Dubai Women's College

Online retailing strategies for a shopping mall in Dubai

Background

Dubai is a shopping destination of choice in Asia aggressively competing with cities such as Singapore and Hong Kong to attract tourists. According to a press report (KT - 5/01/05) a study revealed that in the next two years the total retail spending in UAE is expected to grow to AED 35bn (US$ 9.5bn) from the present level AED 26bn (US$ 7bn) or a growth rate of 35%. Not surprisingly over the last few years the numbers of shopping centres have exploded phenomenally in Dubai. Let us take a moment to glean more figures.

From only about 2 shopping centres 10 years back it now has 35 odd shopping centres of which at least 10 of them would fall under the category of 'Mega' centres, hosting almost every major brand label around the world.

The total available retail space is also estimated at 2 Million square feet which according to Retail International's Principal Mr. Simon Thomson is one of the highest per capita availability in the world. For a stable resident population size of only one plus million (as compared to about 12.5 Million in London) Dubai perhaps has one of the highest shopping centre densities. In the US it is estimated that for every 500,000 square feet of retail space there should be a population of 500,000 within 15 minutes of driving distance.

One of the reasons for such a growth may be a result of aggressive and persistent marketing campaigns by many agencies of the Government of Dubai to attract more and more tourists. Based on data from Dubai Tourism and commerce marketing it is estimated that about 5.5 million tourists would have visited Dubai by the end of 2004, a growth of 10% over the previous year. In fact it has grown by more than 60% during the last five years.

Local residential population has also grown by over 30% in the same period.

It is obvious that with a much lesser population base Dubai Shopping Malls are not (or should not be as we will see later) targeting only the local resident population for their marketing focus.

Even so most of the shopping centres have remained as physical entities despite the growing popularity of online shopping worldwide. According to a study by the National Retail Federation (NRF) in the United States, retailers with a combination of physical stores, catalogs, and Web sites tend to do more business than companies with just one channel. Also a report by Jupiter Research revealed that multi-channel shoppers purchase 30 percent more than those who use only one channel .

For some reason Dubai malls have not explored the possibility of internet based marketing channels although with a geographically dispersed customer base internet is an invaluable marketing media. Websites of these malls currently provide limited and sometimes outdated information.

Given that having an online retailing presence would provide a distinct competitive advantage, this report provides the rationale for establishing an online presence and outlines the technology for online retailing to a large shopping centre in Dubai.

1.2 Objectives

The main objectives of this project are:

To explain why internet based retailing strategies are important based on literature review and case studies

Evaluate the relevancy of such internet based strategies for a shopping centre in Dubai by understanding:

o The customers' perspective

o Tenants' viewpoints

o Employees' position

o Owner's/Management's vision, strategy and approach

Sketch an implementation strategy of online retailing from a technological (software/hardware) dimension for this shopping centre

Here is a chapter-wise outline of how the objectives have been realized and presented.

Chapter two reviews related literature, particularly exploring in-depth the rationale for adopting internet marketing while establishing some of the finer points of this marketing media. In order to maintain a balanced perspective the downsides of launching a web presence is also set forth.

Chapter three explains how the research was carried out to obtain the data needed to realize the objectives of this project. Likely problems and limitations with the research methodology adopted are also expounded

Chapter 4 has two distinct parts. This first part is to establish, through primary research with customers, employees, shopping centre tenants, management and owner's if there is a strong justification to go online. The organization's background, operational landscape, culture and human resources capital will also be explored in this part. The main purpose is to establish at the shopping centre level (or micro level) the need to adopt this channel having already established the rationale at the macro level in this chapter (see paras above on tourism and population statistics) and Chapter 2 (rationale based on literature review).

The second part focuses on implementation issues. It addresses a strategy for implementation in the Dubai context gathering necessary information from implementation consultants who have a local presence. Implementation has been addressed from a technology or software/hardware standpoint.

The last chapter sets forth the conclusions and recommendations from this research effort.

1.3 Significance of this Study

This study should help existing and potential brick and mortar or online retailing outlets in Dubai to understand, adapt and evaluate their strategies. It should also help Dubai based shopping centres to plan their impl