Crate and Barrel, the home furnishings retailer, has chosen Dubai for its first location outside of its North American home. The 2,328 square metre store that opened yesterday in Mall of the Emirates will be used to gauge the chain's potential for the international market.
The new outlet will be followed next month by a 2,600 sq metre store at Mirdif City Centre. The Dubai shops are the only international outlets the company is planning to open this year. Gordon Segal, the chairman and founder of Crate and Barrel, said he chose Dubai because of its central location, and the cosmopolitan nature of the emirate's shoppers could help determine where in the world the chain should go next.
"Dubai is a place where the whole world shops," Mr Segal said. "They're going to come from India, they're going to come from Russia, they're going to come from Europe. They're going to come from Singapore, Australia, and you're going to start defining and knowing where your customers are coming from. Then you will be able to decide." Crate and Barrel, which is based in Chicago and has 115 shops in the US and Canada, is the latest home furnishings and accessories brand to expand to the region.
The US brand Ethan Allen and Thailand's Index Living Mall opened in Dubai late last year, while IKEA is building its largest store in the Middle East on Abu Dhabi's Yas Island. Furniture sales in the UAE are forecast to rise to Dh7.18 billion (US$1.95bn) in 2012 from Dh5.87bn last year, data from the research firm Euromonitor showed. Laurent-Patrick Gally, a retail analyst with Shuaa Capital in Dubai, said while there was a slowdown in consumer spending in the short term, he expected the local population to increase in the coming years and home-related shopping to follow.
The increase in Dubai's population will come from abroad and from residents moving there from Sharjah and other emirates, Mr Gally said. "Don't look at the next six or 12 months - if you look at the next three, four, five years, there is definitely going to be a net immigration influx in Dubai," he said. The past two years have been difficult for Crate and Barrel, and for most retailers. Same-store sales at the retailer fell 12 per cent in its 2008 fiscal year, and 8 per cent in 2009, Mr Segal said. Revenues fell to $1.12bn from $1.28bn the year before.
Crate and Barrel was this year aiming for modest growth of between 5 and 7 per cent, he said. In addition to its two outlets in Dubai, the group plans to open two in Canada and three or four in the US, Mr Segal said. He said his company, founded in 1962, received many international requests over the years for the Crate and Barrel brand but he decided on Dubai after the Al Tayer Group convinced him of the emirate's potential.
"Where is the market really going to be growing? We doubt that the market in Europe is going to be growing and expanding," he said. "We think the world is going to be expanding in Asia and the Middle East." And with many passengers travelling to Dubai from retail hotspots such as India, China and Russia, Al Tayer Group suggested Crate and Barrel could use its Dubai stores as a testing ground. Crate and Barrel signed the franchise agreement with Al Tayer nine months ago, but the two groups had been in talks for more than a year, Mr Segal said.
Despite the tougher economic environment, he is optimistic that the new outlet, built at a cost of more than Dh30 million, will draw customers as vacant properties in the Dubai market find buyers. "If you paid too much for constructing it - you, the developer will lose money," Mr Segal said. "But eventually you will clear the inventory. "And the inventory here will find a price where the market will sell it, then people will buy these apartments or condos and homes. And they'll come to us for furniture."