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UK retail bets on Qatar World Cup

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As the FIFA World Cup kicks off in Russia this week, retailers are already looking towards 2022 host Qatar, hoping to capitalise on the increased footfall and global attention of the event.

In December 2010, it was announced that Qatar would host the 2022 World Cup, leading to a spate of retail launches and store openings across the Middle Eastern country. Premium brand LK Bennett opened in April 2012, followed by footwear chain Dune in August and womenswear label Temperley London in October.

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LK Bennett store in Qatar

Qatar has made a significant investment in infrastructure, transportation, leisure, retail, housing and other sectors deemed likely to profit. A BBC report in February 2017 estimated that almost $500m (£400m) was being spent a week on infrastructure projects in preparation for the tournament on roads, a new airport, hospitals and hotels. 

Private investment in shopping malls has also risen. The country’s biggest shopping centre, the QR5.4bn (£1.1bn) Mall of Qatar, opened in December 2016 in Al Rayyan near the north of Qatar, next to the Ahmed bin Ali Stadium, one of the host stadiums for the World Cup.

The Alhazm mall in the capital, Doha, took eight year to construct at a cost of $825m (£614m). Since it opened in October 2017, it has been dubbed “the mall for millionaires”. 

Country director of property services company Colliers International Qatar Adrian Camps says the large expat community makes it an attractive market for western brands.

“Qatar has one of the highest per capita GDPs in the world and a large expatriate community. There are a significant number of high-quality western retailers already established in Qatar, and most of the luxury brands are also represented.” 

Qatar has a GDP per capita of $66,200 (£46,812), the International Monetary Fund reported in April. This compares with the UK’s £44,180 (£33,099) and the United Arab Emirates’ £39,480 (£29,578). 

Eastern promise

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Harvey nichols doha 49

Harvey Nichols in Doha

One retailer hoping to capture that spend is Harvey Nichols. It opened a franchise store in Doha Festival City in partnership with Saleh Al Hamad Al Mana group in May. 

The 861,000 sq ft store is the eighth international location for the retailer, following openings in Saudi Arabia, Kuwait, UAE, and two in Turkey and Hong Kong. 

While there is strong and steady demand for luxury brands, there is also demand for value and mid-market brands such as H&M, Zara and Mango

Hesham Mourad, Qatar and Egypt associate at international franchise development company World Franchise Associates

 

Harvey Nichols group property and facilities manager Barry Tallintire says the World Cup was not a deciding factor in the choice to open in Qatar, but is likely to benefit fashion retailers expanding to the region: “The significant investment by Qatar in infrastructure, transport and associated hotels, as well as other leisure facilities, all create a legacy that will benefit ongoing businesses, together with exposing many overseas visitors to the charms of the country. 

“It is not a critical factor in our decision, but rather an international ‘badge of honour’ for the country with a legacy likely to benefit retailers in the long term.”

Value chain

Demand is not only growing for luxury brands, says Hesham Mourad, Qatar and Egypt associate at international franchise development company World Franchise Associates: “While there is strong and steady demand for luxury brands, there is also demand for value and mid-market brands such as H&M, Zara and Mango.

“The retail market in Qatar is boosted by the fact that the government is trying to support tourism and the service sector very quickly through greater investment in infrastructure.” 

Value retailer Matalan has been present in Qatar since 2014 in Gulf Mall and is due to launch two more stores by early 2020.

Qatar has one of the highest per capita GDPs in the world and a large expatriate community

Adrian Camps, country director at property services company Colliers International Qatar 

International director Damian Hopkins agrees that value brands are becoming increasingly popular across the country: “Our store in Qatar is one of our best-performing stores in our international portfolio outside the UK. We are seeing a buoyant market in Qatar with the World Cup coming and many new shopping malls opening. The high number of expatriates living in the country do not want luxury brands, instead they buy from the value sector. 

“The appetite for value retailers across the region is very strong right now. Perhaps five years ago it wasn’t as strong, because the shopping malls were attracting luxury retailers and premium brands, but now they are starting to ensure that they have the value segment in there as well.” 

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Matalan in Gulf Mall in Doha

Other retailers believe the “premiumisation” of brands that are mid-market in the UK negatively impacts performance because they are unable to manage the different operational styles for each marketplace. 

One trading director of a UK retailer with multiple locations across the Middle East and Qatar says: “From my experience, I know that the market in the Middle East is very tough. There is a premiumisation of brands compared with their status in the UK, which is challenging [because of the difficulty in adapting and adjusting operations for each sector]. 

“Also, ecommerce is growing in the UK, but bricks-and-mortar stores dominate in the Middle East. Businesses need to be very cognisant of that if they want to do well and they still have to operate both channels. There is a long way to go before the World Cup and the market is only very slowly starting to pick up.”

Cultural differences

Indeed, the British and Qatari retail landscapes widely differ. While footfall is dropping in the UK as spending moves increasingly online, in Qatar the mall is king. The country is home to 21 shopping centres with four more due to open in the next two years, including Place Vendôme, where Matalan has already acquired a site.

Tallintire says: “The retail scene in Qatar is predominantly centred around shopping malls. Shopping is a leisure activity, so access to cinemas and good food and drink establishments is a must, and means that the malls provide customers with significantly longer dwell times.”

Hopkins agrees: “In the UK most of our stores are out of town stores, but in the Middle East our stores are mostly in shopping malls. We sit adjacent to retailers like H&M, Zara, some of the landmark brands comfortably. The big difference I notice is that shopping is a big lifestyle pastime more so than it is now perhaps in the UK where the market has increasingly moved online.” 

The retail scene in Qatar is predominantly centred around shopping malls

Barry Tallintire, Harvey Nichols group property and facilities manager 

Another difference in operations between Qatar and the UK is lease length.

“Britain has a mature property market, whereas the Qatari market is still developing and this brings both opportunities and challenges,” says Camps.

“Generally, property leases are much shorter than in the UK – typically one to five years – which increases flexibility.”

To be successful in Qatar retailers must also adapt to cultural differences, says Mourad.

“One of the biggest mistakes that brands make when opening stores in Qatar is not understanding the market. It is different to a British or western market. By not taking the time to research and learn about the culture, brands and retailers are out on key commercial opportunities.”

Despite the challenges Hopkins remains hopeful about the future growth of the market: “The government is investing heavily. We feel very positive and wouldn’t be opening two new stores if we didn’t. We don’t believe trade will fall off a cliff after the tournament, but instead will reinforce Qatar as a destination for business and tourism.” 

The Drapers Verdict

The Middle East has become synonymous with luxury and affluence, as the opulent shopping malls that are being constructed to meet growing demand demonstrate. With the guarantee of a global spotlight on Qatar in 2022, brands should be looking at the area and assessing whether their retail proposition is appropriate for the market. However, research should first be undertaken to ensure the Qatari marketplace suits your brand profile, whether your position is premium or value.

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