Shivam Goyal’s life changed for the better when a scheduled 15-minute chat with Landmark Group founder and chairman Micky Jagtiani ten years ago turned into a two-hour discussion about the future of retail.
“Anyone and everyone who was living in the Middle East knew all about the Landmark Group because even at that stage it had touched every home and every consumer,” recalls Goyal. “Micky Jagtiani is an inspiration to almost all Indians who are aspiring to be someone in their careers, and the way he has developed the group is a case study in itself.
“So I was quite nervous meeting him — it was an honour, actually. We spent two hours chatting, and that changed everything.”
Rajasthan-born Goyal had just taken up a stint with one of Dubai’s largest private enterprises, having spent seven years with local consumer tech retailer Jacky’s Electronics. His brief, at that point, was to help create a new unit for the Landmark Group focusing on consumer electronics. That unit was eventually branded Emax, which went on to become one of the largest chains of its type in the Middle East.
Since launching just over 40 years ago, the Landmark Group has made a habit out of building own-brand chains into regional powerhouses. As well as Emax, the company also owns Centrepoint, Babyshop, Shoe Mart, Splash, Home Centre and a host of other names that have become household names to Middle Eastern consumers. It now has over 50,000 employees, and has expanded into hotels, fitness centres, restaurants and theme parks. From its small beginnings in Dubai, it now has a presence in 19 countries, from Tanzania to Sri Lanka.
Having helped build Emax, Goyal’s latest job has been to launch and run SportsOne, Landmark’s sporting goods retail division, which celebrated its second anniversary last month. After opening two stores in Riyadh in December 2012, SportsOne now has 11 stores across the UAE, Saudi Arabia and Bahrain.
Landmark’s decision to launch a sportswear chain came on the back of the extensive business and financial research the firm undertakes before opening any new venture, Goyal adds, sitting in an office in the colourful SportsOne headquarters, at the top of the Oasis Centre Mall next to Dubai’s Sheikh Zayed Road.
“From the outside, Landmark looks like a flashy and flamboyant organisation, but internally it’s very closely held and managed by finance people,” he says. “That creates a good balance between that zeal to grow market share and yet keep your feet on the ground via the very tough controls that have been put in place by the finance team.”
In general terms, and especially when it comes to retail, Gulf firms have teamed up with more recognised names in other markets to bring brands into the region. Franchise operators, like Kuwait’s M H Alshaya, have been hugely successful in populating the Gulf’s malls with their partners. However, Landmark’s different approach has also yielded hugely successful results. When asked how the group has managed to achieve its targets, Goyal says it’s down to few set rules.
Firstly, Landmark bases its research and initial studies on the Saudi market; in short, if it works in the kingdom, it will work in other parts of the Arab world.
“Although we’ve been based here from the start, we never look at this market through the prism of Dubai or the UAE,” Goyal says. “It’s a very developed market here compared to other pockets of the Gulf.
Another key point is ensuring that Landmark focuses primarily on the Arab audience, instead of basing its strategy on the English-speaking population that is most prevalent in the UAE.
“Out of the 50 million population in the Gulf, very easily 38 million of those are Arabs, whether Arab citizens or expatriates,” says Goyal. “That’s about 75 percent of the population, so we always develop a strategy that keeps the Arab customer in mind.
“How this translates is that whenever you visit a SportsOne store, you find bilingual communication on the floor — there’s as much focus on Arabic as there is on English. We never take Arab consumers for granted.”
The last rule is that the group maintains its focus on mid-market consumers, rather than heading towards the high-end space which is filled by a host of competitors.
“It’s very easy for anyone to get carried away and cater to the pinnacle of the consumer segment but we understand that 80-85 percent of this market comprises the mid-market, and that’s our sweet spot,” he adds. “We never make the mistake of drifting towards making the brand premium.”
Landmark’s tight approach has meant that SportsOne’s progress since its launch has been smooth, and certainly over and above what Goyal had forecast in his initial business plan. Like for like growth in retail sales is between 65-70 percent, he says. These are big numbers, but are obviously coming from a small base.
“The real like for like count should be considered only in the fourth or fifth year, because then you are starting to mature,” he says.
In total, Goyal says that the Landmark Group will spend “very safely more than AED100m [$27m]” on its plan to roll out 40 SportsOne stores across the Gulf by 2017. He’s also hoping that the brand will see profitability at the store level in its second year, while the full concept should make a profit “at least in the fourth year”, so potentially around 2016-17.
Much of that will be driven by a strong outlook for the retail market in the UAE, especially in the mid-market segment. In the UAE, the retail sector was worth an estimated $66bn in 2013, according to AT Kearney, with cheaper and mid-market goods taking up the vast majority of sales. The potential is even greater in countries like Saudi Arabia, which has a far bigger population but is far less mature in terms of the retail infrastructure available on the ground.
SportsOne’s strategy for Saudi Arabia will be to build up a presence in the larger, more well-known cities, Goyal says. It already has stores in Riyadh and Dammam, and will open in Jeddah by the end of this month, while Makkah and Madinah are also in the works. But he’s also interested in potentially tapping the kingdom’s secondary cities, which have tended to be avoided by the big retailers.
“There is a huge growth that exists for us in the smaller cities, like Hofuf, for example, which has a population of about 1.4 million people, which is a big market for us,” Goyal says. “Up north, there’s Tabuk, and there’s also Hail, Unaizah and Ar Rass. These are markets that people don’t know too much about in this part of the world, but they are good consumer markets where I feel that an organised sport goods consumer concept is still non-existent.”
In total, he says Saudi Arabia can take “25-30 stores very easily”. In nearby Qatar, where SportsOne has a natural alignment through the hosting of several large sporting events such as the World Cup in 2022, Goyal thinks about four or five stores could be set up “very soon”. The brand has already signed two properties in Muscat, one of which will open this year and one next year, and the business head thinks that both Sohar and Salalah would make good target cities.
At home in the UAE, plans are also under way to roll out more outlets to support the two in Abu Dhabi (Dalma Mall and Al Wahda Mall) and two in Dubai (Al Ghurair Centre and next to the Burjuman Centre). However, rents at the biggest shopping centres, such as Dubai Mall and Mall of the Emirates, have risen sharply in recent years, making it tougher for mid-market brands to gain entry.
“There used to be a phase about five or six years back where a lot of malls were being developed and retailers had a chance to go and grab those opportunities,” Goyal says. “Compared to that phase, today I would say [the opportunity] is not that much.
“But if mall developers think that a particular concept would be good for their mall, they will come to you. We thought that some of the businesses that we launched seven or eight years ago would have no place in the leading malls — but today they are all there.
“The way we are penetrating this market, people are watching us. At this point in time, locations that I had not imagined would come my way so soon, we are sitting and negotiating with them [mall developers]. Very soon, you will find SportsOne present in key malls within Dubai.”
So what will happen after 2017 for a man who is making a career out of launching new businesses? Goyal says his hands are full with SportsOne, although he’s certainly not ruling out any moves in the future. When questioned as to what other avenues the Landmark Group might explore in the future, he laughs.
“There are plenty, but I would rather leave that thought to Micky [Jagtiani], as I am just the executor. But there are many glorious opportunities in many, many areas, whether it’s in food or fashion or elsewhere. Landmark has proved it by getting into hospitality, restaurants, fitness clubs and even clinics — so whatever we have put our hands on, God has blessed us. So who knows?
“Once Micky feels I have made this brand worthy of his recognition, maybe he will assign me something else and I am waiting for that day. Until then I am focused on SportsOne.”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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