Abu Dhabi: When The Galleria mall on Abu Dhabi’s Al Maryah Island opened its doors in August 2013, the vision was to boost luxury retail offerings in Abu Dhabi to target the high-end sector of the market.
However, almost two years later, the mall is still lacking in footfall, with analysts saying that Dubai maintains its position as the UAE’s luxury retail destination, and Abu Dhabi residents continuing to travel to shop.
“Abu Dhabi is still an emerging market for luxury retail. Currently, there is significant retail spend leakage to Dubai and Europe. Dubai’s unique position as a tourist and retail hotspot in the region, and the strength of Dubai Mall and Mall of the Emirates have created unique environments for luxury retailers,” said Andrew Willamson, head of retail in the Middle East and North Africa at Jones Lang LaSelle, a real estate management company.
Willamson said he expected demand for luxury in Abu Dhabi to grow, especially as other upscale developments are launched.
“Abu Dhabi consumers have the purchasing power to drive this sector. As Abu Dhabi continues to build its tourism sector and the planned super regional developments are delivered [together with economic growth], JLL believes that Abu Dhabi’s luxury retail demand will increase,” he said.
Other analysts echoed the same views, adding that The Galleria’s offerings of almost exclusively high-end brands alienate a large segment of consumers.
The mall houses names such as Dolce & Gabbana, Coach, Marc Jacobs, Michael Kors, Dior, Bvlgari, and Burberry, among other designer names, with only a few of the more affordable brands.
Colin Beaton, managing director of Limelight Creative Services, a retail consultancy, said there is demand for luxury retail offerings in Abu Dhabi, but not enough supply.
Shopping experience
“Some of the supply in Abu Dhabi like The Galleria and [Avenue] at Etihad Towers do have high-end retail. The problem is they don’t have the scale and quite the luxurious experience that either Dubai Mall or Mall of the Emirates can provide,” he said.
Beaton added that such malls in Abu Dhabi, despite offering brands, do not offer a wide range of dining outlets or entertainment options like cinemas and children’s play areas. This makes shopping malls in Dubai more attractive to customers as they have a wider range of offerings for a comprehensive shopping experience.
“The only solution is to do something like the Mall of the Emirates in Abu Dhabi, but that’s not even a good idea because there isn’t as much demand or appetite. What that means on the short term is that some brands will be bought from Abu Dhabi and for others, people from Abu Dhabi will continue to drive to Dubai to shop,” Beaton said.
However, though footfall is relatively weaker at The Galleria, such malls that offer luxury brands do not rely on traffic as any sales will generate strong revenues due to heftier price tags.
Beaton also argued that the mall was still in its early days, with many malls taking a few years before growing in popularity.
Location
Meanwhile, Diana Jarmalaite, research analyst at Euromonitor International, said that there was not much awareness about The Galleria especially among tourists.
“Dubai is more known around the world as a key destination in the UAE so this alone drives a lot of sales. When tourists come to the country, they almost immediately know where to go to shop. Abu Dhabi is still struggling to provide that knowledge,” she said.
Jarmalaite cited Yas Mall as an example, saying that its proximity to Ferrari World helps boost footfall, whereas the Galleria is located in an area where a lot of major developments are yet to be launched.
The mall was developed as a result of collaboration between Gulf Related and Mubadala Real Estate and Infrastructure (MREI).
Saed Arar, associate director at MREI, said the mall is almost fully leased out, but a few more dining options are set to open.
“I think The Galleria has been slowly achieving its target in terms of the ramp-up period. Once we have more time for the people to get more acquainted with the mall, and there’s more activity on the island in terms of office and residential space, the picture is definitely positive,” he told Gulf News.
Arar added that retail in Abu Dhabi complements rather than competes with Dubai.
