Eros aims to become a Dh4 billion firm
RETAILER’S CEO CONFIRMS A MAJOR REVAMP IN OCTOBER AND A FUTURE MOVE INTO LOGISTICS
Open fewer new stores. Exit the nonperforming ones. Create omnichannel possibilities between offline and online sales where possible
This, in a nutshell, has to be the strategy UAE’s retailers will have to follow as the postpandemic consumer landscape offers them new directions to pursue growth. The one thing that UAE retailers — or at least those who play it smart — should not worry about is online drowning out physical stores, like it did in the US and Europe and even parts of Asia.
Because, according to Deepak Babani, the UAE’s retail split is still years away from a ‘halfand-half’ situation. “When online sales in a market touch 50 per cent and over, that’s when physical retailers need to think ‘only online’ from then on,” said the CEO of the Eros Group, the tech and electronics retailer that will next month launch a major revamp strategy. “That’s not the case in the UAE, even after last year when online growth just took off because of Covid-19 and lockdown measures.
“Sure, in January to June 2020, online sales of mobiles and IT were up 70 per cent, but this year that’s tapered down to about 52 per cent. Even then, when you take the total electronics and home appliances sales in the UAE, online only contributes about 24 per cent.
“Online sales will continue to grow, but at a lower pace that offline retailers can adjust to.”
Physical is holding up
The signs — and numbers — suggest that UAEs brick-andmortar is holding up to the challenges. Both Emaar Malls and Majid Al Futtaim’s mall and retail arm reported solid numbers from the first six months of this year. The recently-opened City Centre Al Zahia keeps drawing in the crowds in Sharjah, and the Dubai Hills Mall is the most eagerly awaited retail launch in the first-half of 2022.
Babani says that trying to compare the UAE retail dynamic to what is happening in the US does not help with the bigger picture. “Over there, instant accessibility for shoppers to malls can be an issue,” he said. “That’s not how it is in the UAE — a mall (or retail spot) is just a hop away.
Being at a mall is part of the tradition. Make sure the stores are close to the consumer. Until a virtual store can come up with technology to give the shopper the feel of actually “looking” at a piece, I don’t foresee anything happening to physical stores.”
Being practical
It’s not the traditionalist in Babani speaking. More retailers are veering towards finding a suitable mix between online and offline. Nothing illustrates this sentiment better than the online eyewear retailer eyewa confirming plans to launch up to 100 brick-and-mortar stores in the UAE, Saudi Arabia and elsewhere. And some serious investors are backing eyewa in this dual pursuit.
Thinking outside of retail
About three or four years ago, Eros was giving serious thought to get into new business lines and reduce its dependence on electronics retail and distribution. A plan was hatched to get into F&B, which at the time in Dubai was going through an extended period of growth. And Eros did make a dip with an F&B venture.
“Unfortunately, we weren’t successful,” said Babani. “So, rather than get into something we had no experience in, we feel it’s best to get into adjacent businesses. We started a lighting division — and we are seriously considering getting into logistics. Because we handle such large volume of logistics for our own needs, we can apply that knowledge for others.
“We have looked at two or three (local) logistics businesses that we could acquire and build on. But none of them materialised. We are still looking out, but nothing on the table so far.”
Eye on Dh4b
Whether Eros ends up getting into logistics or not, the target remains clear — be a Dh4 billion company by 2025. “That looks realistic because unless there is some breakthrough technology, we will grow organically to be that Dh4 billion entity,” the CEO said. “All these years, we have focused on the foundation and that needs to be strong — and remain strong. We are here to stay.”