Splashing the cash

Raza Beig, CEO of local mid-market clothing brand Splash, is hoping to compete with the A-listers of the fashion world
Splashing the cash
Over the next eighteen months, Beig says Splash will open outlets in up to sixteen new cities in countries across Africa, South Asia and potentially the Far East.
By Daniel Shane
Sun 01 Jul 2012 08:18 AM

When it comes to the world’s fashion capitals, it is not an injustice to say that Sharjah does not rank alongside Paris, Milan or London.

However, it was in this culturally conservative Gulf emirate that one of the UAE’s best known fashion exports was born.

Founded in 1993 with a single outlet, Splash has found success with a mix of in-house designs and imported Western labels, combined with highly competitive pricing. In the nineteen years since its inception, the brand has grown to more than 140 stores across eleven territories, including Saudi Arabia, Lebanon and Egypt.

The company is now a key component in Micky Jagtiani’s Dubai-based Landmark Group, an empire which turns over more than $4.7bn per year.

While Splash’s outlets are a common sight across the Middle East’s glut of malls, CEO Raza Beig has set his sights on significantly expanding the retailer’s presence outside of the region. The inspiration behind this, he says, is two of the UAE’s best-known exports.

“About ten years ago some very senior retailer told me ‘brands are made in the West’ and I challenged that,” he recalls. “We’ve had brands like Emirates and Etihad, who are regional brands, and have made not only a mark internationally, but have unmatched quality standards.”

Over the next eighteen months, Beig says Splash will open outlets in up to sixteen new cities in countries across Africa, South Asia and potentially the Far East. The markets Splash will be moving into in this timeframe include Libya, which has apparently found its thirst for fashion post-Gaddafi, Kenya and Sri Lanka.

Given Splash’s status as a newcomer in these markets, the company will be entering them purely on a franchise basis, rather than making its own investments or through joint ventures, Beig says.

“Historically, Landmark has invested in every market it’s gone into. When we went into Egypt, we put our own money in, when we went to Lebanon we put our own money in, but now we’ve decided that we’ll take the franchise route. The person on the opposite side understands their markets very well and shares the risk,” he explains.

Beig says that the criteria for licensing the Splash brand are stringent. The retailer has a vigorous process for vetting potential franchisees and gauging their suitability, he adds. These range from financial health to prior experience operating in the fashion industry. Beig is keen to emphasise that it is the latter he values more.

“We like to work with retailers, not just people who have money. Retail is not just about opening a shop — you have to understand the science of it. Our partners have [to have] a retail background,” he adds.

Beig explains that over the next year-and-a-half, Africa will be Splash’s “main concentration” for franchising, but Far Eastern markets are also on his radar: “There’s a lot of dialogue from the East but we’ve not yet finalised,” he says.

The decision to franchise the brand was made six months ago, the Splash boss explains, although the retailer has been presented with a number of previous opportunities to do so over the years.

“Over the last five years, I must have had at least 200 or more franchise requests from across the world, from [countries including] Sri Lanka, Pakistan, mainly from Eastern countries, but also Russia and Eastern Europe,” Beig recalls. “But in all honesty, we were not ready.”

To prepare itself for its expansion, Splash has put in place an extensive international team, which is charged with getting franchisees to “understand the DNA of the business”, from product lines, to marketing, to store design.

“The day I give my brand as a franchise I want to make sure that I empower the retailer with not only the retail habits and store designs, but also on product, because the biggest challenge when you see a lot of international retailers come over [to the UAE], the first two or three years they struggle because they just dump the product over here,” Beig believes.

But it’s not just in terms of geography that Splash has ambitions.

A stand-out trend among fashion retailers in recent years has been the celebrity tie-in. In 2012 Splash scored something of a coup in securing the distribution rights to Salman Khan’s ‘Being Human’ range of clothing. Khan is one of Bollywood’s richest acting talents and Beig is wholly aware of the commercial impact such an endorsement attracts.

“It seems to be the norm. Celebrity endorsements and celebrity diets are what high-street is now doing,” he says.

Despite this, Beig believes that leveraging celebrity status may not always be the perfect fit for Splash’s mid-market audience. “We’ve talked to quite a few [celebrities] but sometimes it’s that our price points are not matching,” he explains.

“It can be 25 percent more expensive, but if I’m selling a t-shirt at AED50, the celebrity t-shirt can’t sell for AED100 or AED150. We’re into volume. If I have to buy [stock] at a certain price point which is not our store price point, I think that my quantities will come down dramatically. So it doesn’t make sense — we want as many consumers as we can entertain,” Beig adds.

Beig insists that Splash remains purely a mid-market, high-street brand. For example, the price for a pair of denim jeans from the retailer starts at a thrifty AED45 and runs up to around AED185.

Despite Splash’s perception as a budget brand, Beig is still eager to strike partnerships with more premium players, although he says doing so at a price point that is still attractive to the consumer has proved challenging.

“We recently tied up with Swarovski Elements, so basically a lot of our apparel will [be branded with] Swarovski Elements. This is very premium, so bringing them to our value was very tough. It took us almost a year of negotiations but finally they’ve come on board, and hopefully by this Eid a lot of our apparel will have Swarovski Elements as a tag,” he says.

Juggling premium brands such as Swarovski Elements and Salman Khan’s Being Human with Splash’s position as a midmarket player is not the only challenge Beig is facing in his role.

In light of the retailer’s expansion, he is also tasked with acquiring suitable property in which to open new outlets. Beig says that in Splash’s home market of the UAE this has been particularly tough.

“Property has always been the challenge, especially in Dubai and the UAE. Rents are very high, sometimes unreasonable,” he explains. “Compared to the [rest of] the GCC, the UAE is very expensive, but saying that the UAE has better-quality malls and the authorities have done a fantastic job in bringing the extra feet of tourists.”

One way that Beig has found effective in combating rising rents and lack of retail space is introducing flexibility in Splash’s space demands. In years gone by, he says, Splash would operate solely out of larger 15,000 sq ft outlets, which have become increasingly harder to secure. “Earlier, I used to go to a mall and say ‘this is my concept — I want a 15,000 sq ft store’ and people would say ‘I’m sorry, we don’t have that’,” he explains.

To remedy this, Beig created three years ago what he calls his ‘Boutique’ format. The first of these outlets launched at Ibn Battuta mall in Dubai, and is essentially a consolidated, 5,000 sq ft version of Splash’s typical 15,000 sq ft. The decision to diversify the outlet sizes has made acquiring adequate property more straightforward, he says.

A final challenge that Splash and Beig consistently find themselves up against is the entrance of new retailers into the regional market. In recent months, the likes of M&Co and Tesco’s fashion retail arm have announced expansions plans in the Gulf. However, Beig does not accept that this threatens the position of home-grown brands like Splash.

“What we have in this region is the loyalty of the consumer as well as the sensibilities of the region,” he claims. “We’re very sensitive to the way they dress and more than anything else we really look at all the [competitors] who come in and try to understand their strengths.”

“Over the years as competition has come in we’ve only seen ourselves grow. The consumer — who votes through his wallet — recognises what we bring to the table,” he adds.

One day, he hopes, Splash could even find itself competing with the A-List of the fashion retail world in Western markets. “Right now we’re not sitting in their home markets,” Beig concludes, “but hopefully at some stage in life, we’ll sit there too.”

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.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.