Smaller malls find their niche

Having lost tenants and visitors in recent years to the emirate's hugely successful mega malls, some smaller malls in Dubai are now experiencing better fortunes as they rethink their mix of stores and offer products unique to the vicinity.

Smaller malls are finding new ways to compete with larger ones such as the Dubai Mall. AFP

There is a surreal moment riding the lift to the second floor in Al Ghazal Mall when visitors realise they are being watched by a giant bunny rabbit and a bear.

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Al Ghazal is not an imaginary shopping centre in a fantasy children's novel but a small mall in Dubai that is enjoying a fairytale revival.

The bunny and sundry animals are mascot-style costumes that stand outside Mr Ben's Costume Closet, a fancy-dress store that is extending its retail space in the mall.

"[The animals] set the tone for the whole shopping event," said one mall visitor who recently shopped at Mr Ben's. "It was my first time in the mall and I went for that place."

Al Ghazal, which is just a few kilometres from Dubai Mall, suffered a sharp drop in visitors in recent years that left the shopping centre with only half of its retail space leased at the end of 2010.

But one year on, occupancy is at 84 per cent and is expected to reach 100 per cent by March, according to Colliers International, which operates Al Ghazal Mall.

In the first week of December, the mall had 16,800 visitors, compared with 5,400 during the same period in 2010, and the target is to hit 30,000 per week, Colliers says.

"The truth of the matter is that there's lots of malls suffering, because there's so many that are repeating the same type of business," says David Zlatarich, the property manager at Colliers. "What we have been trying to do is serve the community and not have competition inside the mall. We cannot have four shoe shops because that creates excess competition."

After losing tenants and visitors in recent years to the emirate's huge and hugely successful shopping centres such as Dubai Mall and Mall of the Emirates, the smaller malls are experiencing better fortunes as they remix their stores and offer products unique to the vicinity.

Many of Dubai's malls are trying to offer discount shops and greater value. Some are adding service providers such as health centres and dentists, while others are being marketed as high-end boutiques.

Al Ghazal has added fewer but bigger stores. The shopping centre includes a dentist, a doctor's surgery, an eye specialist, a phone repair shop and a Lebanese restaurant. It has added a Carrefour Market in the past 18 months and a Brands For Less store.

The mall has also been flexible in its rents, offering deals below average prices and giving tenants the opportunity to sign up for just one year to gauge sales.

Jones Lang LaSalle, a global property consultancy, estimates the average retail rent in Dubai at Dh1,800 (US$490) per square metre.

Retail space has increased 60 per cent in Dubai since 2005, according to Jones Lang LaSalle, and the per capita mall space is almost double the level in Abu Dhabi, which has the second-highest rate in the Middle East.

The rapid development of the retail and hospitality sectors has helped elevate Dubai to a major global destination for shopping and tourism, but the speed of the expansion has also left some smaller developments behind.

"The general point is that we think the small malls will start to do better," says Craig Plumb, the head of research for the Middle East and North Africa at Jones Lang LaSalle. "We think we have seen the last of the major malls like Dubai Mall, Mall of the Emirates and Mirdif City Centre. We are now seeing a shift towards community and convenience malls."

Sunset Mall, a shopping centre with 10,219 sq metres of leasable retail space that has just opened on Jumeirah Beach Road, is trying to distinguish itself with a host of quirky, high-end brands that are not household names. It also has 50 offices and 120 apartments overlooking the beach.

"The tenant mix at Sunset itself speaks volumes about the high-end and exclusive nature of the mall," says Ziad Hameed, the leasing manager at Dubai Investment Properties, which operates the shopping centre. "Sunset Mall boasts concepts which are unique to Dubai, like the car spa, gourmet grocery and speciality home furnishings like custom-made luxury beds."

Other malls, such as Mercato, Town Centre and Oasis Centre, are focusing on the local community.

"In terms of competition, since the arrival of the mega malls, most small malls have been affected in terms of footfall, but ultimately our main obligation is to serve the local community," says Charlotte Ferrey, the marketing and events manager at Mercato and Town Centre Jumeirah malls, which are both 100 per cent leased. "Regardless of how many new malls open in Dubai, our objective and purpose will never change."

About 80 per cent of visitors to Mercato live within a few kilometres of the location Ms Ferrey says. "Over the last 18 months, we have changed a lot of stores to improve our offering and brand mix," she says.

The mall has added international brand names including Pandora, L'Occitane, Diesel, Massimo Dutti, Mango and Nine West, and despite serving a relatively affluent customer base, the mall has kept prices at mid range.

It has also been promoting its loyalty card programme, in which it provides discounts of up to 30 per cent and gives away cars and holidays.

Oasis Centre, on Sheikh Zayed Road, has also been pushing its loyalty programme to attract visitors.

Neelesh Bhatnagar, the mall's director, says that visitor numbers were up 20 per cent last year compared with 2010 and that 85 per cent of the mall's visitors buy something.

"Oasis Centre cannot compete with mega malls purely on the basis of its offerings," Mr Bhatnagar says. "We have recognised that the key to our success as a retail destination is building affinity and getting loyal customers."

About 60 per cent of the mall's customers are women, and more than 50 per cent live within 5km of it, Mr Bhatnagar says. Asian and Arab nationalities make up 80 per cent of the visitors.

"Being a mall that is focused on families, there is a greater appeal for categories such as children's retail, home, wellness and of course value for money," Mr Bhatnagar says.

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