Shoe companies seeking to grow

Dubai: UAE retailers said shoe sales have dropped as consumers continue to hunt for bargains and tourist spending slows, industry sources said.

However, retailers said they were certain the country's shoe retail industry would rebound this year, if signs of recovery in the local shopping sector was any indication.

Also, retailers indicated they were grateful for the Dubai Shopping Festival and back-to-school promotions which had helped cushion the impact of lower consumer spending.

Shoe retailers also said expansion plans were afoot, with some retailers keeping an eye on Abu Dhabi's prime locations.

"Indications are that the downturn in trade has impacted Dubai more than other emirates in the UAE," Shoe Mart general manager Raymond Healy said.

"This seems due mainly to the decline in tourist numbers and a perceived exodus from the emirate during the recession.

"Sales values shrunk in 2009 (against) 2008 due to more customers in search of bargain prices and as a result, quantities sold from year to year remained stable."

Healy said Dubai would continue to be a "tough trading area" and a discount-driven market for some time.

"The good thing is that some malls are bouncing back faster than others, which is encouraging," he said.

Advantages and gains can be made in other emirates this year.

Kurt Geiger general manager Mohammad Iqbal Yacoub Ali said shoppers were still buying, but the trend was different from previous years. "We still sell the same number of units, but the value has gone down," he said.

"People have become more promotionally driven and are more drawn towards offers, hence they shop more during DSF, Eid, DSS or any other in-store promotions," he said.

Ecco Middle East commercial director Nimal Perera said there has been less demand from tourists.

However, Perera said the overall performance of the region's shoe industry remained positive.

"Ecco operates in 12 markets in the GCC and Middle East," Perera said.

"In 2009, all these markets had positive growth against 2008 sales, except for the UAE.

"In the UAE, particularly in Dubai, we have seen fewer high spending tourists visiting the malls, and sales in Dubai have definitely dropped due to this reason.

"However, this does not mean the demand for footwear has gone down in the UAE due to the crisis. Ecco has noticed strong demand growth during specific periods such as back to school, Dubai Shopping Festival or during various promotional activities."

Perera said the UAE retail industry would have an "uplift" in 2010, although it would not reach the levels retailers had been hoping for.

"Ecco has already seen very good results in its new spring and summer collections, launched during the Dubai Shopping Festival with some styles already selling out within a few weeks," Perera said.

Despite the decline in revenue, shoe retailers indicated they were still keen to expand their businesses.

Shoe Mart, which has 26 outlets in the UAE, plans to open its 27th store at the new Mirdif City Centre and beef up its business in Abu Dhabi.

"Abu Dhabi is an opportunity area," Healy said.

"It has shown resilience in the recession and, with the developments taking place in this emirate, we feel it is opportune to be there in a big way."

Ecco, which has 15 shops in the UAE, also plans to open at least 12 new stores in the region this year.

"We are aiming at expanding our shop network in Abu Dhabi, once some of the new premium retail properties will become available," Perera said.

"Last March 16, we opened two shops in the new Mirdif City Centre."

The UAE's footwear market is reportedly worth more than Dh1 billion a year, with leather shoes accounting for about 30 per cent, and the rest belonging to textile, plastic and rubber footwear.

Since the UAE is not home to a huge number of shoe manufacturers due to the lack of local raw materials and labour, retailers source their products from various parts of the world.

The removal of trade barriers through globalisation has seen the migration of a significant part of the footwear industry from the West to the Far East, particularly China, one of the UAE's biggest shoe suppliers.

However, Healy said the "depth of range" they provided to their customers had placed Ecco in a unique position to be able to source from other major markets, not just China.

They obtained their products from India and as far as Brazil.

"By doing so, we can cater to varying customer needs in different malls across the UAE and GCC," Healy said.

"Competition will always impact on you. The trick is to learn faster and act smarter and quicker to changing trends and customer demands."

By sourcing supplies from China and other Asian suppliers, Healy obtains a price advantage and also gains a competitive edge.

"It must be noted that while price is important in gaining market share, there are other factors that play an important part, such as quality and service standards," Healy said.

"Today, value plays a big role in the customers' shopping behaviour and all factors that add to that experience can't be ignored or discounted from the equation that makes for a great shopping experience, and thus increasing your market share."

Shoe Mart focuses on the middle segment of the market.

Its in-house brands are being sold for Dh175 to Dh395, while other international brands cost between Dh395 and Dh495.

Ecco's shoes are manufactured in the company's factories in Portugal, Slovakia, Thailand, Indonesia and China.

The company's production plants were well spread out due to the cost of labour, availability of materials, skills in shoe manufacturing and other logistical issues related to selling more than 17 million pairs in more than 90 countries.

The brand's target consumers fell within the middle to upper market category.

Its prices range from Dh225 to Dh995, with the majority costing between Dh350 and Dh550.