x Abu Dhabi, UAEMonday 24 July 2017

UAE expected to escape gloom pervading Britain's high streets

Majid al Futtaim says its Jane Norman fashion stores are open for business, despite the UK-based retailer entering bankruptcy proceedings

Jane Norman went into bankrupcty administration. Bloomberg News
Jane Norman went into bankrupcty administration. Bloomberg News

Analysts say the UAE will escape the retail crisis crippling the UK high street, despite many British brands trading across the Emirates.

Although rising food and commodity prices continue to curtail UAE consumers' spending power, retail analysts believe both Emirati shoppers and retailers have deeper pockets than their counterparts in the UK.

"There are underlying factors that are more of a challenge in western markets than locally," said David Macadam, the Middle East and North Africa director of retail for property specialist Jones Lang LaSalle. "Some retailers have taken on a huge amount of debt to finance their expansion and have found themselves in a cash-flow problem, but in this region I do not think you will see that."

The UK's woes are having some effect on retailers in the UAE.

Jane Norman, the fashion store, has gone into administration, a bankruptcy process where experts are appointed to fairly distribute a company's assets. The company is one of a flurry of UK-based retailers that have recently closed stores or gone into administration.

Majid Al Futtaim (MAF), the Dubai-based retailer that holds the rights to the Jane Norman fashion brand in the region, said it was "seeking clarity" on the situation in the UK, but that its stores were open as normal.

As part of the administration process, a third of Jane Norman's 94 stores in the UK have been sold to The Edinburgh Woollen Mill. The Scottish retailer also has the option to buy a further 28 stores. The remaining shops in the UK will be closed. It is unclear what will happen to the three Jane Norman stores owned and run by MAF in the Middle East.

Much of the clothes sold in the region are designed centrally in the UK and it is not known whether Edinburgh Woollen Mill will design the products for MAF or if an alternative solution will be reached.

Just because a brand goes out of business in its home country does not always mean that stores overseas will also close.

Depending on what is being sold, a UAE retailer might be able to source and label the products, or design the product if it holds the rights to the name.

Examples in the UAE of a retailer that no longer trades in the UK include Virgin Megastore and Woolworths.

"Majid Al Futtaim is seeking clarity on the Jane Norman situation in the UK; our shops are open for business at present in the region," a MAF official said.

The UK high street is under immense pressure as consumers curb spending in an already spluttering economic recovery, which is feeling the brunt of the government's austerity measures.

Thorntons, a chocolate chain, Carpetright, a floor-covering specialist, and Habitat, a home furnishings store, have all said in the past few weeks they will close stores. The clothing retailer, TJHughes, was also put into administration last week.

Majid Al Futtaim teamed up with Jane Norman in 2007 to open stores in Dubai's Mall of the Emirates and Mirdif City Centre, with a third opened in Bahrain soon after.

Mr Macadam believes that if MAF has to close the Jane Norman stores, it will have a "queue" of brands waiting to replace them.

rjones@thenational.ae