If the market is mean, be wise and go for the middle
I'm convinced, now let me try to convince you: business executives are throwing away their management books and resorting to the classics. The latest trend in executive ideas has something to do with the recessionary climate we have been weathering this past year. But I'm sure it has also got something to do with wanting to build organisations that won't go "pop" at the first sign of a downward spike.
So, for now, shelve Tom Peters and Donald Trump. And thumb your way through Plato et al instead. Yes, I'm talking about the original classics, not early 20th-century works. It was Socrates who, in Plato's dialogues, said that a man "must know how to choose the mean and avoid the extremes on either side, as far as possible". He was, of course, referring to the notion of the "Golden Mean". Elsewhere, in The Setting in Motion of the Wheel of Dharma, the Buddha articulates the middle way, the path of moderation, which is the path of wisdom.
And today that's the strategy that many organisations are reverting back to. We use different terms, but the sentiment is the same - the mid-market, affordable and value for money. At the launch last week of the Mirdif City Centre in Dubai - home to 430 shops and offering 196,000 square metres of leaseable area - Peter Walichnowski, the chief executive of Majid Al Futtaim Properties, said: "It's targeted towards the residential population. We are not going up-market in terms of having a high degree of luxury goods. It is very middle market in terms of the retail offer and it also has a lifestyle component that is attractive for residents."
Al Futtaim Properties intends to launch 10 more malls across the MENA region with a focus on the GCC, Syria, Lebanon and Egypt. No doubt these will also be aimed at the mid-market. In the past year we've seen developers from the listed Sorouh Properties to the technology driven but privately held Omniyat Properties coming out with statements declaring that they are now reorienting their focus to the mid-market affordable segment.
The moderately priced clothing retailer Zara posted a rise in fourth-quarter net profit last week for its owner, Spain's Inditex, which is Europe's biggest clothing retailer. It earned a net profit of US$663 million (Dh2.43 billion), against $563m in the same period last year. Analysts had predicted that its full-year profits last year would be $1.74bn, but it actually over achieved, coming in at $1.79bn.
Even Dubai, which in the past few years was becoming a playground for the rich and famous only, is finally being reclaimed by ordinary middle-income families as their city. A few days ago the Dubai Statistics Centre reported that Dubai's population rose 7.6 per cent last year to more than 1.77 million. Analysts have put this down to lower rental costs in Dubai, which is making it an attractive place for those who were previously in Sharjah.
Funnily enough, many of those who have moved to Dubai recently originally lived there before it became too expensive in the past few years. In addition, those who were previously crammed into one villa or apartments can now afford to rent on their own. But before everyone jumps on the mid-market bandwagon, it is worth remembering that choosing where to position an organisation is one of the trickiest decisions to make.
Is the product or service upscale, middle of the road or bargain basement? The result has huge implications on all elements of the organisation as well as its employees. Management journals are full of fables of the victorious and eulogies of those who did not quite make it. It is one of those things that, if fluffed, confuses customers and is extremely expensive to rectify later. There are some exceptions of course. Lucozade is regarded as a sports energy drink today, much like Red Bull and others in that category.
But, for those of us old enough to remember, Lucozade was always a drink we'd have when we were ill. The NHS and doctors in the UK would recommend it to patients. GlaxoSmithKline cleverly repositioned it in the 1980s with the help of the British Olympic double gold medal-winning decathlete Daley Thompson. But the prevailing wisdom is that once a position is taken it is imprinted in customers' minds. So Cartier watches are high-end fashion compared with Swatch, which is affordable fashion.
And Breitling is high-end sport to Casio, which is affordable sport. Duracell is the long-lasting battery, Volvo the safe car, Toyota the mid-market affordable value for money - but allegedly with a sticking accelerator pedal. However, I'm sure that despite Toyota's current travails, it will bounce back, because of the firmly held position in our minds that it offers good value for money. Before you restock your bookshelf with the classics though, one note of caution: according to research conducted in January by Synovate, the Singapore-based market research company, 58 per cent of UAE residents said they preferred to buy designer items.
Perhaps it might be worth keeping a couple of those management books knocking around after all. Rehan Khan is a business consultant and writer based in Dubai
Published: March 21, 2010 04:00 AM