Is the Middle East ready for retail’s new norm?
Frank-Matthias Kuntermann, Deputy CEO of ABC Group, a leading retailer in the Middle East, examines new shifts in retail industry and how the region is evolving to adapt the changes. Kuntermann also takes a close look at Dubai as a retail hub and its growth prospects.
Q: Tell us a brief about ABC’s current and future projects.
A: Our largest project currently underway is the ABC Verdun (a project by Verdun Mall), with a total investment of $300 million.
The 50,000 square-meter shopping, dining and entertainment destination is in the heart of Beirut and is set to open in July 2017 and will host more than 200 stores and a 10,000 sqm department store.
The department store is already fully leased and 85 per cent of the mall is occupied with different local and international stores and restaurants.
ABC Verdun will become the first shopping and ‘retailtainment’ destination in Lebanon. It is conceived as an interconnected urban park with both indoor and outdoor spaces.
The interior space gives way to a lush courtyard park space, the Lebanese garden, on the third level, which is fronted by boutiques and cafés covered by large canopies. This park area of 1700sqm is really a unique, green space within built-up Verdun.
ABC has also recently opened its new state of the art logistics centre. Modern and equipped with the latest technologies, it is aimed at simplifying and speeding up the deliveries and supply.
In terms of the existing ABC portfolio, the group currently operates ABC Achrafieh Mall, the first international standard open-air mall opened in Lebanon, ABC Achrafieh Department store, with its new cutting edge design along with ABC Dbayeh, its first flagship.
ABC also runs four outlets across the Lebanese territory and standalone store for international brands such as Tommy Hilfiger, Iro and soon the first Calvin Klein Jeans standalone store in the region at ABC Verdun.
Q: Is there a target segment for ABC’s retail outlets?
A: ABC is overall considered upper middle level or mainstream. We have most of the international brands represented at ABC malls, from H&M, Zara, Victoria Secret, Nespresso, and many others along with a wide range for F&B outlets such as Paul, PF Chang’s and strong Lebanese concepts.
The ABC department stores are positioned on a contemporary bridge luxury segment incorporating brands such as Hugo Boss, Ralph Lauren, Maje, Sandro, Carven, Tommy Hilfiger Kenzo, Iro, Zadig et Voltaire, Karl Lagerfeld as well as a very strong positioning in cosmetics, with all major brands represented.
Q: Dubai is a very attractive hub for retail. When are we going to see ABC in Dubai or the UAE as a whole?
A: We don’t have any plans to enter the UAE for now and the market is already quite heavily saturated when it comes to the retail business. We are continuously evaluating expansion opportunities within the GCC and Middle East as a whole though, so who knows what the future may hold… For the only Arab department store brand, it would be indeed legitimate.
Q: What are some other regional markets you are eyeing today?
A: For now, all of our focus is on the impending opening of ABC Verdun, so there aren’t any concrete plans region-wise. With 50,000 square metres of gross leasing area (GLA), more than 200 stores, 2,300 square metres of entertainment and 3,700 square metres of cinema space, our efforts need to be concentrated in one place at the moment, ABC Verdun.
Q: Please share some of your insights on the current status of the retail industry.
A: Today, customers are looking for experiences and entertainment on top of products. As a result, the retail industry is moving towards the ‘retailtainment’ concept which is essentially adding entertainment and experiences to the retail mix, presenting a more well-rounded and holistic shopping experience to customers. This trend is now recognized internationally as being the next big thing within the retail industry.
ABC was a trendsetter in the field by adopting this approach in its flagships since the opening of ABC Achrafieh in 2003 and ABC Verdun will be the continuation of this strategy bringing the retailtainment concept to a whole new level. Customer needs and purchasing behaviours have also changed and ABC is constantly working on renewing its brand mix to respond to its customer aspirations and economic situation.
Q: How does political and economic instability in Lebanon affect businesses in general? I ask you this because many people don’t think of Lebanon as a lucrative market, given the aforementioned conditions.
A: On a political level, Lebanon is presenting positive signs. The summer is expected to be a busy time as usual, with Lebanese expats returning home and tourists visiting noting that the return of the stability allowed the travel ban removal from GCC countries.
On a whole, business in Lebanon is thriving, and we expect no delays in the development of the ABC Verdun mall complex.
ABC’s confidence in Lebanon as a market is clear with the investment in ABC Verdun; the new mall underlines our commitment to the country and its economy, while generating more than 2,000 direct and indirect jobs. We believe that Lebanon has many opportunities to seize.