x Abu Dhabi, UAETuesday 25 July 2017

Mixed fortunes for Dubai retailers

Large retail groups report sales growth varying from nine to 33 per cent so far this year.

Dubai’s malls were hit by consumers cutting back on spending and increased competition from newly opened outlets.
Dubai’s malls were hit by consumers cutting back on spending and increased competition from newly opened outlets.

Retail sales in Dubai are see-sawing, with MH Alshaya, one of the largest groups in the region, experiencing a dip of 9 per cent so far this year, while Emaar's grew by 33 per cent.

Mohammed Alshaya, the chairman of MH Alshaya, whose brands include Starbucks, H&M and Mothercare, said sales across his 300-plus boutiques and restaurants in the emirate had fallen compared with the same period last year.

"Sales have grown, but where? Saudi Arabia, Egypt, Lebanon, Kuwait, Abu Dhabi," he said at an industry conference in Dubai yesterday. "Bahrain is down, Doha is up, Dubai is down."

Mr Alshaya's comments stand in stark contrast to those of Mohamed Alabbar, the chairman of Emaar Properties and the developer behind Dubai Mall, one of the largest shopping malls in the world.

He said retail sales in Dubai were up by 33 per cent this year compared with the same period last year, in part because of a surge in tourists. During the four-day Eid holiday, Mr Alabbar estimated the Burj Khalifa and Dubai Mall area attracted 2.5 million visitors.

But the boost in sales is relative given the difficult period last year, he said.

"We're still going through challenging times, and when we say numbers are up, it is up compared to what? To a low base," said Mr Alabbar.

His comments reflect the difficulties Dubai retailers have experienced since the global economic downturn hit the Emirates last year. After years of consistent double-digit growth, consumers cut back on spending. Meanwhile several new shopping malls opened their doors, including Dubai Mall in late 2008, flooding the market and increasing competition. Retailers estimate that sales dropped by up to 40 per cent in sectors such as cars and jewellery last year.

However, Mr Alshaya said the region as a whole was robust and he was expecting overall growth across his company's almost 2,000 stores in 15 countries.

"We are going to grow in a logical manner," he said. "Our economy, our people and businesses have been hurt badly and we have learnt a very expensive lesson of not 'building and they will come'. Not any more. There is a limit."

This year, MH Alshaya opened 240 stores and recruited 4,000 workers to staff them.

Today, it is expected to open the first Victoria's Secret store outside North America in Kuwait. Next year it expects to open another 250 stores, hiring an additional 4,000 people. MH Alshaya is aiming to open 1,250 stores within five years.

But hiring staff continues to be a challenge, said Mr Alshaya. Although the unemployment rate in the region of people aged between 15 and 29 is estimated at 20 to 25 per cent, the company had difficulty recruiting nationals because working in the retail and service industry was seen as "demeaning", he said.

"I would love our workforce to be made up from local people," he said. "Sadly, in many countries in which we operate, nationals hesitate about choosing a career in the retail sector. Some believe government roles are less demanding and offer a more secure option. Others have the sense that serving others is demeaning or wrong. It is sad."

The retail industry also needs regulation to monitor the volume of retail space being built, ensuring it matches the demand, Mr Alshaya said. He also called for the Government to encourage nationals to take jobs in the service sector.

"We don't have locals working in the hotels or in the supermarket or in the speciality stores or in the call centres," he said.

 

aligaya@thenational.ae