Slowing retail growth in the UAE has led to a boom in sales promotions and “value” products.
Majid Al Futtaim (MAF), the owner of the City Centre shopping centres and Mall of the Emirates, says the challenging economy has led to a growth in sales of “value” merchandise.
“Value products are doing well, in fact they are growing,” said Ghaith Shocair, the chief executive for MAF shopping malls, speaking at a ground breaking event for City Centre Al Zahia in Sharjah.
He said retailers that were actively pushing promotions and adding value to their customers’ baskets were seeing a response and producing results.
“The current economic climate is producing winners and losers. The UAE’s retailers have had a great run and been very profitable seeing relentless growth. But now there are more challenges and from that the customer will benefit.”
Retailers are being forced to slash prices to tempt shoppers back to malls. Dubai this week revealed details of a three-day “Super Sale” that is expected to run from May 18 to 20.
The Dubai Festivals and Retail Establishment is coordinating the sale that will offer discounts of as much as 90 per cent.
Tough trading conditions in the retail sector have led to warnings from some retailers about the negative effect of high rents on tenants.
"Mall operators need to be careful about their charges because there is a point when we look at our operating costs and if online makes more sense then we will leave," Anthony Chalhoub, the co-chief executive of the Chalhoub Group, told The National this week.
The group, which runs more than 600 outlets across the Middle East, closed more than 50 stores last year – or double its normal churn. “Rent is a function of sales. My business is not about wringing every last cent out of our retail partners. If you have a unique concept that I believe will drive footfall to our mall then the rent will be negotiable because I want you there. Dubai’s rents are still at a mid-level compared against other cities when it comes to luxury and premium stores,” said Mr Shocair.
He said the challenge from the burgeoning e-commerce space was still in its infancy, accounting for only 2 per cent of retail spend in the region, but had a challenge of its own to overcome.
“E-commerce accounts for a small percentage of wallet spend,” said Mr Shocair. “It is still not certain how big e-commerce can become here because it is unlike other markets with the lifestyle barriers and other challenges. I believe we must offer an omni-channel experience that encompasses both worlds.”
MAF announced the Dh2.6 billion mall in the new Al Zahia development in Sharjah. Due in 2020, it will have 136,200 square metres of gross leasable area housing 360 outlets, slightly smaller that City Centre Mirdif.
“Al Zahia is in a great location just off the 311 and 611,” said Matt Green, the head of research and consultancy for CBRE. “It is in the middle of an upscale housing development and will be a destination mall for those in the northern emirates with many more entertainment options than most Sharjah malls offer.”
ascott@thenational.ae
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