By Courtney Trenwith
Marina Home Interiors has become one of the most high-profile furniture stores in the UAE over 18 years, thanks to an ever-growing and transient population, and now its three founding brothers are making their own move into markets across the world
With tens of thousands of expatriates coming and going every year, there is at least one thing always in demand in the UAE: furniture. So it may seem unsurprising that one of the country’s most high-profile furniture stores, Marina Home Interiors, has increased turnover by 20 percent year-on-year for almost two decades.
But co-founder Khurshid Vakil says the company’s success has had little to do with foresight; when he and his two brothers launched their first store in Dubai in 1997 they had no idea of the real estate boom to come. What they could see was that the emirate was sorely lacking inspiring furniture.
“At that point in time in Dubai [the furniture industry] needed a change, it needed an entry with a fresher appeal, with a fresher look and feel, with products that are not mass-produced and of very low quality,” Vakil tells Arabian Business ,sitting at an enormous wooden table in a funky, warehouse-style office at the back of Marina Home Interiors’ flagship store in the Mall of Emirates.
“The market needed something different and we believe we entered at a point which was just right. The real estate development growth starting in 2001 onwards definitely helped, definitely added or accelerated the growth that Marina has seen.”
The Vakil brothers were not to know, but four years after launching, Dubai opened up real estate sales to foreign buyers for the first time, creating what became one of the most active markets in the world.
More than $59bn worth of property changed hands in Dubai last year, according to the Dubai Land Department. And that was down 8 percent from the previous year.
But probably even more pertinent to Marina Home Interiors is the above-average rental turnover. The UAE population has soared from about 2.6 million to 9 million since 1997. Almost 90 percent are expatriates and Madar Research and Development predicts another 2.5 million people will move to the country by 2017.
Obviously, they all need beds, sofas, tables and chairs.
“This region is very unique that way,” Vakil says. “There’s not too many countries in the world that have such a huge transient population, which is extremely beneficial for any business, even ours.”
But the Vakil brothers are not the only businessmen to sniff out an opportunity. Increased competition has squeezed the market.
“Yes, a transient population helps a lot but that being said, Dubai also has its fair share of competitive brands. I think Dubai is highly saturated with all the brands in every category.
“Particularly in the last five years, we have witnessed so many brands coming into the marketplace, especially North American brands. They definitely have taken a fair share of the market. On the other hand, it has helped us to do bigger, better things with our brand and has helped us to evolve even faster, thereby reaching a wider target audience ourselves, without anyone cannibalising our revenues.”
North American and European companies have particularly entered the Gulf since the global financial crisis, when their own markets dried up. But even as competition increased and demand for non-essential decorative or luxury furniture slowed, Vakil says Marina Home Interiors’ turnover continued to grow at its historic average, except in 2009 when it increased 8 percent.
The company is now turning the tables and preparing to take on the Western brands in their own territory, with the launch of a store in London in 2016 and plans for Toronto, Canada.
“We’re very closely working towards entry into these markets. We believe given the number of expatriates that visit our stores on a daily basis and the response we have seen from our Western expatriates over the years… that our foray into these markets is a natural extension of our business and we foresee it coming very soon,” Vakil says.
In fact, the expansion is a revision of plans initially targeted for 2009, until the credit crunch hit.
“We were quite ready at that point in time but the financial crisis around the world did not allow us to move forward given what was happening, particularly in those markets we were interested in, typically North America and mainland Europe,” he says.
“Since then we’ve evolved multi-fold and we feel that we are more than ever before ready to move into the West.”
Marina Home Interiors, which already has stores in Bahrain, Oman and Saudi Arabia, also is opening in Qatar and Kuwait in the near future and is forecasting enormous growth in India and Africa.
“In terms of future growth there are a lot of new developments shaping up in various countries around the Middle East and North Africa. We’re well positioned in some of those new developments but we’re also seeking our entry aggressively into North Africa and some central African countries,” Vakil says. “We’re already in Egypt; we’re now in an expansion mode there. We would [also] like to see other countries in North Africa and central Africa as being our strategy for the regional growth.
“We are in the lifestyle business and many countries in Africa seem to have come of age when it comes to lifestyling and home fashion. We see it as a large opportunity. Typically, a certain age bracket defines that lifestyle aspiration and in Africa the aspirational target market is emerging year on year.
“We’re [particularly] looking at Nigeria very closely, eastern African countries, Morocco is somewhere on our radar [and] Tunisia is desirable.”
India is presenting similar opportunities as more of its population of 1.2 billion people gradually enter the middle class.
“The greatest strength that India has is the huge 20-30 years age bracket,” Vakil says. “Sixty-seventy percent of the population is between that age bracket and that itself tells you the potential in the coming years. People are [also] becoming very savvy, very lifestyle driven. There’s a huge influence of fashion across the country and fashion is not just about apparel but anything and everything you can think of.
“There’s also this staggeringly growing middle class growth that is growing stronger and stronger. India now has a confirmed 300 million people in the middle income class bracket who are independent, who have jobs that pay well who buy properties regardless of the size, and this we believe will drive the economic growth through 2015 to 2017.”
While Marina Home Interiors also is expanding in the GCC, with new stores in Oman and the first in Qatar due to open early next year, growth is unlikely to be as strong as the emerging markets.
“The population of Qatar is much, much smaller than one perceives it to be,” Vakil says, explaining the company’s seemingly late move into the world’s richest per capita country. “It’s only 2.5 million people, out of which only 1.5 million are expatriates, which are a combination of all classes of work.
“If you further split that, the target market that we’re seeking is much smaller, at this point in time. That being said, with 2022 in foresight the expatriate community is going to grow in leaps and bounds… [and there will be] lots of new contracts, new real estate, new hospitals, schools, institutes, multi-nationals, all positioned for the growth and these companies will require a certain calibre of people which will then fall into our domain.”
The company also has signed a franchise agreement in Kuwait, where the first store is likely to open at the end of the year.
Franchise agreements are likely to be the main business model for Marina Home Interiors going forward, having started its franchise business two years ago.
“Franchise is the way to go forward, particularly in those markets that we have lesser knowledge of but there is a very high potential in our category of business. So in the coming year you’ll see us operating in a number of markets [via franchise],” Vakil says.
“For example, we used to have our own owned and managed company in Saudi Arabia, which will now be moved to a franchise partner effective this year. That will be a new emerging direction for Marina within the region. Similarly there are other markets within the Middle East that we’re in discussions with, and in the Asian subcontinent.”
Vakil says franchising is allowing Marina Home Interiors to expand more rapidly and in areas they perhaps would not enter otherwise.
“It’s not practically possible to run your own owned and managed show rooms everywhere you go; there are various challenges and the biggest is market knowledge,” he says. “I think franchise partners bring in a wealth of market knowledge and infrastructure which helps easy entry to that particular market. We will use our experience in terms of brand synergy, in terms of marketing and a concept, show technicalities and know-how and will help a franchise partner to take the brand forward with their market knowledge.
“I don’t see any disadvantages. It’s a win-win situation: a franchise partner gets a ready-made business model — he or she only invests in the infrastructure - everything else is ready to go. There are [also] markets where we do not necessarily want to go or to expose our own investment for various reasons — [in those cases a] franchise partner comes in handy with local knowledge, investment and infrastructure.
“It’s not always about profitability. Yes, company owned and operated stores are more profitable because you control them but in this case, we’re not exposed to the investments that a franchise partner is willing to make.”
That understanding of the market and customers has been a crucial element in Marina Home Interiors’ success over 18 years, Vakil says.
“Marina has evolved year after year from a single unit into a large organisation — a lot of it is a result of what we have learned from our customers, their likes, their dislikes, their purchase patterns, their habits, their lifestyle aspirations. And importantly, the ever-changing transient population of the region which has taught us new things all the time,” Vakil says.
“The quality of customers that we receive walking into our stores — they’re all educated, they’re all well-travelled, they’re all very worldly in their approach, they know exactly what they’re seeking for their home. Every customer that walks in provides a certain knowledge that we learn from, our team learns from that knowledge and it’s filtered into a strategy which is studied carefully by our respective departments, whether it’s marketing, or operations or delivery or retail.”
But there is nowhere quite like Marina Home Interiors’ own home, the UAE.
“The UAE lifestyle is very different from anywhere in the world, it’s very unique, people are extremely outgoing, people are extremely savvy of style in general whether its fashion or apparel or home fashion or automobiles or other things, they’re very savvy,” Vakil says.
“People spend, people go out, people live a certain lifestyle that is very unique and very different from the rest of the world. That keeps the economic cycle moving on.”
So how does a furniture businessman deck out his own home?
“I must admit that initially [I would change furniture] quite often. But as you see and breathe furniture every day you tend to settle in and take it easy,” Vakil says. “So if there is a very inspiring piece that I see in our collection I might have one of those at home, but otherwise it’s pretty settled.
“Every piece is my favourite piece, there’s a certain attachment with everything that I have at home.
“I’m a minimalist. I like less clutter; I like pastel shades, whites being my favourite. I have a lot of whites at home.”