Riding the retail wave

If there's one sector in the UAE that has shown remarkable resilience in the face of the global economic downturn, it's the fashion retail sector. Over the past year, retail therapy was given a boost thanks to Mall of the Emirates's new Fashion Dome, the launch of the first Bloomingdale's outside the US and opening of the spacious Mirdif City Centre, among others.

According to Fuad Mansoor Sharaf, Vice-President of Mall of the Emirates, it all boiled down to "demand and supply".

"When Mall of the Emirates opened in 2005, we enjoyed tremendous success in terms of sales and footfall," says Sharaf. "Many retailers were queuing up and this led us to some serious brainstorming. As per market survey, the demand for luxury brands had not gone down." He adds that the footfall has also risen by 10 per cent in 2010 when compared to 2009.

"You cannot compare Dubai to any other fashion hub in the world. Dubai is a stand-alone in many respects — unlike other destinations like Italy and Paris. We were a base when we brought in fashion labels from around the world."

To the existing 500-plus stores, the Fashion Dome brought to its fold 40 high-end luxury stores such as Louis Vuitton, Gucci and Mulberry. The 7,000 car-park area was expanded to accommodate 750 more vehicles this year.

Meanwhile, Dubai's Bloomingdale's outpost was another iconic addition to the city's vibrant retail landscape. The first international branch of the famed US department store was a mammoth addition, with a 146,000-square feet clothing and accessories store along with a 54,000-square feet home furnishings department. The project was a joint venture between parent company Macy's and Dubai retailer Al Tayer Insignia.

They are not alone. Other retail chains are aggressively launching new stores in the region. Leading UK-based youth fashion brand Superdry, which opened its first store in Deira City Centre in October, is planning a massive expansion drive. It plans to roll out as many as 12 stores in this region and 30 across the GCC in the next three years.

"Fashion generally tends to be resilient — particularly in the Middle East. Here, teenagers have unbelievable spending power. A survey indicated that an average teenager in this region spends $71 a month when compared to teenagers globally, who spend $21 a month," says Clive Stanley, CEO of Al Khayyat Investments. Based in Dubai, Al Khayyat Investments also manages retails brands such as Fila and La Martina.

"We are on a rapid expansion drive. By mid-November, we will [have] opened our first store in Mirdif City Centre and in the first quarter of 2011, we will have opened another branch in Mall of the Emirates," says Stanley.

Dubai's long-standing mall Deira City Centre also saw a flashy addition with the opening of Iconic department store in February 2010. This Landmark Group project houses more than 130 brands under its roof.

"It's always the right time to do a good business venture and no better time than in a so-called recession," says Raza Beig, CEO of Splash and Iconic. "We got a large retail space in a prestigious mall like Deira City Centre only because of the fear of recession. A property like this comes up rarely for rent in a mature mall. The opportunity came and we took it head on." They have also adopted an aggressive expansion plan in the coming years.

"Our business model is not a one-store format; we want to open 20 stores in the next three years… In a matter of eight months in operation, we have already signed six Iconic stores."

Meanwhile, Italian fashion brand List Roma opened its fifth store at the Mercato Mall in October. Its first foray into the UAE was in July 2009 when it opened its first boutique at BurJuman.

"We strongly feel the recession is behind us, and that the markets in the region have bounced back and the future is looking bright. We are also not seeing any decline in sales because our clothes are reasonably priced," says Kamal Osman Jamjoom, CEO of Kamal Osman Jamjoom Establishment, who is backing List. Its retail portfolio includes other brands such as bebe, Mikyajy, Nayomi and Ulla Popken.

Independent boutiques such as Samsaara, Studio 8 and Soiree — who stock bespoke pieces from celebrated Asian designers — are moving forward on certain conditions. Sarah Belhasa, owner of Jumeirah-based Studio 8, says she is treading with caution, keeping in mind the altering economic climate.

"The era where people used to spend blindly without looking at the price tags no longer exists. They have become a bit more cautious and so have we. We want to take one step at a time and not expand blindly," says Belhasa. This year she has brought on board a dozen more designers.

"Earlier, people had to go to Mumbai or Delhi to shop for festive occasions, but we have on board designers like Manish Malhotra, so the demand is going to always be there." She is planning to open a new branch in a mall, in order to tap into the tourist segment.

Samsaara boutique owner Rohini Gehani agrees. She says she has revised her business strategy with the changing times. "My clients now want value for money. So now we are offering more mid-range priced outfits. That's the demand now," says Gehani. Her mid-range price bracket runs from Dh1,500 to Dh4,000.

Mariya Kassam, owner of Soiree boutique, which stocks bespoke Pakistani garments, believes in evolving with the times. She says, "We have every price point available. This has helped us tide over the grim period."

The owners of Anjalee & Arjun Kapoor boutique, which launched in Jumeirah in May, are taking it one step a time. They are currently planning to open their second branch at the Dubai Mall in the coming months.

Ravi Ramchandani, managing partner of Kachins Group, who owns four boutiques and is a retailer in men's suits such as Cerruti, Holland & Cherie and Taylor & Lodge, believes growing organically is a good defence mechanism.

"The idea is to grow in a systematic manner. The ones who have gone overboard have closed down because the idea is not to increase overheads," says Ramchandani.

The scenario has not been so rosy for everybody, though. Bearing the brunt of his rapid expansion plans was Ajaz Rahim, CEO of boutique Miri, who launched his first store in Souq Madinat Jumeirah in 2004.

"2009 has not been a great year. Our sales dropped substantially and we have decided to roll back stores in Dubai Festival City and hold our Muscat expansion plans," says Rahim. "What happened was that we were living in this bubble. This was a correction that was badly needed. We are on our way to recovery."

This is just the beginning. Fashion insiders and retailers are confident that this is not the end of the race. MOE Vice-president Sharif says the mall's owner and developer, Majid Al Futtaim Properties, have every intention of going from strength to strength.

"The nature of our company says as long as there's demand we will add more retail spaces."