Franchisee sees growth limited by brands' fears over infrastructure and political stability
Jawad group cautious on expansion
The company that runs Dairy Queenrestaurants and Accessorize stores in the UAE is looking to expand across the region, starting with outlets in Syria and Jordan. But the Bahrain-based group's expansion in areas such as northern Iraq and Iran is being held back by western brands' hesitation to enter retail markets in fragmented and less stable areas, said Abbas Hussain Dehdar, the deputy chairman of the franchisee Jawad Business Group.
These brands are waiting for the retail infrastructure to develop fully and for political situations to settle further, he said. "They are willing to go in the future but not immediately," Mr Dehdar said. "They want to go in with a clear view." Jawad was embarking on "controlled expansion" this year, as the building of malls in the region has slowed, said Anil Menezes, the general manager of the company's fashion division.
Few major malls are on the way after Mirdif City Centre, which opened in March. "A lot of the expansion over the years has been pushed by new malls coming in and new developments," Mr Menezes said. "Today that is very scarce. You do not see new malls of this size and stature coming in the next two or three years." The retail industry in the region, particularly in Dubai, has expanded rapidly in the past five years. In that period, at least three major malls - Dubai Mall, one of the largest in the world, Mall of the Emirates and Mirdif City Centre - have opened.
But since the onset of the economic downturn, consumer confidence and spending have slipped. In turn, retailers have become more cautious about expanding. Jawad has added 30 stores, 20 of them in Mirdif City Centre, Mr Menezes said. The company aims to open between 40 and 45 stores across the region this year, including a restaurant called Jamie's Italian, branded by the UK celebrity chef Jamie Oliver.
The restaurant, Mr Oliver's first in the UAE, will open in Dubai Festival City in about three months, Mr Menezes said. Regionally, their next steps will be into Syria and Jordan this year, he said. "There are retail opportunities in terms of developments in Syria and Jordan, and we will look at that as a next priority," he said. "Iraq and Iran will be the next stage." Sales across the group's existing outlets, which include Papa John's Pizza and Monsoon, were showing signs of recovery, Mr Menezes said.
While figures for the second quarter had not been finalised, sales in the first three months of this year were up between 10 and 12 per cent compared with the same period last year, he said. Still, business was not back to the peaks of 2008. "In this environment, I think you will not have the 10 to 15 per cent, double-digit growths of the old years," he said. "Now, every growth, you will really work hard for it. That's the reality of today's environment."