Having what it takes to ramp up growth in the UAE

Having what it takes to ramp up growth in the UAEImage Credit: Supplied

The retail industry may account for a fraction of the UAE GDP, but it sits on a strong position as the tourism industry and infrastructure investment continues to boom across the country. Regardless of whether online shopping and e-commerce are progressing, the strategic location and physical presence of a store will continue to help successful retailers make the greatest use of their store portfolios and brand marketing to attract customers.

Research begins with identifying what it takes to be successful in the UAE and how to generate the best return from retail store portfolios. Retailers need to consider a number of factors to occupy a retail premise and achieve success from it.

From infrastructure quality and consumer demand to ease of setting up and running, the UAE offers international and local retailers a promising opportunity to enter the market or expand its presence further as economic conditions continue to grow.

In regard to location, Dubai will continue as a strong hub for retailers with the expansion of Dubai Mall and Mall of the Emirates already well underway and new malls, including Nakheel Mall and Deira Islands Mall, and also the 'walkable' environments of City Walk in Jumeirah.

The greatest expansion by far, however, is taking place in Abu Dhabi where nearly 1 million square metres of new mall space is being planned over the next five years. Developments include Yas Mall which is due to open shortly, The District on Saadiyat Island and Sowwah (Al Maryah) Central which broke ground just recently.

The quality of transportation is a key factor contributing to a retailer's success. The growing young population and increasing number of expats and tourists will continue to attract further business, based on the accessibility of quality roads and direct metro links to the malls. The accelerated advancement of infrastructure over the last year has spurred the UAE's position as a regional — and international — business hub.

The quality and quantity of local suppliers, business freedom, and regulations are all given high priority when entering a market. If the investment into a relationship is made by native speakers with the patience to understand the people, local cultures and procedures, even the most opaque local bureaucracy can be overcome.

For major international retailers, the UAE offers strong franchise partnerships to support market entry providing a relatively low resource and capital requirement. Franchise operators such as Al Tayer Group, Landmark Group, Al Shaya and Chaloub Group are some of the largest single retailers operating international and local retail brands across the UAE and the wider region.

Prevalence of foreign ownership and trade freedom in the UAE should also be addressed by retailers.

The UAE has seen a dramatic increase in population in 2014, driving further growth across various outputs such as property and infrastructure projects to name a few. The country has one of the world's highest population growth rates, increasing at approximately 7.6 per cent a year and expected to hit 9.9 million by the end of 2014.

Disposable income for the majority of nationals and segments of the expat communities rose earlier this year, leading to the expected boost in consumer spending. But while domestic demand often forms the basis of the retail business case, the power of tourism cannot be ignored.

With many of the major shopping destinations also being purposely tied to key hospitality destinations, retailers are able to tap into the 'tourist dollar' more directly than in many other global locations. Also the visitor numbers, particularly in Dubai, could at the very least double over the next five to six years. Therefore future growth appears to be there.

With a strong economic environment driven by solid labour costs and inflation, the UAE has a promising economic position for retailers and investors at large. The Dubai economy has seen the fastest growth rate since 2007, driven by solid performance across manufacturing, tourism and construction in the last year.

The UAE's GDP growth is expected to rise 5 per cent plus due to the Dubai Expo 2020 preparations, and further progress in the non-oil sector has strengthened market sentiment. Some say that shopping is the national sport of the UAE and with market demand across the country picking up as optimism improves, it is likely to remain so for some time to come.

Did you know - Young entrepreneurs grab shops on Deira Islands

Source: Christopher Seymour, Special to gulfnews.com

The writer is a Partner and Head of Property at EC Harris, the natural and built asset consultancy in the Middle East

For Rent


View more properties

For Sale


View more properties