UAE destination of choice for MENA-bound retailers

Armina Ligaya

• Last Updated: November 19. 2009 8:07PM UAE / November 19. 2009 4:07PM GMT

The UAE is a choice destination for international retailers looking to make up for sales losses elsewhere. Stephen Lock / The National

DUBAI // The UAE is the top choice for retailers looking to open new stores in the MENA region next year because of Abu Dhabi’s growing potential and the ease of entering the country’s retail market, a report says.

Mark Morris-Jones, a regional senior director at the commercial property consultancy CB Richard Ellis (CBRE), said other factors influencing retailers’ decisions for expanding here were a growing supply of new shop space in the country and Dubai’s past retail success.

“The biggest spends have been in Dubai,” said Mr Morris-Jones. “Where are the biggest concentration of international retailers? Also in Dubai and the UAE.

“And that’s why this particular market continues to be of interest. Other markets are certainly interesting, but in some respects more challenging.”

This year has been difficult for retailers globally, as consumers have become more wary of spending during the economic downturn. But most brands are optimistic, with 200 out of 220 retailers planning to expand their global presence next year, CBRE said.

Retailers’ top 10 target markets were in Europe, with Germany, France and Spain taking the top three spots.

The UAE ranked 21st globally, followed by Saudi Arabia on 33rd, Qatar on 54th and Algeria on 55th.

Twenty-four per cent of retailers surveyed said they were looking to the MENA region, with 80 per cent of those focusing on the UAE.

The growing profile of Abu Dhabi, with events such as the Formula One Grand Prix and investments in international companies such as Daimler, has helped gain retailers’ attention, Mr Morris-Jones said.

Craig Plumb, the head of research in the MENA region for Jones Lang LaSalle, said retailers were drawn to the amount of shop space in the country, with Dubai Mall, one of the largest shopping centres in the world, and new malls to open in Dubai and Abu Dhabi.

“It’s easy to get in because they know there are projects available,” Mr Plumb said. “In Saudi and other places, there are not that many malls announced yet. If it was just based purely on demographics and income, then those other markets like Saudi would be ahead of the UAE.”

But retailers have adopted a conservative approach. About 40 per cent are looking to acquire no more than five stores by the end of next year, according to CBRE.

About 23 per cent are looking to open between 10 and 40 stores, with 11 per cent aiming for more than 40 new outlets.

That is far from the expansion strategy in the UAE last year, with every retailer clamouring to get into all the newest and biggest malls.

Mr Morris-Jones said that as sales in Dubai are estimated to have slowed by as much as 40 per cent, the mood has shifted from the expansion strategy in the country’s retail sector last year.

Annette Jarnefelt, the managing director of stationery retailer Ordning and Reda, said it has opened two outlets in Dubai this year, and had plans for one of its five new shops next year to be in Abu Dhabi.

But the Swedish company has lowered its targets for new stores because of the economic downturn, and is aiming for markets closer to home.

“The focus is Europe still,” Ms Jarnefelt said. “There are lots of markets in Europe and that is much easier to handle, logistics wise.”





aligaya@thenational.ae