Dubai: Get the feeling that reaching out to consumers through a mall store is a drain on the business? Try a kiosk instead.
Retailers are cottoning on to the kiosk concept in a big way to get their products and brand awareness with the intended audience. Where start-up businesses are concerned, it is proving to be much more than that.
Last year VIP Ventures came out with the kiosks to sell the range of skin-care products from Vipera Cosmetics, a European brand that was yet to have a presence in the local market.
"The kiosk model offers the great visibility that is needed for a brand that was virtually unknown at the time and gave us a chance to keep our overheads low," said Amit Gandhi, director at VIP Ventures.
"Also, when you are there in the high footfall areas, you do tend to get the awareness among shoppers."
The company did take a few chances along the way. Traditionally, selling cosmetics here has relied on stores to provide the certain intimacy that shoppers prefer when testing the wares.
To do so in the "open environment" of kiosks required a leap of faith on the part of the prospective shoppers. More so, since the brand itself was not a "name" at the time.
"If you have a good product, it gives the retailer a great chance to convert the stock taking units into actual sales," said Gandhi, who now operates locations at both The Dubai Mall and Mall of the Emirates among others.
"We thought it was novel because cosmetics were typically not sold at kiosks and it's really proved to be a good one for us.
"The kiosk is very different and has its very own individual identity compared with shop-in-shops."
A big plus for a fledgling retailer has to be the lower rents that a kiosk in a mall would require as opposed to operating a store.
Even with the scaling down of mall store rentals in the last three years, the existing levels can yet prove a hurdle for a tyro retailer testing out a market with a new productline.
"I would say we got in at the right time since we only launched in 2010 and rentals were still soft by as much as 15 to 20 per cent off their peak rates," said Gandhi.
"Moreover, if I was there in 2010, my contract will be the same for 2011 as well as mall operators do tend to look at these things.
"Since the recent improvement in retail sentiments in Dubai, we have seen rentals of kiosks having gone up. If someone is coming in now with a similar concept and prefers a prominent mall location, he might find it to be more expensive by 5 per cent and even more."
According to him, kiosk rentals would be in the region of Dh150,000 to Dh175,000.
Now that he has had a look at the lay of the land in the UAE, the next obvious move would a Gulf-wide location. This is where Gandhi has a few options being the master-franchise for the brand in these markets.
Even a decent rub of the Gulf's colour cosmetics market, valued at more than $500 million by the end of this year, could translate into good numbers for Vipera itself. (That for the UAE is forecast to be in the region of Dh519.5 million by 2014.)
"For possible locations in the GCC, we are giving expositions of how the concept works to interested parties and there are normal commercial terms we work on," said Gandhi. "We are close to signing for Saudi Arabia and will be giving out franchises to local retailers there."
TIPS for success
- Control as many elements of the process as you can. Apart from the retailing, we have started assembling the kiosks in Dubai based on the guidelines for the principal in Poland.
- If there are opportunities, be quick on the draw with adding other concepts. With our brand, we can just as easily create shop-in-shop locations at multi-brand stores or hypermarkets.
- But any retailing model has to fit with the product that is being sold. Not every business can make the same headway.
- Update your merchandise regularly.