An observer’s perspective on the challenges faced by the biggest mall in the World

Back in 2008, I wrote an article about the biggest mall in the Iberian Peninsula, Lisbon’s Dolce Vita Tejo, stealing the title from its previous holder, Colombo Shopping, also in Lisbon.

At the time, I was working at Sonae Sierra, owner of Colombo. I remember everyone at the office talking about Dolce Vita opening just a mere 6km away from our champion performer, so I rushed to check it out and dismissed any worries.

Although Dolce Vita had a lot going on for it, including a well-balanced retail mix with a few new store concepts, the location itself was a disaster – in the middle of nowhere except for the poorest neighborhoods in the city.  Plus, its marketing concept was about being the “biggest”, while Colombo was “the place of everything”, a much better strategy.

I went on to work in different fields but I’ve kept an eye on the Shopping Center Industry. Now, having moved to Dubai, it’s nearly impossible not to. Especially when you live Downtown, across from Dubai Mall, the World’s biggest shopping center (at least for now!).

It feels like a déjà-vu: last year Dubai announced plans to build the biggest shopping center, again! The appropriately named Mall of the World (MoW) is going to be located very near the current size champion.

What does this mean for Dubai Mall?

I don’t know how long it will take for this huge development to be finished but I do know that NOW is the time for Dubai Mall to adjust its strategy and start planning for the future challenger.

(I’m also very curious to see how Emaar, developer of both malls, will deal with potential market cannibalization, but that’s another subject).

Breaking the World’s size record sure makes headlines (a tactic Dubai has mastered so well), but like Colombo, Dubai Mall chose a clever positioning, embodied in its tagline: “welcome to everything”. However, chances are the even bigger MoW will also have everything you can possibly imagine.

Dubai Mall’s established position as an operational success is certainly an advantage. Number of visitors has been growing very fast, reaching a record 65 million in 2012 (more than New York)!

But in a city obsessed with novelty, is it possible to keep this growth rate with a new king in town?

Plus, Mall of the Emirates (MoE), the current competitor, has announced a $272 million redevelopment project called Evolution 2015. Despite being outperformed in terms of footfall, when it comes to earnings per square foot, MoE ranked the 7^th center in the world, according to the ICSC.

Can Dubai handle 3 power Centers?

In my opinion, now is the perfect timing for Dubai Mall to reposition for the future, leverage its current strengths, and focus on profitability.

To increase average spending per visit requires either sales push efforts or attracting the right kind of shopper with a predisposition to spend, which is better on the long term. And Dubai Mall already has the perfect mix for this: high fashion, fine dining and luxury goods.

Tourism is another key area and current strength of the mall located next to the Burj Khalifa and the Dubai Fountain. Combining these two factors seems only logical and essential to strategically position Dubai Mall as the Fashion Capital of the Region.

The Fashion Avenue could be to Dubai what Bond Street is to London and the 5^th Avenue to NYC. Or even Avenue Montaigne to Paris. You can already get a bit of the Parisian taste at Ladurée or Angelina, after a shopping spree full of Chanel, Dior and Louis Vuitton.

But what sets these iconic streets apart is their authentic environment. It’s not just shopping, it’s a complete experience set in a city with its own personality, architectural design, art scene, cultural vibe and unique opportunities for people watching.

It’s obviously impossible to replicate such authenticity inside a mall, but creating a unique experience for the fashionable crowd is very much attainable. Sporadic events are great but it requires more of a year round commitment to style and a range of services that are currently lacking.

Since we’re talking about style…

… And that’s not an exclusive of high-end fashion, I want to tap into another demographic group that may be targeted in turning the Dubai Mall in a lifestyle destination, a place to be instead of a place to go: the Teens.

Although I’m no expert (yet) on consumer trends and shopping behavior in Arab markets, teens usually have time to spare, money to spend and a huge influence in their family’s purchase decisions. They can be both the most volatile consumers and the most loyal, but they need to experience a sense of belonging. The trick is in providing a meaningful platform for them to express their individuality from within a larger group that shares their values. That can be very profitable if you know how to materialize the Cool Factor.

The same goes for fashion-conscious young adults, who have even more disposable income. They may value the quality of designer shoes but don’t want to wear the same outfit as everyone else. Style is a reflection of their identity, and originality is more important than name brands. They combine designer labels with vintage clothes, statement pieces and fashion buys. The place where they shop should be an extension of their lifestyle. After all, NYC isn’t just about 5^th Avenue but also about the ultra-stylish SoHo and the Meat Packing District.

A lot could be said about applying these insights, but this was intended more as a reflection on strategy than a tactical exercise. I have no doubt Dubai Mall will continue on its remarkable path to establishing itself as an international shopping destination even as competition gets fierce.

Rute Silva Brito