SINCE THE FOUNDATION OF THE RETAIL franchise business in 1983, its portfolio of global brands has expanded to over 55 household names, ranging from Mothercare, Boots, The Body Shop and Debenhams of the UK to Starbucks, American Eagle, Pottery Barn and Office Depot of the US. Sectors covered include fashion and footwear, food services, health and beauty, pharmaceuticals, optics, home furnishings and office supplies.
The company is part of the Alshaya Group, founded in Kuwait in 1890, and is owned by one of Kuwait's most influential merchant families. Pamela Ann Smith talked to Executive Chairman Mohammed Alshaya in London, when he discussed the company's policies and operations, and outlined its plans to expand further in Europe.
There seems to be a misconception in parts of the US and Europe that consumers in the Middle East are not interested in international brands, that they prefer to shop in local markets. Do you think this is true?
No, international brands are mainstream. The region's consumers, particularly those in the Gulf states, are very discerning. These markets are populated by people who are travelling all the time. They have high purchasing power. They are young. Internet penetration is very high and they are aware of, and want, the latest trends. A lot of them are educated in western universities in Europe, America and Australia. Their second language is English. Brands are very important for these markets and for consumers. People look for them all the time.
The consumer demand is there and taking brands globally can help companies sustain their growth. Take a brand like Mothercare, for example. Today a good portion of the bottom line of Mothercare's overall business comes from the relationship they have with us.
There are also a lot of very large, very modern shopping centres in the GCC countries. Have these changed shopping patterns?
We have some of the world's leading malls in the region such as Dubai Mall or Mall of the Emirates in the UAE, The Avenues in Kuwait and Granada Mall in Riyadh, Saudi Arabia. Both in scale and brand mix they rival the best in the world. Traditional souks or markets have their place in our heritage but people increasingly prefer to shop in modern mall environments. Environment is also key. The intense heat in this region means malls are a major destination for leisure and many people go to them up to three times a week. Similarly, we had better sales in Moscow this summer when intense heat and the smoke from forest fires had people coming to the malls because of the air conditioning. That encouraged people to buy.
Are the corporations that produce international brands willing to change their products to adapt them for Middle East markets?
Absolutely. Our brand partners understand the opportunity of adjusting product ranges to respond to local consumer demand. However, consumers are buying into a brand and they want to discover that brand replicated in these markets. It's about editing, not about significant changes, since consumers aspire to get the same brand experience they would if they visited a store in its home market.