While many international retailers in North America and the EU have been forced to tighten their belts over the past three years, their counterparts in Dubai have benefitted from steady expansion. Indeed, the emirate’s international and luxury retailers recovered relatively quickly from the global economic crisis, despite falling incomes throughout the region. This is largely a reflection of the spending power of the local population, which has a substantial number of high-net-worth individuals and, more broadly, high levels of disposable income.
A KEY DESTINATION: The UAE is one of the wealthiest countries in the world. According to a May 2012 study by the Boston Consulting Group, a global management consulting firm, 5% of UAE households had $1m or more in personal wealth on an annual basis, the sixth-highest figure in the world. Similarly, four of every 100,000 households have a personal wealth of at least $100m, according to the study, which ranks the country in the world’s top 10 in terms of ultra-high-net-worth households. A study released in early 2012 by Forbes magazine, meanwhile, showed the UAE had the sixth-highest GDP by purchasing power parity per capita, at $47,439. “Markets in the Gulf have become more lucrative and open, and this has resulted in more money in people’s pockets to spend,” said Vipen Sethi, the CEO of Dubai-based retail conglomerate Landmark Group.
According to an April 2012 report by CB Richard Ellis (CBRE), a multinational real estate services company, the UAE is the second-most-targeted city for international retailers in the world. After carrying out surveys in more than 200 cities, the firm reported that 53.8% of 326 of the world’s leading retail brands were present in the UAE, less than 2% fewer than London, which took the top spot. “For retailers, the UAE remains a very important market both for those brands currently trading and those aspiring to enter the market,” said Nicholas Maclean, the managing director of CBRE Middle East.
MAJOR PLAYERS: The majority of the international brands for sale in Dubai’s malls and department stores are distributed by a handful of local family-owned conglomerates. The Chalhoub Group, for example, is the sole distributor of more than 280 luxury brands, including Christian Dior, Dolce & Gabbana and Ralph Lauren, to 400 stores across 14 countries throughout the region. The Al Tayer Group distributes fashion and jewellery brands including Alexander McQueen and Gucci, to more than 180 retail outlets in 12 countries in the region. The firm also holds the distribution rights to major auto makers, including Ford, Ferrari and Maserati, to name a few (see overview).
The Paris Gallery Group, meanwhile, is the retail arm of Al Fahim Holdings, a privately owned conglomerate. In addition to distributing more than 450 major international brands, the company operates more than 40 Paris Gallery stores throughout the Gulf. The firm distributes Chanel, Burberry, Cartier and Givenchy, among others. Bin Hendi Enterprises, meanwhile, owns the local rights to more than 75 international brands, including Brioni, Miss Sixty and Hugo Boss. In addition to retail, the company, also operates subsidiaries in hospitality, construction, and interior and furniture design.
NEW ENTRANTS: As Dubai’s reputation as a centre for global brands has grown in recent years, a number of major retailers have announced plans to set up shop in the emirate. Reports that Apple, the most valuable company in the world as of mid-2012, is considering opening a store in the Dubai Mall, which, with 54m visitors in 2011, was the most-visited shopping and leisure destination in the world according to the mall’s developer, Emaar. Other firms that have either recently opened stores in Dubai or are planning to do so in the near future include US-based brands American Eagle Outfitters, The Limited and Macy’s; Turkish firm Mudo City; and Canadian technology firm Research In Motion, which manufactures BlackBerry mobile devices.
“It is not just about the commercial opportunity in Dubai,” said Ahmed Ismail, CEO of Majid Al Futtaim Ventures. “It’s also about brand building and utilising Dubai as a platform to extend one’s reach into countries that would otherwise not have access to such brands.”
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