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Furnishing profits in Middle East

Tags: furniture, franchise, retail, Middle East, Home R Us, Brands, IDdesign, Ikea, Landmark

BY Namita Bhagat | October 12, 2011 | comments ( 0 ) |

 
Furnishing profits in Middle East

Growing demand for trendy style and designs, Emirati furniture sector offers booming market and profitable business avenue for local/global furniture brands. Read on.

Over the last few years, an upswing in furniture market in the United Arab Emirates (UAE) has been noticed. This increased demand and need is offering favorable business opportunities to the domestic as well as global furniture manufacturers. The brands tend to gain considerably from the strengthening retail sector and consistent consumer spending in the country. According to a study, the aggregate furniture demand in the Gulf is estimated to be USD 4.5bn at production prices. In the UAE, the growth rate of furniture imports has been double than the rate of many other high income economies. Many international furniture brands have forayed in to the Middle East market via franchise route and partnered with established business houses to grow their brands in the region. Several local players also have marked retail presence and may opt for franchising in the future.       

 Market drivers

The market for furniture products in UAE is varied catering to different consumer segments like;

 a)      Commercial segment: where the furniture products are supplied to hotels, offices, colleges, schools;  

  b)      Retail or residential consumption:  where the consumers buy products for own usage and their homes  

 Exposure of people to global trends: The local UAE consumers are well exposed to global trends. Retaining their style of home furnishing according to Middle Eastern culture, the Emiratis also like to experiment and incorporate global design elements for setting up their homes.

 Expatriate community: The expatriate community from multi ethnic backgrounds likes to buy furniture and home ware designed and styled according to the art of their homeland, offers a scope for international furniture brands to cater to a substantial clientele.

 Taste of the people: The people in UAE like contemporary and assorted home interior furnishings. The international furniture manufactures carefully select their market ranging from lower end to high end consumer. The major global players offer better-quality finishes, designs and brand name which finds wider appeal among consumers.

 Major brands

 Prominent international brands and local brands enjoy significant share in the local furniture market. The US brands like Stanley Furniture and Rachel Ashwell Shabby Chic, Crate and Barrel, a furniture chain, Chinese brand Qumer, Mark Wilkinson Furniture, a UK designer furniture brand, Molteni & C Dada, Italian furniture brand, Aati Dubai owned and operated by the Al Tayer Group, Homes R Us by UAE based Lals Group, Home Centre, owned by UAE’s Landmark Group, Scandinavian furniture brand ID Design, IKEA from Sweden, Thailand based Index Living Mall, Singapore based Iwannagohome! etc.

 Retail Scenario: There are hosts of local and foreign brands that have strong retail presence in the country and continuing with further expansion.

 Brands For Less Group (BFL): The group was established in 1996 offers one stop shop catering to all the furniture requirements at affordable prices to the consumers.

Cottage Chic:  Cottage Chic owned by Avenue Trading offers major US furniture brands namely Stanley Furniture and Rachel Ashwell Shabby Chic brands. 

Home R Us: The UAE-based Homes R Us currently has nine stores across the country and is expanding in Abu Dhabi (UAE), Kuwait and Saudi Arabia. The brand presently has retail model.

 Franchising: Many international furniture brands have forayed into the Gulf market via franchising and several local brands are mulling to opt for brand development through the franchise model. 

 IDdesign: A Scandinavian brand that offers a successful retail concept has teamed up with Easa Saleh Al Gurg Group through franchise model.  Sharing the reason for success of the brand in the region, Raed Dibs, General Manager of IDdesign, Dubai says, “The basic philosophy of IDdesign is to give the customers an exciting shopping experience filled with colourful inspiration in the mid-range price segment, always with great value for money. Our products are carefully selected with functionality, flexibility and design in mind. They accommodate aesthetic solutions, making rooms for individual choice of size and design. The product range is carefully composed of four well-documented style groups.  This is our key to success.”   The brand currently has four stores, three of which are in Dubai, one each located at Mall of Emirates, Mirdif City Centre and a standalone showroom on the Dubai – Sharjah Road. There is one store in Al Wahda Mall in Abu Dhabi. Elaborating on the reasons for opting franchise model, Dibs adds, “We are already in the Furniture business and wanted to develop a franchise in Scandinavian style with modern and contemporary products. We visited them in Denmark to understand the concept and decision was made to open the franchise.”

 Ikea: Ikea, the Swedish home furnishings brand has partnered with Al-Futtaim, UAE based retail group, a franchise operator of more than 55 retail brands and have opened its largest store in the region on Yas Island, Abu Dhabi. The brand is expecting to open another store in Dubai by 2013. Dubai already has one Ikea sore at Festival City. Moreover, the company has plans to extend its reach in Qatar next year and Egypt in 2013.

Home centre: UAE business conglomerate Landmark has developed its concept in the home furnishing sector namely ‘Home Centre’. Developed in UAE in 1994-1995, the brand has strong presence in the MENA region with 45 stores at present. The company has plans to open six stores by end of 2011 and may launch another four in 2012. The brand also has presence in India through its 12 large format stores which the company is seeking to expand with more locations in the next two years. All Home Centre outlets are company owned at present. Whether ‘Home centre’ would consider franchise route for expansion in near future, is explained by Jonathan Jagtiani, CEO, Home Centre. He says, “We have been considering franchise opportunities over the past few months, primarily in markets which are difficult for us to enter as we may offer certain benefits such as being a large anchor tenant in a newly  developed mall. We would enter into such agreements only if the local team has a strong commitment to see the brand develop and be very hands on. Home Centre is a long term commitment and would usually take some time to reach a solid level of trading.”

Conclusion

To conclude it is worth to note that the brands considering expansion in the UAE market require understanding the multi layered market of the region and the consumer preferences, changing demands and the varied purchasing power. With so many established home grown and international players, the new brands wanting to bring their retail or franchise concepts in the country need to be patient and preserving with long term outlook. Providing quality products at competitive prices with ever rising costs may pose a challenge for them. 

 

 
 
 
 
 

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