Budget brands flourish in post-recession Dubai

Emirate is unlikely destination for value brands after the credit crunch, say retailers
Budget brands flourish in post-recession Dubai
Budget retailers are slowly changing the face of Dubai’s malls, a significant feat in a city that ranks second only to Hong Kong for its percentage of luxury fashion brands
By Claire Ferris-Lay
Sun 15 May 2011 09:23 AM

Dubai has become the unlikely home
of a flourishing budget retail market that has grown amid the economic
downturn, retailers and analysts said.

A secondary retail market
offering lower price points is thriving in an emirate that is better known for
its lavish malls and designer shops.

“When a recession hits what do
you do? You buy cheaper things. It’s no secret that since the recession the
luxury brands have struggled more than the mid-range or value brands,” said
Mike Leighton, retail analyst at property consultants CB Richard Ellis.

Budget
retailers are slowly changing the face of Dubai’s malls, a significant feat in
a city that ranks second only to Hong Kong
for its percentage of luxury fashion brands.

Max, a value fashion brand owned
by Landmark Group, is in talks with a number of landlords, including Dubai
Mall, to expand its stores amid rising demand.

“Every mall now wants a certain
mix in their tenant and retail [offering]. They want to make sure there is
space for the value brands because the value brands have the capability to
bring in footfalls. That’s what all mall developers are looking for,” said CEO
Ramanathan Hariharan.

Discount clothing chain Matalan
opened its first store outside of the UK in Dubai in September 2009l. The
company now operates three stores across the UAE. 

“We are seeing people like
Matalan coming into the market who were not there four or five years ago. Malls
[are now saying] to brands like Max or any similar value brands, if it is well
done and well executed, why not a value brand?” said Hariharan.

Changing spending habits among
Dubai residents is also driving footfall at mid-range and cut-price malls.
Traffic at Ibn Battuta Mall, whose storefronts offer a mix of value brands, was
up 89 percent in 2010 compared to the previous year, according to owner
Nakheel.

In Dragon Mart, a 1.2km long
Chinese trading hub offering cut-price goods, footfall rose 84 percent in 2010,
Nakheel said.

Dubai Outlet Mall, which offers
discounts of between 30 to 90 percent on designer brands, sees around 150,000
customers a week. The mall saw an 8-10 percent increase in footfall in the
first quarter of 2011 and has seen renewed interest from brands keen to open
outlets, its director said.

“Because of the popularity of
the mall there is renewed interest from those [retailers] who wouldn’t have
considered coming here,” said Vishal Mahajan. “Some of the existing tenants in
the mall who have tried and tested our concept are now looking to take up more
space for their different concepts.”

Malls moving towards a blended
retail offering, however, could see a decline in their luxury tenants, says
CBRE’s Leighton.

BinHendi Enterprises, the
UAE-based retail empire that counts Hugo Boss and Artioli among its labels,
closed down its first branded strip in Dubai’s Deira City Centre in June 2009,
due to a decline in luxury shoppers.

“We are in luxury goods, and the
mall is no longer for luxury goods,” president. Mohidin BinHendi said at the
time.

“Deira City Centre has
repositioned itself, they got rid of some of the more luxury brands and brought
in more value fashion,” Leighton said. “I would not be surprised if the other
malls followed suit.”

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