For its retail destinations and entertainment attractions, Dubai has consistently set and broke records year after year.
Most recently, in 2022, The Dubai Mall was the most visited retail destination in the world with more than 100 million visitors. If you add other Dubai success stories to the mix, such as Mall of the Emirates and Global Village, you will assume that Dubai has cracked the success formula to retail destinations.
However, as much as it learns from its success stories, Dubai also has its way of learning from failures, and retail is no exception. There are several retail complexes within master-developments that are underperforming, with tenants complaining about lack of footfall and high rentals. Accordingly, let us explore some of the mistakes that have been made along with the major lessons we ought to learn.
When developing a retail landscape, we need to consider the type of outing the destination will attract. Another approach to look into the mapping of a retail attraction is the anticipated frequency of visits along with the positioning of the pricing.
Frequently affordable became inaccessible and unaffordable
The most important attribute here is the space of each individual retail outlet. More specifically, the enormous size of the space allocated by the developer, with shops starting at 5,000 square feet. It is a massive undertaking for tenants to fill these seats, let alone bearing the cost of fit-out. The master-developers have not been catering to such concepts. Think of mom-and-pop stores; ‘hole-in-the-wall’ outlets, or a tiny two-table Chinese restaurant.
We don’t see these in new developments, because the master developer does not cater for them. And this needs to stop.
Seasonal destinations need seasonal treatment
It is no secret that outdoor spaces in Dubai are seasonal. Hence, the tenant is taking a chance to make their numbers during the high season to compensate for the low season. However, developers and landlords renting such seasonal outlets need to also carry some of the weight.
Smaller tenants with smaller retail concepts need to also be able to afford their own outdoor space, and that is what we have been seeing in Global Village, where the tenant only pays for the season that they’re able to operate outdoors.
New destinations need initial critical mass
At one point, a master developer insisted on having tenants with only new and original concepts. That is a unique strategy if the shops were small and affordable, but to be original and launch a 300-seat restaurant is a huge undertaking. To have that across your entire tenant mix is a huge risk on the landlord as well.
You need to launch with established anchor outlets to create enough critical mass to the destination. This is also needed to help sustain your smaller original concepts.
If we look at the JLT model, we see how it has become an unofficial ethnic cuisine destination. We see that smaller shops allowed for entrepreneurs with retail concepts to test and learn with ethnic food. We see in almost every major city, retail destinations that cater to such ethnic attractions, with retail markets such as Little Italy and Chinatown. Inaccessible and massive Lebanese restaurants next to gas station will not work…
On another note, boutique malls have been very successful and extremely popular with tenants and customers alike for several reasons. This includes ease of accessibility, from parking to arriving at the desired shop, smaller shops, unique community locations and cheaper rentals. High-end and special purpose food courts have also been very successful and desirable as well.
That’s the direction retail should be going…