Dubai: Owners of startups and small businesses in the UAE are clearly thinking beyond interest rates and inflationary costs to focus on two elemental issues - What are their chances of finding a consumer base? And if they manage to do that, will it be enough to sustain the business?
Whether launching a business or expanding their operations, these owners are using the present to take a crack at being successful. A lot of them are doing so simultaneously in the UAE, whether that’s in the tech or digital space, old-fashion retail but with suitable tweaks, or even trend-spotting categories such as fitness.
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The one constant - no one is holding back from getting into business.
“Today’s start-ups are shifting their focus to disrupting micro-segments of ecosystems using AI and machine learning (ML) to cater to consumer needs,” said Eddie Maalouf of Toughlove Advisors. “(That’s) regardless of the industry. Startups are now targeting specific points rather than disrupting entire systems.”Startups still face the previous challenges, of limited access to capital, lack of resources, competition from established players, and limited access to local networks and resources. These challenges are unlikely to disappear anytime soon. Therefore, a start-up's success remains dependent on its business model and scalability potential
Startups still face the previous challenges, of limited access to capital, lack of resources, competition from established players, and limited access to local networks and resources. These challenges are unlikely to disappear anytime soon. Therefore, a start-up's success remains dependent on its business model and scalability potential
“They are creating payment gateways and micro-financing and automating logistics and last-mile deliveries, irrespective of whether they are supplying consumables, rides or services.”
Chances are opening up across categories - and platforms. For the right idea or product, there are platforms and funding available.
- Amazon’s UAE operations plan to ‘showcase’ products from up to 100,000 SMEs by 2026, from 50,000. Once this program reaches a critical mass, what it does is drastically cut down the time to market and visibility for the SMEs. “As part of this initiative, we will continue to support local businesses and SMEs to help them grow by providing them access to customers on Amazon.ae, as well as our technology and logistics solutions with Fulfillment by Amazon,” said an Amazon statement issued at the time.
- Late last January, Majid Al Futtaim’s Carrefour franchise ‘onboarded’ The Zola Collective at its flagship outlet in the Mall of the Emirates. The women-owned wellness and lifestyle brand was one of 14 startups/SMEs to emerge winners in the Majid Al Futtaim Launchpad program for 2022.
- The eco-friendly fashion platform Only Ethikal, launched a crowdfunding campaign with Eureeca to ‘expand its product-line and increase its reach regionally’. The company set a target of $250,000 to be raised, with the campaign running for 90 days on the Eureeca platform.
- Zbooni has launched a ‘chat-to-shop’ marketplace where it wants to get ‘highly-rated’ UAE brands to come in. If customers find a product they quite like, they move on to chatting and closing the purchase. Ray Assaf, CEO and co-founder, calls this a more ‘human approach to commerce’. And ecommerce.
- And there’s always private equity available to support a business model that stands a chance to keep going. The Emirati brand Carter & White has just picked up Dh40 million from a Series A funding round. The luxury clothing and accessories company will open its first store in Riyadh’s Al Faisaliyah Center during the fourth quarter. Then add other stores in the Gulf and then on to Europe. (A popup store will run between June to September in Porto Cervo, Italy.
Shouldn’t rate hikes force a rethink?
What all of the above reveals is that the platforms are there, and the funding too to make a fist of it. But shouldn’t businesses, especially emerging ones, be extra careful given that the cost of funds has risen since March 2022? (With 10 rate hikes by the US Fed, the cost of funding has certainly gone up.) Stewart Miller is the founder of The Platform Studios, a boutique health club that was bought by FitnGlam, a homegrown entity. He reckons interest rates and all of that can be looked at in different ways.
“UAE’s growth and (with that the) potential salary increases should ease the pressure on consumers’ wallets and boost disposable incomes,” said Miller. “Our target demographic prioritizes health and wellness - after (their) rent (payment commitments). So, our business is well-positioned.
“While there are many (fitness) operators in this market, success will come to those who offer a value-driven rather than a commoditized, business model. As the population of Dubai grows and more people prioritize health and wellness, there will be ample opportunity.”
By focusing on building a community and providing quality experiences, niche entities can attract loyal customers and maintain sustainable margins
A lot changed after pandemic
Industry sources say the post-pandemic shifts in business and entrepreneurship are still showing up. For evidence, look to the deals that are happening in the cloud kitchen space, where bigger players are acquiring niche operators and creating even more scale. The speed at which the cloud kitchen concept has grown has stemmed directly from changes in consumer behaviours and trends after Covid. It hasn’t been the only one. Anything related to expanding the scope of digital payments or BNPY too happened in the period after the pandemic broke out.
Wellness-focussed businesses are definitely among the top choices as the post-Covid phase takes over, along with startup ideas that give a spin to traditional concepts.
In the second case, it means even opening a brick-and-mortar store. “Though there are many success stories of brands becoming huge in a short period of time online, it’s a very small percentage,” said Gautam Sinha, Creative Director and Founder of Nappa Dori, a luxury leather accessories brand from India that recently opened an outlet in Dubai.
“What they don’t realize is that even if the online market is easy to set up, maintaining it in the long run is a different ball game. You are not only stepping into the most competitive marketplace but need deep pockets to be seen online with social media marketing. Everyone is competing with each other for that attention.”
Brick-and-mortal stores will not go anywhere - people need tactile retail to build an emotional connect with their customers.
The ReSHA brand started in 2022, and the initial set-up costs are about Dh25k, covering logo design, a photo session, materials, and labor.
We conceptualize the design, and then we find the appropriate materials for the design. Our designs tend to merge Western influences with classic patterns and silhouettes. We source the finest fabrics from India and the UAE, with Dubai is a major hub for importing and exporting textiles worldwide.
- Rehana of ReSHA brand, which she launched with sister Shana.
That’s true, there is that other concept time will never overtake. Connecting with customers, whether via physical or digital. In the UAE, business owners are getting the chance to do all of that.
"We identified a demand for luxury fragrance in the Middle East and the US, and have capitalized on it. In a short span, we customised niche fragrances for various occasions. And done custom-made perfumery of between $9,000-$14,995 per unit. There was a limited edition - of 10 pieces - for an agency in Los Angeles."
Each piece was worth $100,000 and contained 500 ml natural fragrance in special packaging.