and long-term success of such retail sites, lies not in their size or architecture but in the acquisition of strong, well recognised and desirable brands to fill the spaces within them.

As any retail buyer or merchandiser worth their salt would tell you, the trick to achieving consistently high margin sales and sell thru's is in having the right stock.

While there are many variables in achieving this stock, the principles of the width and depth of stock can be rolled out on a more macro level when looking at the retail tenant mix for a mall or mixed-use development. It is for this reason that investment in global sourcing of stores, brands and retail ventures is what will distinguish the more successful sites over those that opt for the safe option of filling their malls with brands that already have a heavy local presence.

Until recently, there seems to have been little genuine investment in new store and brand sourcing in these markets and because of this, many of the malls and boulevards often find themselves competing on a like-for-like brand basis with little to differentiate themselves from each other.

Tussle

As such, the recent tussle between Japan's Fast Retailing and Dubai's Istithmar for the US-based upscale department store chain Barneys in New York, as well as the Qatari-backed Investment fund Delta Two's ongoing bid for the UK-based grocery chain Sainsbury's are important to the long-term credibility of the Middle East's retail sector.

It is not the fact that neither of these brands may never reach these shores, but that a much more global view is being taken by retailers. With the advent of the retail investment houses attempting to broaden their reach, these new, more global interests show that there is increasing strength in depth, and global awareness of the future retail brand product mix of the Gulf.

What this will mean for consumers is that, if normal market dynamics take place, acquisitions such as these will lead to a top down filtration of brands, making our mall trips all the more exciting.

The writer is head of GRMC Retail Services, Dubai.