RETAIL THOUGHTS ANALYSIS OMNICHANNEL MALL WATCH CEO TALKS Nizar Choucair Top 15 retail cities aswaaq Yas Mall Anthony Chalhoub

www.imagesretailme.com June 2017

BEAUTY IS BIG BUSINESS

Bahrain BD5.0 | RO5.0 | KD4.0 | QR50 | SR50 | AED50

CONTENTS

RETAIL THOUGHTS VOL 7 ISSUE 9 6 You need passion to achieve your goal RETAIL THOUGHTS ANALYSIS OMNICHANNEL MALL WATCH CEO TALKS Nizar Choucair Top 15 retail cities aswaaq Yas Mall Anthony Chalhoub NEWS 10 Fashion Forward Dubai takes its pop-up to KSA www.imagesretailme.com June 2017 11 GFG-Emaar Malls to develop Namshi 12 Danube to revolutionise KSA’s online grocery space 13 Majid Al Futtaim officially opens Mall of 14 Emaar Square Mall in Istanbul is now open 15 City Centre Al Zahia set for 2020 launch 16 Lulu Group ventures out in Sri Lanka BEAUTY IS BIG BUSINESS 17 25+ new concepts to open at Bawabat Al Sharq Mall 6

Bahrain BD5.0 | Oman RO5.0 | Kuwait KD4.0 | Qatar QR50 | Saudi Arabia SR50 | United Arab Emirates AED50 ANALYSIS 18 18 Dubai and Doha are top five markets for new entrants COVER STORY 26 The MEA beauty market is estimated COVER STORY to be worth $30 billion and set to grow 26 Beauty is an age-old tradition at a CAGR of 3% during the period 2016-21. Current spend per capita in the MEA is $21 for beauty and personal YOUNG & ENTERPRISING care products. Globally ranked among 38 Entrepreneurship is fulfilling despite challenges top ten countries, the UAE’s per capita spend is $239, while Saudi Arabia ranked among the top 30 at $164 . FOCUS 40 About all things leather 47 44 38

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INTERNATIONAL VIEW MALL WATCH 44 A brand that popularised velour tracksuit 56 Truly a destination within a destination LEISURE & ENTERTAINMENT REAL ESTATE 47 New rules define the future of entertainment 58 Building partnerships OMNICHANNEL CEO TALKS 52 Online-offline must be a delicate balance 60 Resilience and agility are crucial in business FOOD WATCH STORE OF THE MONTH 54 Peppermill continues to evolve 66 Giordano

JUNE 2017 | RETAILME | 3 Dear reader Time to VAT It’s time to get ready for the 5% Value Added Tax (VAT) across the UAE from January 1, 2018, which will have long- term implications on the retail sector. Saudi Arabia too is www.facebook.com/Images RetailME expected to implement VAT beginning January 2018, while www.linkedin.com/Images RetailME the remaining four GCC states Bahrain, Kuwait, Qatar and www.twitter.com/Images RetailME Oman may follow suit in stages to meet the 2019 deadline. www. youtube.com/Images RetailME VAT is a consumption levy imposed on goods and services and is near universal across the world. The decision to Editor-in-Chief Amitabh Taneja | [email protected] introduce it in the GCC states comes from the need to diversify the regional economy and boost revenue EDITORIAL generation and, in particular, to reduce dependence on oil Managing Editor revenues. The change has far-reaching implications both for Lawrence Pinto | [email protected] businesses in the region and for the service providers and Editor accounting and financial professionals. Rupkatha Bhowmick | [email protected] “The tax procedures law is in the final phase, and will DESIGN & PRODUCTION soon be issued and published. The technical legislative Creative Head committee is debating the law in preparation for submitting Johnson Machado | [email protected] it to the Cabinet for approval, while the selective draft tax ADVERTISING & MARKETING law will soon come up for discussion by the committee,” Manager – Business Development Shaikh Hamdan Bin Rashid Al Maktoum, deputy ruler of Nikhil Gupta | [email protected] Dubai and minister of finance, announced last month. SUBSCRIPTIONS On the surface, VAT appears to be a complex topic, and the Jehan Mandap | [email protected] finer details of the law are worked out as the countdown to January 2018 begins, but the framework is reasonably clear. The tax will apply to almost all goods and services, except DISTRIBUTORS basic food items, education and healthcare. Freehold residential properties sale or lease during the first three years is also exempted. It is compulsory for all businesses with an annual income of AED375,000 to SOURCES: register with the VAT system. Deadline for registering with UN, IMF, WEF, WTO, the VAT system will start in the third quarter of 2017 but will Economic Intelligence Unit, Euromonitor, be compulsory in the fourth quarter. Businesses with an National Statistics, National Statistical Planning, annual income of AED187,500 and above have the option National Chambers of Commerce, to register with the system. Look out for our forthcoming Department of Tourism and Commerce Marketing (DTCM), Dubai, issues for the latest updates on the subject. Retail International, AC Nielsen, KFI Research, McKinsey, Al Rajhi Capital, Al Masah Capital Ltd, A T Kearney, Alpen Capital, Cushman & Wakefield, Planet Retail, IDG, Colliers International, CBRE, JLL.

PO Box 502316, Dubai, UAE Disclaimer: Every care has been taken to ensure the accuracy of information contained in this publication. Tel +971 4 4467555 Fax +971 4 4469707 However, the publisher will accept no responsibility for any error or omission in the content. Email: [email protected] Copyright © 2017 IMAGES Multimedia fz llc. All Rights Reserved. www.imagesretailme.com No part of this publication may be reproduced without the prior written consent of the publisher/copyright owner.

4 | RETAILME | JUNE 2017 RETAIL THOUGHTS You need passion to achieve your goal Every person must have and sold chocolates. It was a passion, be it in retail a great feeling to spend time or otherwise. If you’re there. I preferred going to the shop to assist my uncle not passionate about in the sale of chocolates than a particular thing, you playing with my friends. won’t be driven enough to That’s the kind of love I had achieve your goal in most for chocolates and the art of cases. Passion drives you selling the product. When I was 11 years old, I to achieve even goals that wanted to quit school to join seem difficult. my uncle in his store. But my When you see your father said no. He convinced dreams turn into me it was important to attend reality, the feeling of school to gain an elementary education. So we arrived at a accomplishment is pact: every day after school, indescribable. That’s what I’d go to my uncle’s store to I’ve seen in my life. It was help him. I did that diligently an intense passion for two every day until the age of things – chocolate-making 18, learning the tricks of the trade, the art of chocolate and trading – that drove making and the way to talk me to start Patchi, a brand to customers and build a that’s globally recognised relationship with them. today, shares Nizar Slowly, my business Choucair – founder of acumen grew. It wasn’t something I was taught Lebanese high-end luxury, or learnt in a professional gourmet chocolate concept course. It’s something I Patchi, variously labelled learnt on my own. I never the Rolls Royce of chocolate got a formal degree in the and ‘jewellery’ chocolate – art of chocolate making. I learnt by using my eyes with RetailME and tongue. Even today, I taste and approve every No book can teach piece of chocolate at Patchi. you what practical People are born with certain experience can skills. For some, it’s fashion My uncle from my mother’s designing or mechanics. For side owned a shop that sold me it’s chocolates. I’ll never chocolates and candies in have enough of chocolates. downtown way back in the 1940-50s before the Pioneering the idea war started in . Back of chocolate gifting then, Lebanon was a hub for From setting up a small trade, transport and fashion kitchen in my house to make in the Middle East. chocolates, I finally opened I’ve had this strange my first boutique shop in the attraction for trade and retail upmarket Al Hamra Street in ever since I was four-five Beirut in 1974. From day one, years old. Every day after I was convinced I didn’t want school, I would go to my to import chocolates like any uncle’s shop to watch the way another chocolatier. I used to customers walked into the go to Italy very often looking store, looked for chocolates, for ingredients and would how my uncle spoke to them also visit Napoli frequently

6 | RETAILME | JUNE 2017 MISC. UPDATES

Lulu Group ventures out in Sri Lanka AE-based retailer Lulu Group has inaugurated Ua world-class sourcing, food processing and export unit in Sri Lanka. The move will further boost its sourc- ing operations and help bring quality products to its large chain of hypermarkets. Sagala Ratanayaka, chief of staff to the prime minister & minister for law & order and Southern Development, in- augurated the group’s project. YAS Lank Duminda Disanake, agriculture minister; Navin Disanayake, minister of plan- tation industries; Eran Wick- ramaratne, state enterprise Sagala Ratanayaka, Yusuffali MA, Salim MA and other officials development minister; Yusuf- fali MA, chairman of Lulu tions around the world. Ministry of Southern Develop- Currently, Lulu Group oper- Group; and other officials -at “It is part of our ongoing ment and the Government of ates 134 hypermarkets in 10 tended the ceremony. strategy to set up own sourc- Sri Lanka to boost the export of countries in the GCC, Egypt, Ideally located in the Ka- ing and food processing units these products. We are already and the Far East and em- tanayake Export Processing around the world to ensure exporting about $5 million ploys over 40,000 people. Last Zone, near Colombo Interna- uninterrupted supply and worth of fruits, vegetables and year, the group recorded an an- tional Airport, the facility will maintain competitive pricing commodities, which could in- nual turnover of $6.9 billion and primarily focus on sourcing, by eliminating third parties. crease to $10 million by the end ranked as the number one re- processing, storing, packaging Sri Lanka has a vast variety of of the first year,” says Yusuffali. tailer in the Middle East & North and exporting of fruits, vegeta- fruits, vegetables and an exten- The quantum of exports is Africa region and one of the top bles and commodities from Sri sive range of commodities. We set to rise from the current 50 fastest growing retailers in Lanka to various Lulu opera- are working closely with the 3,500 tonnes to 7000 tonnes. the world, according to Deloitte. Patchi to build new facility at Dubai Industrial Park uxury chocolate brand Patchi has announced Lthe ground-breaking for its new chocolate manufac- turing facility at Dubai Indus- trial Park. The 122,000 sqft factory, de- signed to become the largest facility, will also host Patchi’s headquarters to comple- ment the company’s ongoing growth and business in the region and across the world. The ground-breaking cer- emony drew the presence of Saud Abu Al Al-Shawareb, Saud Abu Al Al-Shawareb, Abdulla Belhoul, Oussama Choucair and others COO, Dubai Industrial Park; Abdulla Belhoul, CEO, Dubai and beyond. The brand’s most innovative factory in the uled 18 months from now. On Wholesale City; and Oussama presence signals the status of world. The new manufactur- this occasion, I thank Hussein Choucair, CEO, Patchi UAE. Dubai Industrial Park as an ing plant will be one-of-its- Koleilat, managing partner of “Patchi’s decision to build ideal destination for manu- kind with so many exclusive Buildmark Contracting, for its new headquarters at Dubai facturers,” says Al-Shawareb. offerings aligned with the implementing innovative de- Industrial Park is timely and “We are so proud to have UAE Vision 2021, which sign concepts to ensure the will serve as its springboard chosen Dubai and the UAE would be revealed at the functionality of the project,” for the Middle East market to build Patchi’s largest and opening that has been sched- states Choucair.

16 | RETAILME | JUNE 2017 ANALYSIS Dubai and Doha are top five markets for new entrants Commercial real estate services firm CBRE released the latest edition (2017) of its ‘How global is the business of retail’ report in May this year. The report reveals that cross border retailers were focusing more on tried and tested locations for expansion in 2016. The report examined 51 countries and 166 global cities to provide a comprehensive view of the markets that international retailers entered for the first time.RetailME brings highlights from the tenth edition of the report, beginning with a focus on Dubai and Doha

ubai ranked third most attractive markets Dfor new entrants, welcoming 59 new brands in 2016, according to the report. While, Doha jumped six places in the new entrants’ ranking, with 58 new brands establishing themselves in 2016 compared with 29 in 2015. Among Dubai’s new entrants 32% were specialist retailers, many of which were athletic- leisure brands such as Under @Shutterstock Armour, , New Balance and GapFit. These fashion- looking to enter the region, infused sportswear retailers are Dubai once again frequently using the emirate targeting the young working emerges a preferred market as a stepping stone to population of the emirate. wider regional expansion Doha has transformed its Dubai also retained Dubai’s overall retail sector programmes,” says Nick retail market in the past few the second position for remained resilient in 2016. Maclean, managing director, years with the development international retailer “Dubai’s global air CBRE Middle East. of many large-scale malls representation for the connectivity and its stature “Despite regional offering more extensive retail sixth consecutive year, as a hub for trade between economic challenges, Dubai and leisure facilities. It has led closely behind London, the east and west has clearly remains a preferred market to widespread demand from which retained the number given an added impetus for leading international and retailers for these centres that one position. With high to the retail sector. Dubai regional retailers that can provide a unique experience occupancy levels in the main continues to remain the provide plenty of incentives and embrace place-making retail hubs and many malls clear destination of choice and growth opportunities. principles. approaching full capacity, for the majority of brands Dubai’s fast-growing

18 | RETAILME | JUNE 2017 COVER STORY

he Middle East has a strong culture of Tsocialising – be it over meals, shopping, getting a haircut, beard trim or over a relaxed spa session. This social culture dates back to centuries from the time of the hammams or public baths. Today some of these age-old traditions are seeing revival. Hammams are now exclusive features in high-end hotels, so much so that today many international brands, like Rituals Cosmetics, take inspiration from this ancient tradition to develop one of its product lines. The region also loves fragrances. Arabs are known for their preference of fragrances that leave a trail, quite like oud and attar from the olden days. No wonder, oud has been gaining more and more prominence in Beauty is an age-old tradition recent years as an essential care and fragrance lines. the international names. colour cosmetics. Adding ingredient in developing The Levant region is Bahrain-based Green Bar and spunk through colours has perfumes catering to the reputed for its art of soap- Dubai-based Shiffa are some always been cool in the Middle Eastern taste. So making using natural great examples. Middle East. It has become much so that alongside the ingredients like olive oil and These days’ consumers even more sophisticated home-grown perfumers – like other essential oils. Today are far more conscious with companies like Pantone Abdul Samad Al Qurashi, several home-grown brands about what they put into coming up with colour trends Ajmal Perfumes or Arabian like The Camel Soap Factory their stomach. They screen for every season. No wonder Oud – even international as well as international through ingredients, nutrient Polish brand Inglot has a brands like Gucci and names like LUSH Cosmetics composition as well as the huge fan following in the L’Occitane develop their and Le Soie are taking this ethical standing of products Middle East. oud range to meet regional tradition forward. they consume. This trend is Along with the much- consumer demand. The regional beauty market now becoming increasingly loved brands are the new Further, there is a steady is undoubtedly thriving and visible in cosmetics and entrants like Italian KIKO rise in the number of seems to be challenge-proof. personal care too, giving Milano causing a rage with its fragrance galleries – such as What’s more interesting is rise to natural, ethical and colour cosmetics and Rituals Plethora, Amouage and more the kind of trends that the free-from brands leading to Cosmetics propagating the recently Ghawali – offering industry is throwing up, the rise of brands like The culture of slowing down and a range of niche perfumes. making the space more Organic Pharmacy, The Body enjoying a little therapy daily. Department stores like dynamic and exciting. One Shop and Nuxe to name a After all, one must enjoy a Sephora, Areej, Paris Gallery such trend is the rise in the few. shower, a cup of tea or just and Wojooh are doing brisk number of home-grown Besides fragrances and staring out of the window to business offering the whole brands that are successfully skincare products, the region gaze at the beautiful sunrise range of beauty, personal rubbing shoulders with also sees strong demand for or sunset.

26 | RETAILME | JUNE 2017 New rules define the future of entertainment

Last year Dubai and the Middle East saw its first Content must be two theme parks in IMG Worlds of Adventure and creative and original Dubai Parks and Resorts, while destinations like Some of the recurring Global Village, Ski Dubai and Dubai Dolphinarium themes in the leisure and continued evolving. These theme parks and other entertainment industry are: variants of amusement concepts aside, now Dubai is thinking out-of-the-box; being original; and being also home to the Dubai Opera. agile to adapt to changing The UAE capital has taken pride in Ferrari World Abu market dynamics quickly, Dhabi, a highly attractive destination on Yas Island opines Gary Goddard, that continues to pull visitors, while many more founder & CEO, The Goddard concepts are scheduled to come – such as Warner Bros Group – a US-based themed entertainment integrator. Abu Dhabi in 2018 followed by SeaWorld in 2022. “The need of the hour is Qatar is home to the world’s first Angry Birds World to create original concepts. concept, Saudi Arabia is firmly focusing on its 2030 Gary Goddard The way for Dubai, or any vision that aims to create leisure and entertainment other country/city in the facilities comparable to London and New York. In “You have to be on top Middle East, to succeed is not by recreating what Oman work is underway to develop some unique of the game; originality is the key. Disney’s most Disney or Universal Studios retail-cum-leisure destinations. Bahrain and Kuwait have already done. The way are not far behind. As a whole, the region is growing. popular attractions are forward is original thinking. Considering the growth prospects of the Arabian not based on movies. They The world’s first Bollywood leisure and entertainment market, the third edition are original content.” Parks comes up as a surprise hit within the Dubai Parks and of the Theme Parks & Entertainment Development Resorts. That’s not surprising Forum Middle East organised by IQPC – which took at all – its new, its different place from May 9-11 at Meydan Hotel – saw many and its original,” he avers. discussions on what will drive growth of this already Indeed people are vibrant industry, RetailME reports expecting different kinds of entertainment.

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