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With respect to the Middle Eastern retail markets, the open and honest truth to this question could simply be a short and simple riposte of, 'it's not', even-though we are currently very much part of a large mall culture and philosophy. Many, many successful small malls flourish throughout the world and still remain as very profitable centres for both the developers and the operators. These malls typically have a tight and focused array of small retailers, and they frequently do away with the rather formulaic and often overly reliant footfall generator of an anchor grocery store.
The result of this is that these malls create a niche in the market for themselves by targeting a specific group or catchment on which the mall tends to rely, but also trust. Additionally because of the intricate relationship with these small malls and their reliance on a shopper demographic that is highly focused on the specific malls' product mix, these small malls often posses very high market penetration numbers which in turn leads to a very reliable shopper audience.
Consequently, if these smaller malls can be so successful, then why is the Middle East region so obsessed with large, headline grabbing mega malls, of which very many are due to open in the coming 5 years or so? The truth is actually hidden somewhere behind this rather sweeping statement about the current state of our regional retail markets and has a reality that is grounded somewhere between beating those more mature markets at their own game and the desire to create some of the world's most enviable retail real estate environments.
Current appetite
So what is driving the markets' current appetite to large scale malls? Firstly, the region was a relative late starter in terms of sophisticated shopping mall design, construction and delivery to market, certainly in comparison to some other global markets. Consequently a way to really kick-start a retail boom, to imbue a true shopper and mall mentality, as well as to generate a self sustaining retail economy is to win over the potential shoppers, by developing lifestyle changing retail malls. The upshot is that by delivering a series of world-class, and often world beating large-scale and sophisticated malls to a market that is still in a relatively immature stage, it proves that the region has the ability to define itself as having a world class mall culture.
Secondly these smaller malls are often a by product of a retail market that is showing signs of maturity. With many large-scale malls in existence, the natural process is to down-size and really begin to focus on reaching out to the residential communities. With a view that, as a developer you understand their specific retail requirements of a community and then delivering them in a small and more focussed retail environment. I have no doubt that we will begin to see more and more of this style or type of centre throughout these markets over time, however for the time being we are content with what we have.
Lastly, although these regional markets are trying to play catch up, the mature global markets are also changing and as a result there are global trends that are beginning to buck those which are being followed in these markets. In the US, coupled with the fact that the there has been a radical downturn in consumer spending, shopping malls have gradually been declining as centres for commerce, with a slow movement away from simple covered malls, and more towards the social amenities that come with the development of lifestyle and mixed-use centres.
Spending habits and consumer confidence in Middle East however both remain bullish, tourism numbers are in the ascendancy and as a result this confidence is maintaining an aggressive build strategy for large-scale malls. The foreseeable markets conditions are strong, however in the medium to long term these large malls are likely to become iconic contributions to the retail landscape, however the community malls will also eventually arrive, as more and more residential communities are built.
The writer is Head of GRMC Retail Services, Dubai.
The upshot is that by delivering a series of world-class, and often world beating large-scale and sophisticated malls to a market that is still in a relatively immature stage, it proves that the region has the ability to define itself as having aworld-class mall culture.
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