Dubai: UAE malls and their retailer tenants have only one thing on their minds right now — get shoppers back in.
If that means going to any extent possible with promotions — even 70- or 80 per cent off on prices in some categories — then do it. The feeling is that, if they manage to get people into the malls, they will hang around for a bit of actual shopping and not just head directly for the food court or cinema.
Retailers believe that by sacrificing margins now, they will at least ensure they are not left holding stock when the new season comes around in September.
Some even express optimism that a turnaround is not too far off.
“If by the fourth quarter, overall sentiment starts to improve, the retail sector will have much to cheer about,” a retailer said. “But for now, the only thing that interests shoppers in the UAE are the prices and how low they are going.
“It will take a while before shoppers get comfortable paying the full price. Until then, retailers need to keep the offers coming.”
Clearly, malls and their tenants are hearing the message.
As expected, the three-day “super sale” that launched the Dubai Summer Surprises provided a sales spike.
Discounts or savings of up to 90 per cent were available during the three-day run.
But the aggressive campaigns have been sustained since then.
It’s a two-front battle that is being fought — one to make shoppers feel comfortable about spending on non-essentials and, two, not be overawed by competition from online shopping portals.
In the process, they are using the same aggressive pricing and targeting strategy online sites have been deploying.
Mall owners too realise that they cannot get by just by drawing traffic to their F&B stores and entertainment zones.
What they don’t want happening over and over again is to see some of their retailers exit because of low business. All such exits cause disruptions.
Helped by the promotions, clothing sales are seeing some marked improvements this quarter, while the beauty and skincare category is holding steady, market sources add.
Home accessories demand still hasn’t picked up, while gold and jewellery sales — despite promotions across the six months — remain stuck in a rut.
Now, malls seem to have hit on a new strategy to get the crowds in — open designated “outlet” stores, where off-season apparel and accessories can be sold. The first one at Dubai Festival City is opening on Tuesday (June 26), spread over 2,300 square metres.
“This makes it the first department store styled “outlet” opening at a major mall in Dubai,” said Vijay Samyani, CEO of Concept Brands Group and operator of the “Brands4u” stores. “Except for the mega-malls, shopping destinations in Dubai are willing to experiment with outlet stores, if they can pull in consistently higher traffic.”
There are three levels of clearances — we have to get the sign-off from the brands saying that what will be displayed at the store will be off-season apparel and not the current line.”
– Vijay Samyani | CEO of Concept Brands Group
The company plans to have eight such stores in the UAE by year end, totalling 14,000 square metres of leased area. (In Dubai, there are two stand-alone mall destinations bearing the outlet stamp — the Dubai Outlet Mall and the Meraas-owned Outlet Village. There is another one in Al Ain.)
Launching stand-alone outlet stores is not an easy process, Samyani said, and prospective retailers need to be patient in clearing all the requirements.
“There are three levels of clearances — we have to get the sign-off from the brands saying that what will be displayed at the store will be off-season apparel and not the current line,” said Samyani. “The same process has to be repeated with the brands’ local franchises and the mall managements.
“Only after these approvals can a store be opened. All merchandise need to be a season or two old to be defined as an “outlet store”.”
There has been market speculation that a couple of older malls in the city are considering relaunching themselves as full-fledged outlet shopping destinations. Much, of course, depends on their location and the audiences they are targeting.
Meanwhile, the Dubai Outlet Mall itself is going through a major expansion, with an eye on the growing resident base living at communities in Dubailand and Silicon Oasis.
Concept Brands Group itself is planning to launch a small-scale outlet mall in Dubai, though the location hasn’t been decided. Samyani says the current aggressive pricing from traditional retailers need not impact on traffic to outlet stores.
“The three-day super sales happen only twice a year — the other campaigns from retailers are also more time-bound,” said Samyani. “Outlet stores can maintain the same low price strategy all through the year. That will remain their biggest strength.”
Malls in the UAE go easy on rents
The efforts to control rent increases in the retail sector seems to be paying off. More retailers are confirming their contracts are being renewed without any increases, or even some cuts. This is particularly so where rents are based as a percentage of sales. Now, those percentage demands are being brought down, even at the biggest malls in the city.