Analysis
Retail

Primark launch would diversify Dubai’s retail offering

September 6, 2024, 10:35 AM

A launch in Dubai would add to Primark's 450 stores worldwide, including the Oxford Street flagship in London

Alshaya partnering with Primark
Dubai wants to ‘change perception’
Aiming for broader audience

The launch of value fashion retailer Primark in Dubai would add a much-needed affordable element to the emirate’s retail offerings, industry experts say.

Kuwait-based Alshaya Group announced this week that it had partnered with the international fashion retailer and is looking to “explore opportunities to bring its stores to the Middle East”.

Alshaya’s portfolio of companies stretches over 4,000 stores and includes brands such as Starbucks, Footlocker and H&M.

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“For many years shoppers across the region have asked for Primark and we are looking forward to the start of a successful partnership to help bring their exceptional in-store experience to the GCC,” said John Madden, CEO of Alshaya Group.

Primark, originally founded in Dublin as Penneys 55 years ago, operates more than 450 stores across 17 markets.

The company’s brand of affordable fashion is a major draw for customers.

Sandeep Ganediwalla, partner MEA at Redseer Consultants, said Dubai’s plans to attract a wider talent pool, with the introduction of the freelance visa and relaxing golden visa requirements, coincides with the drive towards more affordable retail.

“We already have a large and growing middle class which are budget conscious customers,” said Ganediwalla. “You can see that in the success of brands such as Max, Centerpoint, H&M, Viva and Shein to name a few.”

Last month Dubai-based retailer Brands for Less sold a 35 percent stake in the company worth $360 million to US discount retailer TJX Companies, owner of the TJ Maxx chain.

Both TJX and BFL specialise in the “off-price” sector, selling well-known brands at a discount by purchasing large quantities of merchandise at low prices.

Dubai’s position as a luxury shopping destination has been cemented in recent years, with high-end operators such as Gucci, Chanel and Louis Vuitton located in shopping malls across the emirate.

The city has seen significant growth in luxury spending because of improving tourist inflows and the influx of high-net-worth individuals – those with liquid assets more than $1 million – buying residential property.

With a retail spend per capita of around $14,000, the emirate ranks second only to New York in terms of consumer expenditure, according to a report from Strategy& Middle East, part of the PwC network.

But Mohammed Feras, associate vice president of Dubai Festivals and Retail Establishment, said it is working hard to “change the perception about Dubai that it is very expensive”.

Almost 4,000 outlets took part in the 27th annual instalment of the Dubai Summer Surprises, run by Feras’s organisation, and 1,380 promotions were offered throughout its duration.

Untapped market

Feras said the affordable side of the retail offering was an untapped market. “Obviously, there’s still a gap to be bridged, but we are working towards that and we want that to happen as soon as possible.

“I think also the retailers are understanding this now. They’re working towards pricing strategies to make sure that they are catering for all types of budgets.”

The average monthly cost of living in Dubai is $2,229, which is in the top 13 percent of the most expensive cities in the world and most expensive in the UAE, according to stats from livingcost.org.

Ian Ohan, founder and former chief executive of food and beverage company Krush Brands, said introducing more lower-cost retail options “could be beneficial for creating a more inclusive, economically stable and diverse market”.

“By strategically expanding affordable retail, while maintaining its high-end appeal, Dubai can cater to a broader audience, support local entrepreneurship, and ensure sustainable growth.”