Reflections

Analyzing “Dubai- A city of malls, souks and shoppers!”, Our Experience with a collection of facts & figures

Dubai is truly a magical land….Not only because of oil wells and beautiful sand dunes but also because of its major developments in the retail and tourism industry in the recent 20 years. We witnessed the newly emerged little world town- Dubai, with amazing skyscrapers and fascinating malls.

The rich Arabs spend their money abundantly everywhere and foreign nationals apply their brains to utilize the opportunity to make money. Their main business is to keep entertaining people residing in UAE, attract tourists to this land, and of course earn profits by doing so.

We began our stay there by observing the nitty-gritty in the launch promotions of the world’s largest mall- ‘The Dubai Mall’ and ended our knowledge trip by on looking the launch day of Dubai Summer Surprises 2009 in the great ‘Mall of Emirates’. Both the events were one of its kind and a must see for fresh marketers stepping into fashion, retail, tourism, hospitality and entertainment industry as well. The days went by and we kept visiting malls, souks, market areas, hotels, resorts, Desert Safari, beaches and every such place where there is a possibility for marketers to please their creative urges.

Be it a ‘Deira city centre’ which is one of the oldest and convenient shopping place, housing value brands till the hi- end ones at one place, or a mall like Mercato possessing an architecture which resembles Greek culture architecture, making the Europeans feel at home. The busiest road E 11, better known as the Sheikh Zayed road, has a Times square known for its bowling and Ice café, an ‘Ibn Batutta Mall’ which is named after great the Arab traveler, mesmerizing all the visitors with the themes of six different countries. This road also has an ‘Oasis center mall’ which has an old-got-burnt-&-turned into-new tag attracting great footfalls in the new version. The newly opened ‘Dubai mall’ has a ubiquitous catchment area, with a remarkable malls-within-a-mall concept comprising a huge Gold souk, a dedicated fashion avenue, a heritage mall, endless brands, amazing food court with an out-and-out kids floor selling luxurious kids brands, always jam packed with mom dad and kids on their skating shoes! It also has the world’s largest walk in aquarium & underwater zoo, an ice rink, a kids zone and a waterfall..phewww!!! You name it and they have it to please you and your family. There’s an another mall which is experienced in entertaining its visitors and giving a absolute fun and shopping package for the family which is the ‘Mall of Emirates’ sheltering the Ski Dubai, an ice resort, which magnetizes people of Dubai to come and enjoy ice games in sizzling summers. The sophisticated ‘Wafi Mall’ has an Egyptian exterior and is in the shape of a pyramid where celebrities from all over the world drop in often to shop for luxurious brands and designer wear. Another one in Bur dubai, named ‘Burjuman’, the oldest mall of Dubai gives competition to Wafi as this one also has ‘Saks Fifth Avenue’ which is like an MBO of kuxury brands. Burjuman also has mid segment brands and is an attraction for sports lovers, with a big multiplex sized screen telecasting live cricket matches. This city of malls also has ‘Dubai Festival City’ anchored by Ikea and Hyper Panda- hypermarket and is a major attraction for mothers and children with a beautiful water front and an amusement park at another end.

All the malls in Dubai have distinct characteristics and diverse ways of attracting people. Every mall is doing wonders in terms of footfalls and conversions, and they get nearly doubled up on weekends as we noticed that there is a craze within people to move out of their shelters on Fridays and Saturdays. Not only malls, but market places like Meena Bazaar, Al Karama, Bur Dubai, Mirdiff Uptown are also doing great business through value seeking customers and people who love to scroll out in evenings to enjoy the real weather of Dubai.

It was a great learning experience to view and understand the overwhelming malls and the brands play within this city. Overall, Dubai is a marketer’s dream place to work upon not only because of the above mentioned reasons but also because of the government policies and framework which we have elaborated in the full report along with some other facts.
Read on to know the Real Dubai………….

Contents

Scroll down to view complete report or click on each chapter label

• Objective
• Overview
• PEST Analysis of Dubai Market
• Dubai Retail Market Facts
• Dubai Shopping Malls
  o Facts
  o Dubai Shopping Malls Group
  o Deira City Center
  o Mercato Mall
  o Mall of Emirates
  o Ibn Battuta Mall
  o Oasis Centre
  o Comparison between Dubai Malls
• Dubai Shopping Festival
• Dubai Summer Surprises
• Dubai Duty Free
• Major Players in Dubai Fashion Retail Industry
  o Landmark Group
  o Al Tayer Group
  o Bin Hendi Group
  o The Sharaf Group
• Dubai Malls Vs Indian Malls: Comparative Study
• Mall Management Aspects and Indian Scenario
• Suggestions for Indian Malls
  References

Objective

The objective of writing this report is to understand the key to the success of Dubai as a shopping destination and to have an in-depth understanding of mall culture in Dubai and how it is different from malls in India.

Overview

Dubai is the second largest state and the main port and commercial center of UAE. Situated on the two banks of Dubai Creek, Dubai has become one of the sought after tourists' destinations of the world. It is the place wherein beaches, deserts and bustling city life are all around. With the Dubai government's substantial intervention on industrial and commercial development, international investment and tourism, the city has turned to be one of the leading trading centers. With many skyscrapers and luminous offices rising up on the banks of the Creek it's said that Dubai's evolution is dramatic which actually began in the year 1960. Now Dubai houses some of the best hotels and restaurants, parks and gardens and a fairly good number of software companies (Yatra.com, 2009).

Shopping in Dubai is an experience in itself, especially during the festival days. Internationally acclaimed branded clothes, accessories and other goods at throw-away prices, a fun-filled ambiance where shopping, entertainment and culture from nations across the world are skillfully blended together and amazing discounts in just about everything – right from accommodation and air fares to the discounts at the shopping centers themselves – all combine to make Dubai an irresistible shopper's paradise. Shopping is a kind of national past time of people of the UAE. Moreover, apart from Dubai property, shopping is also a major attraction for tourists coming here. Earlier, there was the trend of doing shopping from traditional souks there, but now the glitzy and glamorous malls have replaced the fact (Dubai Travelogue, 2009).

One of the things that make Dubai a great place to go shopping is the fact that it is a duty-free port that low or mostly no duties or tariffs imposed on foreign products. For the bargain hunter it is a field teeming with game so thick that even taking aim is superfluous. In addition, credit cards can be used to withdraw money from ATMs in shopping centers across Dubai -a benefit that eliminates the hassles of going to banks to obtain cash (Guide2dubai.com, 2009).

These malls in Dubai are very well designed. These are a part of the great architecture and effort involved by well known real estate developers. The total spending at shopping malls last summer exceeded Dh1 billion, according to the Dubai Shopping Malls Group, which represents more than 30 malls in the emirate (Paul, 2009).Dubai's position as the fourth-most dominant retail city in the world is the result of concerted efforts on the part of the retail sector and events such as the Dubai Shopping Festival and Dubai Summer Surprises to offer value-added promotions on leading international brands (Dubaicityguide.com, 2009). Many of these malls have become destinations in themselves, with attractions ranging from indoor entertainment complexes, food courts, play areas, clustered retail areas, attached hotels, cinema complexes, coffee shops, indoor ski facilities to a large aquarium (Paul, 2009). As far as the prices in the mall are concerned, they are generally competitive.

PEST Analysis of Dubai Market

Political Environment

• Dubai is one the seven emirates that comprises of United Arab of Emirates. Although UAE’s political environment is stable; the structure of government at both the national level and in each of the emirates is relatively immature and dynastic in nature. At the national level, the UAE operates as a loose confederation of seven emirates. Since Abu Dhabi is the largest oil producer the ruler of Abu Dhabi typically claims the presidency, while the ruler of Dubai typically occupies the vice-presidency.
• Dubai shares legal, political, military and economic functions with the other emirates within a federal framework, although each emirate has jurisdiction over some functions such as civic law enforcement and provision and upkeep of local facilities (Government of Dubai Website, 2009).
• Dubai's government operates within the framework of a constitutional monarchy, and has been ruled by the Al Maktoum family since 1833. The current ruler, Mohammed bin Rashid Al Maktoum, is also the Prime Minister of the United Arab Emirates and member of the Supreme Council of the Union (SCU).
• The UAE has one of the most open trade policies within the GCC region with no protective duties and minimal import restrictions.
• UAE has been a WTO member since 1996, giving it access to newer markets and helping removal of the barriers to exports.
• Jebel Ali Free Zone is a free economic zone located in the Jebel Ali area of Dubai. It offers a set of products and services such as: Business centers, ready to use offices, Warehouses, factories, and infrastructure ready plots.
• There is a well defined, sound legal framework for business and a clear set of ownership rules. Foreigners are permitted ownership rights of up to 49% for limited liability companies established within the Emirate of Dubai and up to 100% for professional companies, branches and representative offices of foreign companies and free zones enterprises (Government of Dubai Website, 2009).
• The government has a long, consistent commitment to pro-business and liberal economic policies including the protection of intellectual property rights (Government of Dubai Website, 2009).
  

Economic Environment

• Dubai’s main revenues are from tourism, real estate and financial services. Revenues from petroleum and natural gas contribute less than 6% of Dubai's economy. Real estate and construction, on the other hand, contributed 22.6% to the economy (Arabian Business, 2009).
• As of February 2009 Dubai's foreign debt is estimated at apprx. USD 100 billion.
• There are no direct taxes on corporate profits or personal income except for oil companies that pay a flat rate of 55% and branches of foreign banks that pay a flat rate of 20% on net profit generated within Dubai (Government of Dubai Website, 2009).
• Customs duties are low at 4% with many exemptions, 100% repatriation of capital and profits is permitted.
• No foreign exchange controls, No trade barriers or quotas,
• Competitive import duties (4% with many exemptions)
  

Social Environment

• A large expatriate population (more than 80%).
• Crime Rate is almost Zero.
• Male comprises of more than 70% of Dubai population.
• More than one marriage is allowed.
• Traditional dress of men in Dubai is a dishdash or khandura - a full-length shirt-dress that is worn with a white or red chequered headdress (gutra) and secured in place with black cord (agal). Women wear a black abaya - a long, loose black robe that opens from the front. (Go Dubai, 2009)
• There is no dress code and tourists and residents are free to embrace any fashion as long as it does not offend anybody’s sensibilities.
  

Technological Environment

• Dubai has a network of seven industrial areas, one business park and three highly successful, specialized free zones of international distinction, two world class seaports, a major international airport and cargo village, a modern highway network, state-of-the-art telecommunications and reliable power and utilities all of which deliver efficiency, flexibility, reliability, reasonable cost and size (Government of Dubai Website, 2009)
• Dubai is served by over 120 shipping lines and linked via 85 airlines to over 130 global destinations (Government of Dubai Website, 2009).

Dubai Retail Market Facts

• The retail market in the Dubai continues to grow rapidly with future CAGR expected at around 12% (Just-Style, 2009).
• The increasing household consumption, affluent population, and booming service industry (including tourism, banking and trading sectors) are propelling growth into the nation’s retail industry. Also, the modern shopping malls anchoring hypermarkets and various shopping events like Dubai Shopping Festival make the country a more lucrative destination for retail industry (Just-Style, 2009).
• Tourism market accounts for 21% of Dubai’s retail spending, increasing to over 40% in Dubai’s new generation ‘destination’ shopping malls.
• Total number of tourist shoppers last year estimated at 1.9 million
• Total spending in Dubai’s retail sector is expected to surpass US$ 7.6bn by the end of 2009 (Colliers International, 2009).
• Increasing population and rising per head household consumption remains one of the key drivers for the growth of retail industry in the Dubai.
• Shopping events in Dubai (like DSS and DSF) and Dubai Duty Free (DDF) are the major contributor in the retail industry, with retail sales in DDF accounted for more than 9% of total retail sales in the country in 2007. (Just-Style, 2009).
• The cosmetics and personnel care market in the UAE has grown considerably and will continue to grow at over 8% per year in near future. (Just-Style, 2009)

Dubai Shopping Malls

The evolution of Dubai's retail sector as a truly world-class shopping destination has been swift and phenomenal, and in this growth, shopping malls have played a key role. Dubai's shopping malls have removed the dichotomy of shopping and leisure, and created a perfect blend of retail and entertainment that appealed to families - both residents and visitors. The philosophy of mall developers in Dubai has been to design shopping malls as vibrant retail and leisure destinations. The Dubai Mall, for example, has redefined the shopping and leisure experience with its rich array of components including the world's largest indoor Gold Souk; one of the world's largest aquariums featuring 33,000 living animals; an Olympic-size ice rink; an entertainment section including the region's first SEGA indoor theme park; and KidZania®, an 80,000 square feet children's 'edu-tainment' centre.

Facts

• Shopping mall supply accounts for over 70% of total retail GLA, with non-mall GLA representing less than 400,000 m² in total (Colliers International, 2009).
  
• Occupancy rates of 98% - 100% in destination shopping malls, with average occupancy levels over 90% across market (Colliers International, 2009).
  
• Shopping mall rents average US$ 1,200 per m² P/A, increasing to an average of US$1,800 in premium retail destinations such as Mall of the Emirates, Ibn Battuta Mall and Burjuman (Colliers International, 2009).
  
• Anchor tenant rents average US$ 135 per m² P/A at present. Increasing competition for anchor tenants has reduced average rents for forthcoming malls to US$120 per m² P/A (Colliers International, 2009)

• Estimated footfalls determined less by spending power and more by location and available leisure amenities – Mall of the Emirates currently achieves the highest footfall at 2 million visitors per month. Deira City Centre registers 1.5 million visitors and Ibn Battuta Mall hosts just fewer than 1 million visitors per month (Colliers International, 2009).
• Mall of the Emirates, Mercato & Deira City Center continue to trade at close to 100% occupancy (Eye of Dubai, 2009).
  
• Festival Center, Dubai Mall, and Dubai Marina Mall are all currently trading with noticeable unopened stores (Eye of Dubai, 2009).

• GLA Per Capita set to increase to 2.35 m² in 2010, reduced to 1.14 m² when accounting for expected growth in tourism inflows. Retail sales, however, will have to grow at a steady YOY growth rate of 35% to sustain current performance trends (Colliers International, 2009).
  
• The scale of forthcoming retail supply and increased competition is nevertheless expected to bring about an overall softening in rental rates at the market level.
• Smaller and older malls will be required to reposition themselves to appeal to specific market segments, in order to reduce the impact of sharp vacancy increases and downward pressure on rental rates made likely by market oversupply (Colliers International, 2009).
• New, larger malls with strong tenant mixes are expected to maintain current absorption rates, driven by strong economic fundamentals, continued brand diversification and the evolution of the ‘shopping resort’ concept towards greater incorporation of leisure amenities (Colliers International, 2009).
  
• Established malls with sound anchorage, positioning and parking continue to deliver more stable rental income streams (Eye of Dubai, 2009).