Damas has grand designs for a Far East presence

Dubai: Having redesigned itself into a mid- to high-end jewellery retailer, Damas is crafting a strategy that will see it expand its reach into key Far Eastern markets. To speed up the process, it would even go in for acquisitions, according to a top official.

“There are a few good candidates [for acquisitions]... but it’s a lengthy process in itself,” said Anan Fakhreddin, chief executive officer of Damas. “There’s always the chance that these may slip through. But the Far East is where we want to be as part of the natural expansion, and preferably through a wholly-owned operation.”

Some of the other leading jewellery chains in the UAE are also thought to be considering retail exposures in the Far East, given the near saturation coverage they now have in the Gulf territory.

Having full ownership is the same gameplan that Damas has followed successfully in Saudi Arabia, where it is now adding to its retail presence.

Five new stores there are to be added this year, part of a 40-store addition that for the wider network.

“The majority of new openings are in the UAE and at new locations — there was a slowdown in retail expansion between 2009-12 because the company had more pressing matters to deal with,” said Fakhreddin. “That’s not the case now.” (The Damas network now adds up to just under 300 stores and Fakhreddin makes a point of stating that none of these generate losses.)

It was last year that Damas — which is now wholly owned by the Qatar based Mannai Corp — decided to recast itself into more of an upscale retailer by emphasising jewellery, particularly the diamond-studded type, and scaling down that of the high-volume gold sales. This shift has also seen it come out with multiple branded jewellery lines, which has also been a positive for margins. The average transaction size at the outlets have gone up, according to the CEO.

Now, the split between jewellery and gold in Damas’ overall sales is 50:50 as against the two-thirds that gold used to have until a couple of years ago. The move up the value chain has also compensated for the fact that gold prices have come down over the last year to currently hover in the $1,280 (Dh4,701) an ounce plus range.

“Creating new product lines is critical to maintain the success of the recent past — in effect it would be the steam behind the engine,” the CEO said. “It means that we have to keep bringing out new generation designs to keep offering consumers what they want, and that means scaling up the design and manufacture to its peak.”

Apart from its own factory in Dubai, Damas has an eclectic sourcing arrangement from designers in Europe, India and elsewhere. “There is a plan, which has been agreed upon in-principle, to set up a second owned facility in Dubai,” said Fakhreddin. “We could formally give the go-ahead for the venture later this year and it could be in Dubai Industrial City.”