High-end UK retailer House of Fraser plans entry into capital

The British retailer House of Fraser plans to expand rapidly in the Middle East to offset deteriorating conditions on the UK high street.

The British department store chain aims to open an outlet in Aldar's Emporium at Central Market next year. Jason Alden / Bloomberg News

The British department store chain House of Fraser is looking to expand rapidly in the Middle East as economic conditions deteriorate on the UK high street.

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The brand plans to start trading in the region next autumn with a store in Abu Dhabi and is looking at opening other shops including in the capital's Yas Mall and in Jeddah, Riyadh, Doha, Kuwait and Dubai.

"The Middle East is a great opportunity," said Robin Terrell, the executive director of multi-channel and international at House of Fraser. "It is on that cusp of being established, but not yet saturated, by any stretch of the imagination, certainly if you look beyond Dubai."

House of Fraser was also weighing an expansion in other emerging markets to tap into accelerating economic growth, Mr Terrell said.

"We need to be opportunistic," he said. "Because this is the first move outside the UK, we need to make the Middle East a success."

The first store is to open in Aldar's Emporium at Central Market next year in a franchise agreement with Retail Arabia, a major Middle Eastern retailer that operates Géant stores and The Bahrain Mall.

House of Fraser had also been considering stores in Egypt, but that has been put on hold.

"In the early stages, our partner was looking at Cairo opportunities, but things changed," Mr Terrell said. "I still think it's a huge opportunity for us. But it is a case of wait and see."

Sales at the group are growing at about 4 per cent this year in the UK and Ireland in comparison with last year, Mr Terrell said.

But the outlook for the UK high street is grim, as austerity measures dampen consumer confidence and retailers start to slash prices ahead of Christmas.

Already this year, there have been a number of retail casualties in the UK, with Jane Norman and TJ Hughes going out of business.

"We are still doing well, but, equally, the environment is very tough. There's no doubt the environment is very difficult out there," said Mr Terrell. "If you look at traditional UK retailers and look at the two main big things they are talking about, one is online and the other is international." Mr Terrell said

House of Fraser would position itself in the premium end of the department store market in the UAE but would also try to cater to all tastes.

"It will be more Harvey Nichols and Bloomingdales than Debenhams and Galeries Lafayette," he said.

House of Fraser is one of the biggest department store chains in the UK, with annual sales in excess of £1.3 billion (Dh7.52bn) and a 160-year history in retail. It has 62 stores in the UK and employs 5,200 staff, with 11,000 other employees in brand concessions in its stores.

The company's profit grew 6 per cent to £69.7 million in the year to January of this year.

Mr Terrell said the company was considering shipping products ordered via its website to the Middle East before the launch of its first store.

"We have the opportunity to seed the market first, which is what we are looking at doing next year," said Mr Terrell. Online retail is one of the fastest growing parts of the business for the brand, and the website supplies 131 countries worldwide. Sales on the House of Fraser's website have grown from £22m in 2009 to £100m this year, Mr Terrell said.

"Shopping is a recreational activity here [in the UK], but I think it is even more so [in the UAE]," said Mr Terrell. "So stores are even more important there.

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