The Saif Belhasa Group has pared back its retail expansion plans and postponed its initial public offering (IPO) due to economic uncertainty, said its chairman. The Dubai-based group planned to have as many as seven outlets for each of the franchises it introduced last year by 2011, but it has scaled that back to one or two, said Saif Ahmed Belhasa.
He said he had also aimed to take the family-owned firm public this year, but would now revisit that plan in three years if market conditions improved. "Unfortunately, the market is not helping us to go. We were going at a very high speed, but what has happened in the market is there has been a slowdown effect," he said. Opening retail stores in the UAE used to be a guaranteed profit-making venture. But that changed last year as the effects of the economic downturn began to trickle down to the UAE.
Consumer confidence in the Emirates fell by a record 21 points last May, but rose steadily until October, according to the global market data specialist Nielsen. By December, consumer sentiment in the UAE took the biggest hit worldwide, after local residents were shaken by Dubai World's debt restructuring call. As a result, retailers in the Emirates are for the first time slowing the pace of expansion.
However, the Saif Belhasa Group overall fared relatively well, as revenues rose 10 per cent last year. The group, better known for its chain of driving schools and building materials trading, introduced a new restaurant division last year called Creme de la Creme. The group expanded into food retail in part to cash in on the Dubai Mall, one of the largest shopping centres in the world, at the foot of the Burj Khalifa, Mr Belhasa said.
"There was a big investment in this tower, a unique project, and there was Dubai Mall, which was huge. I thought it would be a good idea to be there because it would draw a lot of people." The group brought three new franchises to Dubai: two cafes, MBCo and Chocolate Bar; and the Mexican restaurant chain Cantina Mariachi. Sales are rising after the official opening of the Burj Khalifa earlier this month, but the group would wait until conditions recovered before going into Abu Dhabi, Mr Belhasa said.