For many years a happy hunting ground for overseas companies keen to sell their wares to a new customer base, the UAE is now reversing that trend.
Homegrown UAE retailers going global
Walk around any shopping mall in the UAE and the halls are lined with big brands and restaurant chains from every corner of the world. From Gucci to Gap to Starbucks to Al Hallab, consumers in the Emirates are spoilt for choice.
That is apart from when it comes to one thing: home-grown, independent stores and restaurants created in the Emirates.
But this is beginning to change.
As the local retail scene begins to mature, it is increasingly spawning brands and chains of its own, which are now setting up shop in nearby Gulf countries, and even in Europe and North America.
Organic Foods and Cafe, a chain of health-conscious restaurants and supermarkets, plans to open a branch in Bahrain next month. The exotic furniture chain Marina Home is considering opening stores in Canada and the UK. The cafe group Shakespeare and Co has two outlets on the way in Bahrain, and one in Lebanon. It is also seeking franchise possibilities in Saudi Arabia and Jordan. And Okku, a luxury Japanese restaurant at the Monarch Hotel in Dubai, is weighing up an outlet in London.
Mark Morris-Jones, the director of retail at the global property consultancy CB Richard Ellis, says these are indications of the Emirates's retail industry evolving.
"It's showing how good local concepts are becoming in terms of product value for money and the way that they retail," he says. "It's a positive thing."
On the surface, the Emirates appears to be the perfect breeding ground for budding retail entrepreneurs. Dubai, in particular, began as a trading post in the 19th century, bringing in goods to the creek that were sold in traditional souqs.
Consumer spending has of course climbed steadily since then. Although it has slowed in the past year or so, non-grocery retail sales have grown from an estimated US$7.17 billion (Dh26.33bn) in 2004 to $10.97bn last year.
Some UAE-based companies long ago made their mark across the region. Landmark Group, whose brands include Splash and Babyshop, and Damas Jewellery are two of them. But retail space in the UAE has been flooded by international brands over the past five years.
The UAE is the second most popular destination for international retailers, behind the UK and ahead of the US, according to a recent report by CB Richard Ellis. The report also found that Dubai is the second most attractive city for global retail brands, just behind London and ahead of Paris.
Overseas companies come to this country for its ample supply of new and shiny boutiques in palatial shopping centres. It is also easy to enter for foreign brands. To set up shop here, international retailers must find a local partner or franchisee, which often shoulders the risk and contributes the capital.
But the downside is these global players can make it difficult for UAE entrepreneurs to compete.
Suzanne Blake, the business development manager for Shakespeare and Coin Dubai, says there is a perception here that foreign brands are often superior.
"They always think that [Shakespeare] came from France or England or the US. People in the UAE tend to think that something international is better," she says. "So if they see something that is from the fashion brands, such as Gucci and Guerlain, they see something that is international and they almost always tend to see it is better. I think that is starting to change now."
Another issue is finding a concept that will click with the UAE's diverse population.
"You have a very difficult audience here," says Ms Blake. "As a restaurant, you have to find something that will satisfy 100 different nationalities. So it is very difficult from a food and beverage perspective to start something."
Perhaps another obstacle to budding entrepreneurs is the difficulty in starting a business.
The Emirates is ranked 44th out of 183 economies for the ease of starting a business, according to a recent report by the World Bank. That puts the country behind some mature economies, such as the UK, which is ranked 16th, but also behind other emerging markets such as Romania, which holds 42nd spot.
However, the UAE is making strides to change this. By eliminating obstacles such as the minimum capital requirement, its latest ranking is a big improvement on its 118th placing in the previous report.
And with time, this should improve even further. While merchants have been trading out of the UAE for many years, starting with the pearl divers hundreds of years ago, organised retail is still a relatively new idea.
"It's a new part of the world," says Mr Morris-Jones. "We've only been doing this 20, 30 years. Some of the retail brands out of Europe, they've been going one, two, maybe 300 years."
And as successful retailers based in the UAE expand their footprint across the country, they will be pushed to seek success abroad, he says.
"Those retailers will come to saturation point in their given geographical market. To grow, they will have to go cross-border. And they're going to have to look at those [outside] markets."
Emirates traders that are starting to branch out into GGC and world markets.
Shakespeare and Co
The Dubai chain, which has nine outlets in the UAE, opened its first cafe outside the Emirates in the Syrian capital of Damascus in February. Two more outlets are on the way – in Bahrain and Lebanon. “The UAE is a small country, so it only makes sense to go and look at the GCC and after you’re in the GCC to move into other sectors as well,” says Suzanne Blake, the company’s business development manager.
Marina Home Interiors
The home furnishings chain, which has 19 stores across the Gulf, is seeking to boldly expand the franchise. “With the percentage of clientele that we have from Europe, Canada and other western countries, we feel that our products are quite liked in those countries. It would be a natural extension of our business to explore the possibility of opening in those markets,” says Khurshid Vakil, the company’s co-founder and executive director.
Organic Foods and Cafe
The chain of organic cafes and supermarkets is adding a new location in Bahrain next month, on top of its two outlets in Dubai and one expected to open in Abu Dhabi. “I opened my company because I couldn’t live here any longer if I didn’t have organic food,” says Nils el Accad, the chief executive.
Okku. The luxury Japanese restaurant is looking to open a second outlet this year. The plan is to launch a restaurant in London. “From the beginning, it was designed to be a brand launched in Dubai, nurtured in Dubai and taken worldwide from Dubai. For us it was taking that story around the world,” says Ramzy Abdul Majeed, the co-founder of Okku.