Dubai malls and retailing need a rethink
Posted on 09 June 2009 with no comments from readers
Dubai malls report that their turnover is down by around 30 per cent this year, while research firm iSuppli says regional television sales have plummeted 67 per cent to $236 million in Q1.
These are challenging times. Fast moving consumer goods have stayed in the shelves recently. This week the 65-day Dubai Summer Surprises promotion begins with the ambitious objective of equalling last year’s sales performance.
Bargain time
No doubt there are going to be some bargains. Shops have massively over-stocked this year, budgeting for an expansion that never happened.
And yet when you look around the shops at some of the prices being asked in Dubai it is no wonder that items have not been selling. Why would you pay Dhs750 for a city shirt in Dubai when you can buy one in a prime location in London for Dhs150?
Unfortunately the list goes on and on. Shops selling designer items seem to think that people in Dubai do not travel, and will not notice absurd mark ups, and this is a city that does not have any sales tax.
They are going to have to learn the hard way then by failing in business. You might find the odd passing tourist with more money than sense, but this is not a viable business plan.
High prices
The DSS perhaps will bring a moment of sanity back into Dubai shopping. Yesterday this correspondent was offered a polo shirt for Dhs850 which fell to Dhs350 after the first laugh, and Dhs300 on the second. Ludicrous over-pricing does not work.
It is true to say that Dubai shopping malls have never been at their busiest in the summer months, despite the hot weather that leaves residents with nowhere else to stroll. But retailers do seem to have lost the plot and forgotten the consumer amid a mania for huge shops, doubtless with high rents although the staff are still paid peanuts.
Recessionary periods often force business back to basics and there is clearly a need for a serious rethink about Dubai retailing, particularly at the upper end. But then the owners will not need to be told that, their sales figures will be screaming at them.
no Comments posted by readers:
The people in Hawaii also thought that the Japanese tourists also did not travel back in the 80’s and 90’s but learned the hard way after. Prices of clothes and other items are way over priced in Dubai these days but I feel that this is partly due to the rent that malls are charging tenants.
Andy, it’s not because of the rent, it’s because of greed. Retailers are now faced with the global market. The fundamentals here are still very good – low priced labour, no sales tax… competitive rents are not the reason for the downfall.
They need to start trading on global terms… get motivated, qualified and passionate staff, start writing retail business plans, rationalise stores and distribution. Learn what customer service is … it’s not “good morning sirmaaam”. Empower staff, buy appropriate stock for the market.
And get real about the business – retail is a mug’s game and it’s hard work. Get used to 10% growth instead of 70% and work, work, work!
As I said before, higher mall rents will lead to higher retail prices which will lead to loss of sales and then shop closures due to poor sales from high rents. Here is an example of this new mess which will start unfolding next in Dubai..