One of Saudi Arabia's biggest retailers is exiting Dubai and selling its brands to Apparel Group, which has caused problems for the emirate's malls.
Vendor's exit leaves stores barren
The withdrawal of Saudi Arabia's biggest retailer from Dubai has caused chaos for malls across the emirate, as a number of stores have been left for months without any stock.
Retail Group Gulf (RGG), which is majority owned by the Fawaz Alhokair Group based in Riyadh, has sold four brands to Apparel Group based in Dubai and is in the process of closing the stores of its 14 other brands.
As brands have changed hands and RGG has run down stock, stores have been left with little to sell in Dubai Mall, Al Ghurair Centre, Ibn Battuta and Arabian Plaza.
Clothing brands Cortefiel and La Chateau in Ibn Battuta Mall have had very little stock for months. Sales staff have continued to be employed with little to do but explain the situation to customers.
"Cortefiel is now nearly out of stock. We were promised that there would be some stock coming by air freight but this did not happen," said Jassim Al Ali, the director of business and asset management at Retailcorp Malls, Ibn Battuta's operator. "From our side, we have now solved the problem, but I think they are still struggling in other malls."
Cortefiel and La Chateau have now been sold to Apparel Group, which is set to switch Aldo and Kenneth Cole for Cortefiel in the Ibn Battuta store. The current Aldo in the mall will be turned into a Tim Hortons, the second in Dubai, Mr Al Ali said. Apparel declined to comment.
Analysts say RGG is likely to have kept stores open with little stock until the end of their leases so it was not subject to contract breach penalties. RGG declined to comment on that, but said four stores now open would be closed soon.
"At the end of the day … if you are surrendering your lease before the end of the term, then there will be covenants in place," said Stuart Gissing, a director at property consultancy Colliers International.
RGG is one of the biggest retailers in the Middle East, with more than 1,000 stores, and runs brands such as Marks & Spencer, and Gap.
* additional reporting from Ben Flanagan