Dubai's upmarket retailers expanding
They were big here and now they have gotten bigger. Two stellar names in the global luxury landscape, Prada and Cartier, recently updated their presence in the UAE through two new and swanky stores, in Dubai and Abu Dhabi respectively. By the looks of it, they will not be the only ones as global brands - both established and emerging- mark out new turfs in the UAE’s red hot retail space.
It does not matter whether the space is a destination mall or on a prime location on the high-street. The only criteria for the brands - and their franchise partners - is that they get in now as store rentals firm up and inch their way back to pre-2008 peaks. (At least that is the case at the handful of destination malls.)
There are as many brands and retailers who are prepared to wait as well, at least going by the waiting list at Mall of the Emirates which currently numbers more than 130 prospects. The new Prada store has just opened at the Mall, which is now polishing its credentials as one of the pre-eminent regional destinations for deluxe labels. And the farther up they are in the luxury chain, the better.
Peter Walichnowski, CEO of MAF Properties and owner of Mall of the Emirates, calls it the art of proactive asset management by which “Retail destinations, particularly malls, can stay relevant. That’s how malls in the US and built in the 1960s continue to be relevant while newer malls, which have done nothing to reinvent themselves, fail.”
Mall of the Emirates went in for a fresh look in 2010 by creating the Fashion Gallery as a hub for high-end brands. There are plans to create more leasable space, and the more creative ones include plans for the area under the ski slope.
Other malls are doing their but and more as there is a lot at stake here. The Dubai Mall will add another 1 million square feet to its existing 12 million, while the likes of Burjuman is going through a massive makeover programme. In Abu Dhabi, the marketplace is closing in on the opening date for the Yas Mall, and all 235,000 square metres of it. (Incidentally, Cartier opted for a non-mall location for its flagship store, located within the retail cluster of Etihad Towers.)
So, what is with all this attention being lavished on the luxury end of the local retail spectrum? The answer can be found at the turnstiles within the Dubai International Airport. “Dubai is now positioned behind only London in offering consumers the greatest brand exposure globally, with luxury retailers naturally being well represented,” said Matthew Green, head of research and consultancy for the UAE, CBRE Middle East. “The current high level of visitor inflow is directly benefitting the retail industry and with Dubai’s reputation for luxury brands it appears this is where many of the tourism dollars are being spent.
“For malls, being able to offer a diverse retail mix is fundamental in helping to establish a broad consumer base which in turn drives sales performance; the luxury segment plays an important role in this strategy.
“If consumers know that they only need to visit one single centre and cover all their retail needs, then it makes sense that higher sales levels can be achieved across the mix.”
The dynamics of the industry are in their best shape ever since 2009 when retailers, especially those representing prestige brands, pulled back on all expansion plans and consolidated their networks. That is now seen as an anomaly. By the following year, they were back to doing what they knew best - putting up new store locations.
It remains to be seen what sort of retail mix will make it to The Dubai Mall once the additional space is created. There is also the Yas Mall, where pre-opening bookings are coming along nicely. Beyond these, there is very little fresh inventory being created, especially in the high-end space. (Nakheel has launched a retail project for the Palm, but its reach will be confined to the immediate environs and just beyond.)
Mall managements will then have their work cut out on retaining their prestige tenants, who tend to be more finicky with their requirements. Walichnowski acknowledges as much - “Luxury brands may well want to go somewhere else unless all the conditions are perfect. But in Dubai right now there are two or three locations where brands realize they will not lose by being there.” That does make a win-win situation.