On factors shaping the local retail environment
Do you expect the retail sector to face oversupply in the short to medium term, and what impact will additional space have on existing malls?
AL DARWISH: There has been a recent flood of retail space in Qatar and some other major markets around the world. The coming years will show that the well-established, customer-centric retailers, which focus on acquiring the right location, size and tenant mix, along with practicing efficient management, are the ones that will stay ahead of the game. Older, more established malls may have to create new favourable rental policies to keep brands from leaving. However, established mixed-tenant malls generally command premium occupancy and rents over newer malls.
In early 2017 a couple of mega-malls opened their doors and at least eight other malls are expected to come on-line by 2019, with 1.3m sq metres of retail space in various stages of construction. This represents an increase of 220% over the current supply, and the area will have a significant impact on the dynamics of the retail market in Qatar if completed as planned.
Being the oldest retailer in the country with over 65 years of experience, we consider malls as part of Qatar’s touristic legacy. This increase in retail space is a positive change that will attract a stronger presence of international brands to the country, which helps us draw in shoppers from around the world.
What factors are shaping future growth, and how will the introduction of value-added tax (VAT) impact the sector?
AL DARWISH: The retail sector in Qatar is poised for robust growth, primarily due to an expected increase in population and the government’s efforts to diversify the economy away from hydrocarbons. Increased state spending and steady implementation of the Qatar National Vision 2030 will also contribute to an influx of people.
VAT is being discussed for introduction in Qatar and the region in 2018. We are anticipating a potential cautiousness in consumer spending because of this, and we are working on implementing a strategic plan that will help manage customer expectations and protect their best interests.
As Qatar looks to further promote its global brand, in what way will the visa-free entry programme affect the tourism sector?
AL DARWISH: Visa facilitation is a critical component of the national tourism strategy, and one which we, as a private sector entity, are reviewing with the Qatar Tourism Authority. With the renewed focus of diversifying the economy, a revised strategy has been put in place that empowers various players to boost tourism growth, and this will impact the expansion of the retail sector now and in the future.
As per the government’s announcements, all nationalities are welcomed in Qatar. This has helped attract new visitors from almost 80 countries – especially from the East Asia and Eastern Europe. We have also witnessed an increase of local high-net worth individuals who have stayed here this past summer rather than travel abroad during holiday periods.
With Qatar’s culture of shopping at malls, what is the effect of increased consumption through digital platforms?
AL DARWISH: E-commerce in Qatar is expected to grow and in order to keep up, retailers – whether they started in brick-and-mortar locations or with e-commerce – will need to merge their physical and digital systems to serve all shopping preferences. We embrace this change and we don’t see a major negative effect on our business. Our target clients usually expect to have their purchases with them as they leave the store and do not like to wait for delivery.