Now we have a network of 10 operational shopping malls. Mall of Arabia, Mall of Dhahran, Salaam Mall, Aziz Mall, Khurais Plaza, Sahara Plaza, Al Nakheel Plaza, Ibn Khaldoun, Al Noor Mall and Al-Ahsa Mall. “Rapidly, and in less than a decade we have become the single largest owner and operator of shopping malls in the Kingdom of Saudi Arabia.” Director of Malls, Simon Wilcock, discusses the mission, vision and strategy of the organisation.
How have you ensured the creation of three retail concepts where shopper’s choice, entertainment and convenience is paramount?
All our locations are specifically designed for retailers and thereby retail consumers; the way the stores are laid out, sight lines in the properties as well as brand mix. The brand mix is vitally important, ensuring that the broadest volume of fashion retail stores are achieved, so that consumers have ‘no-reason’ to shop elsewhere. Our malls are conceptualised as ‘one stop’ environments, catering for fashion, grocery, entertainment and utility, all contained in airconditioned and service driven buildings. Shoppers should be able to come for entertainment and food, or equally fashion or homeware. Whilst children should be able to stay safely in the mall in crèches, entertainment or food areas; therefore increasing the stay time of the parents and family in general.
What challenges do you face in the smooth running of such a ramified operation?
Our challenge lies in maintaining a ‘common sense’ and ‘consumer focused’ approach to the business. Ensuring that there is a balance between form and function, that is to say, that what looks great also ‘works’ great. Although complexity derived from facilities management through to marketing and sales exists, through efficient implementation of solid policies and procedures - supported by great human resources - major issues are usually mitigated.
What differentiates your malls that are regionally located in diverse cities?
Our malls are designed to attract a multitude of different clients, but are in form, fairly similar to each other. They differentiate through brand mix, in particular the local ‘Mom’s and Pop’s’ traders that add the local retail flair and diversity of product. Our target has been the Saudi family, which is indicative of the region, reflecting the majority of consumers. Jeddah and Al Khobar are more tourist- driven, although this tends to be local tourism, but with a ‘Pan Gulf’ flavour. Religious tourism in Jeddah and strong traffic between Kuwait, Bahrain and Qatar in the Eastern region changes the dynamic of the malls - they need to be more entertainment driven, with options for people to stay longer.
Your business group has been involved in mall development for some time, how is the retail sector evolving in KSA?
Saudi Arabia is undoubtedly the power house market in the Gulf Region. Despite the media drive behind the UAE, the size and growth of the indigenous population in Saudi ensures sustainable growth. The retail sector, both development and retail, continues to expand. The blip of 2009 we need to put down to experience and focus on development as this market is far from saturated and offers significant opportunities. Our retail partners, in particular Al Hokair Fashion Retail, have been experiencing growth ahead of the Gulf Market, and are aggressively pursuing further expansion. Therefore where there is perceived retail demand, there is retail real estate demand. Arabian Centres Real Estate is no exception and has implemented an ambitious five year growth plan. Clearly there are casualties in the market, but that is to be expected in any environment, but we plan for contingency and aggressively push forward.
What are the future trends in the mall industry?
A by-product of the recent recession is the emergence of larger multi-site operators and the thinning of the single site operators that do not have the resources and connections to facilitate suitable retail environments to attract substantial volumes of consumers. Those primary businesses that reacted quickly to the down turn have benefited from the cost cutting exercises and are therefore leaner and more efficient to be able to combat the current climate. The economies of scale generated by the multi-site operators make the whole development process more cost effective and efficient. The consumer ultimately benefits from this evolution as the businesses become more competitive, working harder to retain clients. This should be reflected in better services, more competitive pricing and greater offer.
Against what standards in terms of service and innovation do you benchmark yourselves, and why?
There are several industry based mechanisms, to include the ‘International Council of Shopping Centres’ which works continually to update the industry and pioneer best practice in retail property. Market competition is also a driving force for development and change, pushing developers to source and implement new ideas and initiatives. I don’t think this is necessarily about marketing and promotions, but more akin to services, facilities and choice; for example in the range and diversity of entertainment and brands.
With global brands foremost in the retail mix of malls in the Middle East, what progress can be seen in the gradual evolution of home-grown Saudi brands, if any?
International is the order of the day... this is far from complete, especially in Saudi where restrictions to entering market have precluded some brands from being present. The UAE and Gulf states in general are ahead in this area where trading and legal status of the brand principle is more secure. The gradual opening of the KSA market is helping to encourage new brands and categories to come to market. For the consumer this means more choice and better pricing. The current market is two dimensional - generally reflecting women’s and children’ fashion - with an ever increasing homeware component. However, niche brands and products are still absent from market and the sophistication of the speciality leasing market is low. Saudi brands are present in market, not including small local retailers with one to two stores, and are legitimate competitors. At first glance this is stronger in the food market (where international branding is limited), with businesses such as Kudu, that could legitimately play on the international stage. There are a few others, but the developers are still focused on delivering international brands to market.
How important is the concept of strong branding for the success of a mall?
Strong branding is essential, however ‘random’ strong branding, is pointless and costly. There needs to be a relationship between the brands in the mall. That relationship defines the character of the mall and the kind of clientele. Is it fashion? Therefore ladieswear, with apparel, footwear, accessories or is it homewear – large scale, accessories, flowers etc? You can have all the elements, so long as they are woven together carefully and logically.