Dubai Metro spawns new breed of retailer

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    By Armina Ligaya   www.thenational.ae

    Zoom, the Emirates National Oil Company’s (ENOC) new convenience store chain, is hoping to capitalise on a new market when it makes its debut on the Dubai Metro.

    ENOC wants to expand its business by attracting Metro users through its non-fuel brand, Zoom. Jeff Topping / The National
    ENOC wants to expand its business by attracting Metro users through its non-fuel brand, Zoom. Jeff Topping / The National

    “Zoom will tap the new Metro user community and we aim to position it as the flagship non-fuel retail brand of the company,” said Saeed Khoory, the chief executive of ENOC Group.

    Three of Zoom’s planned 28 outlets open today on the Red Line. Commuters will also be able to shop in Last Minute convenience stores, which are planned to open in 10 locations on the Green Line.

    Retailers such as Zoom are hoping to entice cash from a share of the expected one million commuters daily. They know sales might be slow at first, but some are negotiating for more outlets, hoping to cash in on the Metro’s future growth.

    Only 10 of the 29 stations on the Red Line are open to the public today, which has disappointed some but others expected such a major development to have a couple of hitches.

    “Things will improve,” said Bunny Malik, the general manager in the UAE for the Asian restaurant chain Chowking, which has signed on for 12 stations and is looking to secure at least six more.

    “Especially when you have a big project like Dubai Metro, or any metro in the world, there are a lot of hiccups there, so we expected this.”

    Prashand Shiroor, the senior manager of operations at Asia Exchange, which has one outlet, said: “When the entire bidding process took place, everybody was keen to get a shop, understanding that most of the stations on the Red Line would definitely be opened.”

    About 500 retailers submitted their bids at the start of this year for the 235 units available. More than 90 per cent of the retail space, about 11,000 square metres, had been awarded by May.

    Robert Ziegler, the vice president of management consultancy at AT Kearney in Dubai, said retailers on the Metro could duplicate the success of Dubai Duty Free.
    “It’s a place where people wait, and if you have an offer in place they will shop,” Mr Ziegler said. “In the past, airports were just throughways and weren’t very attractive. Now they’ve become shopping centres with a bit of flying on the side.”

    He said those retailers that catered to the convenience shopper, such as cafes and services like dry cleaning, would be likely to succeed.

    “At the moment, you are going to attract people for whom the Metro is an alternative to taxis,” Mr Ziegler said. “It will be a less affluent population that use the Metro because of its cost advantage.

    “As the Metro becomes more developed, more interconnected and more convenient to people, you’ll see more affluent people joining.” Mr Shiroor said he wanted more outlets because the metro stations were a cheaper alternative to prime retail space in shopping malls.

    While space in a Dubai mall could cost as much as Dh5,000 a square foot, the metro’s minimum bid starts at about Dh2,600 a sq ft and can settle between Dh3,500 and Dh4,000 after the bidding process.

    “Shopping centres have already established themselves, so they command a premium now,” Mr Shiroor said. “The Metro stations are really new and they can’t price them very high. Maybe as it picks up this will change.”

    But the convenience store chain 24 Seven withdrew the tenders it had submitted because the soft economy has meant it can rent high-street retail space at rates as much as 30 per cent lower than last year, said Martin Pointon, its operational director.
    “We do like the Metro, but at this moment in time there are not going to be that many of the stations opened, and we can get better deals and grow faster,” Mr Pointon said.

    The delay in station openings also prompted Last Minute convenience stores to withdraw from 18 of its 28 Metro sites.

    But Jose Sreedharan, the retail operations manager for Alpha Med, which has nine coffee shops on the Dubai Metro, said they would be a good investment in the long run.

    “We feel that it will be a success, if not immediately, but it will be in the future,” Mr Sreedharan said. “We felt it was the right thing to do so we went ahead with the units.”

    Abdullah Zreik, the managing director of the electronics retailer Internet Heroes, says the first few months will be a challenge, but sales will pick up by next quarter.

    aligaya@thenational.ae

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