Demand from expatriates in region leads company to expand into their home markets.
Marina prepares to set up home in West
The Dubai exotic furniture retailer Marina Home Interiors plans to expand into western markets within two years, starting with a store in Canada. Khurshid Vakil, the co-founder and executive director of Marina, said now was the perfect time to expand as mall developers in those saturated markets were looking for new tenants to freshen up their shopping centres.
"We believe this is the right time to strike a deal," Mr Vakil said. "This is the right time to identify a good location because they are available. "North America and some of the northern European countries have aggressively started looking for different brands and different offerings from retailers." Mr Vakil said Marina also planned to expand its regional footprint through franchises, with its first opening in Kuwait this autumn.
The company aimed to sign at least 25 franchises in the next five years, depending on when mall developers delivered their shopping centres, he said. Retail sales in the UAE and globally have slowed over the past two years as consumers held back from buying non-essential items in the economic uncertainty. In that time retailers also closed or relocated underperforming outlets and scaled back expansion plans.
But this has also presented retailers with an opportunity. The average cost of renting a new store has fallen, and landlords are more willing to negotiate terms and rates. And in the mature markets of major cities in North America and Europe, vacancies left by retailers that decided to downsize have opened up space for new businesses. Marina is in discussions with several mall developers and aims to open a store in Toronto by the end of next year or early 2012, Mr Vakil said. Other potential markets include the US, Germany, France and the UK.
"With the numbers that we see here and the percentage of clientele that we have here from Europe, Canada and other western countries, we feel that our products are quite liked in those countries," Mr Vakil said. "It would be a natural extension of our business to explore the possibility of opening in those markets." Sales at Marina's 19 stores across the Gulf are showing signs of recovery and are about 10 per cent above last year's levels so far this year, he said.
But sales last year dipped by about 20 per cent from 2008, a record year for the furniture retailer. Sales in 2008 were up 60 per cent from 2007, Mr Vakil said. In the long term, furniture sales in the UAE are forecast to rise to Dh7.18 billion (US$1.95bn) in 2014 from Dh5.87bn last year, data from the research firm Euromonitor showed. Other regional markets are also tipped to grow. Furniture sales in Kuwait are forecast to grow 8.1 per cent, from Dh2.2bn last year to Dh2.3bn in 2014. In Qatar, sales are forecast to grow 6 per cent, from Dh927 million last year to Dh986m in 2014.
Many new furniture retailers are choosing to set up shop in the UAE because of growth possibilities. In the past year, at least three major furnishing retailers have opened outlets in the Emirates. They were Crate and Barrel, Index Living Mall and Pottery Barn. Mr Vakil said Marina's sales were expected to slow during the summer months, but he hoped for a rebound at the end of the year. "We believe towards the end of 2010 it will show major progress in terms of consumer confidence and spending patterns," he said.