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Tue 2 Oct 2012 10:50 AM

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Arab Spring had "positive effect" on UAE retail - Al Futtaim boss

Dubai retailer says growth this year slighter than 2011; could open future Ikea stores in Gulf

Arab Spring had "positive effect" on UAE retail - Al Futtaim boss

The Arab Spring unrest that has swept across the region in the last 18 months has had a “positive effect” for retailers in the UAE, according to a senior executive at one Dubai conglomerate.

Political instability has so far led to the toppling of governments in Egypt, Tunisia, Yemen and Libya, in the process creating a windfall in consumer spending in the UAE, which has generally been seen as a safe haven amid the turmoil.

“On balance I think the [Arab Spring] has had a positive effect, but there is both a positive and a negative effect,” said Steve Hammett, president of Al Futtaim Retail, which operates franchises for brands including Marks & Spencer and Ikea across the Middle East.

“The positive is other regional shoppers, or people that would’ve shopped elsewhere in the region, have been drawn to the UAE, because they’ve had less opportunities to shop in those other countries [affected by the unrest],” Hammett told Arabian Business in an interview.

He added that this impact “broadly outweighs the negative effect of worldwide economic distress, a little bit of negative sentiment about the region as a whole from outside of the region”.

Last month, the CEO of Dubai mall operator Majid Al Futtaim, Iyad Malas, said that the Arab Spring and economic woes in Europe had led to a 10 percent rise in spending, as shoppers shunned destinations that have been hit by political unrest, such as Syria, Egypt and Lebanon.

Al Futtaim Retail’s Hammett said that the firm, whose other brands include fashion brand Guess and electronics seller Plug-Ins, did not expect its revenue growth in 2012 to match that of 2011 however. He declined to give any further indication on figures.

“Last year was particularly strong for us because we moved into growth having had a couple of years of a flatter market. So not surprisingly this year doesn’t show the same [comparables] as last year,” he said, despite the final quarter of the year still being to come, when shoppers typically spend more in the run-up to Christmas, potentially being a “golden quarter” for the company.

Last year, the company opened a branch of the Ikea furniture store in Abu Dhabi, its second in the UAE following its Dubai outlet. It plans to open additional outlets in Doha and Cairo in spring and summer respectively next year, and Hammett did not rule out future launches.

“For next year Doha and Cairo is sufficient, and by the end of this year, we might have another look at what we’re doing in the second half of 2014. There’s every chance in the future that there will be a third UAE store, but right now we’ve got other things.”

Al Futtaim Retail also plans to open outlets of UK high street retailer Marks & Spencer in Jordan and Lebanon next year, although the GCC will remain the firm’s core market, Hammett said.

“About 70 percent of our sales are in the UAE. In our five-year plan, if we deliver everything that we plan to, despite the fact that on the whole businesses will double in size, and despite our reaching into some of the UAE countries, the UAE will still be about 60 percent of the total,” he said.

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