By Claire Ferris-Lay
Landlords need more than retail brands to draw footfall in competitive market, says JLL
Malls in the Middle East must offer more entertainment and community-led activities or risk becoming obsolete amid a glutted retail market, said consultancy firm Jones Lang LaSalle
Changing consumer habits and a rise in online shopping habits means malls that fail to reposition themselves in the new landscape are likely to suffer, the company said in a report.
“Older malls that lack ‘pull’ factors such as entertainment and F&B options will ultimately suffer and some may be converted to non-retail uses,” analysts wrote.
“Mall-owners may need to consider repositioning and remixing options with the aim of staying competitive by providing fresh new concepts to their customer base.”
The region’s leading retail market Dubai has added more than one million square meters of shopping space since 2006. But saturation is forcing many mall landlords to overhaul their tenant mix and add more lifestyle brands such as entertainment, food and beverage outlets.
“[Over the last year] proposed retail supply in Dubai has adjusted to evolving market and economic conditions, which reflects widespread acknowledgment that the sector it more mature with sufficient supply to serve tourists and residents,” analysts wrote.
Dubai’s BurJuman shopping mall said Monday it plans to increase retail space by more than a fifth and add in a cinema, grocery store and expand its family entertainment area in a bid to drive footfall. President of BurJuman, Majod Al Ghurair, said malls had moved on from being seen as purely retail outlets.
“Visitors not only look at malls as places to shop but as a complete entertainment destination,” he said.
Value brands have also said that Gulf shopping malls are becoming more open to locating retail space as they look to boost footfall.
“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,” said Ramanathan Hariharan, CEO of discount clothing brand Max.
Older malls in Abu Dhabi and Saudi Arabia that offer limited international retail outlets are forcing many consumers to travel to Dubai or abroad to shop, said Jones Lang LaSalle.
“Across both markets, older malls are losing market share as demand turns towards modern malls that offer more international brands, facilities, amenities, entertainment and leisure.”
I used to shop in BurJuman until they started charging for parking and have not been back. MOE parking is free for the length of time I want to be there and already has the facilities so no matter what BurJuman does I will never go back all the time I have to pay for parking even if I just want to use a food outlet. Ease of parking is a big plus when choosing where to shop, not just what the shops have to offer.
Parking is the key factor rather than entertainment for sure and lots of 'Sales' given the dramatic rise in the cost of living. If entertainment is free then it will attract an audience but not shoppers. If entertainment has to be paid for then you either spend your money on that or shopping generally not both.
People that use malls to go to the cinema are not likely to go shopping, but may eat in the food court afterwards. However,the real problem is that income's are not rising and the average working shopper is spending less. Plus in Dubai, as Abu Dhabi's retail spread picks up, there are just too many square feet of retail for the population. Also as supermarket food bills rise spending on other items falls.
Locations like The Outlet Mall are now the shopper magnets because of the bargains. Brand labels at beautifully cheap prices are where retail is at now across the world.
Here here, George. There's no way I would use a mall that charges for parking either no matter what is inside. Also I avoid Dubai Mall as the parking is too complicated. This must be the worst planned car park I have ever seen.
I have been in UAE for over 3 years now and I have noticed that Clothes and Shoes Retailers in the UAE are almost 23% more expensive (on average) than in the UK. Bearing in mind in the UK you have to pay 20% VAT (Sales tax). During "Real" Sales in UK, prices can be as much less as 70% than in Dubai. So how can retailers justify charging more than in UK? I think Retails and Mall landlords need a reality check, reduce their 40+ percent profit margins to more realistic 10-15%. Idea is that UAE is tax free country and to attract tourists to shop here, i think retail prices have to be at least 30% cheaper than in UK/EU. 6000 AEDs will buy you approx 18000 AED worth of clothes and shoes in the UK in Sales. So if you were to spend lets say 18000 in one year on clothes, then why not go to London in December and Jan and have a shopping holiday and still be better off.
The Malls have to become destinations, and some have already, such as MOE, Dubai Mall etc.
However over the last few years licensed F&B outlets have apparently been hit with restrictions in trading hours that in some cases have forced closures or relocations.
In DIFC Zuma used to be licensed to 1 or 2am, now is back to 12am in line with Caramel and other new venues such as La Petite Maison.
Likewise Souk al Bahar should have a vibrant nightlife, but places such as Club Bang, Hive and Cru have all closed soon after opening due to apparent licensing restrictions and inconsistencies, whilst others such as Left Bank & Karma Cafe seem to thrive.
We are all aware of the local sensitivites, and respect them, but this has to be balanced with attracting business and tourists surely?
I run retail stores in two locations in the UAE, one is a stand alone store and one is in Ibn Battuta Mall. I keep lower prices on my European products than compared to Europe, basically deduct the VAT so my price here is roughly 20% off the European price. This works in the stand alone shop but in Ibn Battuta I loose money on a monthly basis due to the Mall Management that refuses to adjust their rents to market conditions. I pay a higher rent in Ibn than I do in Selfridges! I agree with you that many products are overpriced but it is not necessarily the retailers fault. If Mall Managements were working and thinking as Mall Operators rather than Landlords, the situation and prices in the town would be different and the end consumer would benefit.
I never set a foot in Burjuman after I had to make a AED 100 purchase to get free parking. It's a matter of principle! I spend money but refuse to be forced to.
Also, since moving to Dubai, I've constantly been shopping online. Even with courrier charges, I save money over the prices in malls.
How can retailers fail to realize that this is a global market and that you cannot multiply the price of a pair of Levi's jeans by 3?
You may get Chinese or Russian shoppers but not savy Western expats!
Guys...Burjuman doesn't charge for parking anymore....
I think the fact that so many believe this still to be true, shows how badly Bur Juman handled it. With a press flurry they told everyone come, and you will pay to park. Most still believe that. How sad that Bur Juman handled this so badly, if as you say they no longer charge. I for one gave them up years ago because of that and at the moment have no intention of going back.