Dubai retail sales seen falling 30pc
Dubai, July 7, 2009
Dubai luxury retailer Bin Hendi Enterprises expects retail sales in the emirate to drop by up to 30 per cent this summer versus last year, the company's president said, as the financial crisis continues to hurt retailers.
'25 per cent to 30 this summer, compared to last year,' said Mohi bin Hendi, who heads Bin Hendi Enterprises. He did not give details of his company's retail sales.
Despite the gloomy outlook, Bin Hendi, which distributes luxury brands such as Brioni, Calvin Klein, GF Ferre and Hugo Boss plans to expand into Gulf Arab countries and bring four new high-end European brands to the market this year.
'My strategy is to expand in the downturn so that when the market picks up we're going to be there,' Bin Hendi said.
Bin Hendi Enterprises is in talks with mall owners and developers to increase its retail outlets in markets such as Qatar, Bahrain, Kuwait and Abu Dhabi.
'Qatar is a good emerging market with a lot of demand for retail,' Bin Hendi said, adding the company was in initial negotiations with mall builders and planned to enter that market at the beginning of next year.
The wider Gulf region experienced an economic boom in the six years to 2008, and luxury retailers expanded quickly into Dubai hoping to capture sales among wealthy Gulf Arabs and tourists to the most popular Arab destination after Egypt.
Dubai's retail sector was hard hit as the financial crisis crimped spending habits and the number of tourists to the emirate fell. Retail, which generates a third of Dubai's gross domestic product, has slowed markedly.
Bin Hendi closed an entire avenue of its stores in Deira City Centre, one of Dubai's most popular malls, this year, due to the absence of high-end customers.
'We closed down the shops because it did not make financial sense for us,' Bin Hendi said. 'We cannot sustain it any more because the clients are not there...if there are no sales, where will the rent come from?'
Mall shops in Dubai, one of seven emirates comprising the United Arab Emirates, may see tougher times and even closure if landlords continue to stall on renegotiating high rents, luxury retailer Rivoli Group told Reuters in June.
Bin Hendi said mall owners had to be 'more accommodating to their clients' and 'the smart ones will bring rent prices down' if they wanted to avoid store closures.
Hendi said he had no plans to tap into the mid-market segment, despite the luxury sector taking a hit.
'We are not going to go down and start selling cheaper products,' he said. – Reuters