Dubai retailers starting to innovate – Giordano chief
The rising costs in retail industry could mean some will collaborate in order to achieve greater efficiencies, according to the MD of Giordano Middle East.
Costs for Dubai’s retailers, including higher rents, have meant tighter margins for many, but Ishwar Chugani, the head of Giordano’s operations in the region, says retailers in the emirate are starting to look at ways of streamlining their operations.
“There’s possibly going to be a lot of consolidation, and the bigger guys are going to get stronger with more brands. I feel there's a lot of opportunity, not for competition but for collaboration on reducing costs, maybe by using the same freight forwarder, things like that where you can get economies of scale,” he said, in an interview withArabian Business.
“Lately we have spoken to a few other retailers about working with contractors. You have to be innovative, and always find new ways of doing things. The cost of everything is going up; it's relative to what's happening in the market,” he added.
Chugani said the nature of retail in Dubai has always been cyclical and despite the rising costs, he believes there are opportunities to grow sales.
“In a market where everybody is playing the same field, if costs go up everybody has to realise that the costs are going up. So how do you manage that? I’ve been living here for 35-36 years, things go up and things go down, and at the end of the day you need to sometimes really look at what you do, what brought you where you are and then decide.
“We’ve gone through that before. Costs have gone up before and tourists have stopped coming from one place, but one door opens and another closes. Dubai has always been like that. When we came in there was one mall and hardly any brands. Today there are 300 brands. If we can still grow by 8 to 10 percent today, it means there's opportunity, otherwise we would have been extinct,” he said.
Chugani, who is also a founding member and advisor of Middle East Council of Shopping Centres, said there are plenty of opportunities for neighbourhood malls to develop and for more outlet stores to open in Dubai. He said the Mall of the Emirates and Deira City Mall are two of the best malls in the region.
“Mall of the Emirates globally, in terms of sales per square foot, is still one of the highest malls in the world. I guess the size just right,” he said.
Yas Mall in Abu Dhabi, the UAE’s second largest mall, has not produced the return as yet for retailers, and Chugani said it will come good eventually, citing the example of Dubai Mall.
“Yas Mall will take some time. I would still give it more time. I believe it's more of a weekend [mall]. It may have been a bit early [for us], but then you have first mover's advantage. But we see the trend and it’s moving. Once the residential comes up, you have the leisure and you have very good brands. I think it has a recipe for everything.
“Even with Dubai Mall, in the first two years, everyone was saying 'what have we done', but then Dubai Mall was opening during the crisis, 2009/10. Today, it's wow,” he said.
