From Manhattan to the Gulf

09 July 2004
There are few names closer to the heart of the dedicated American shopper than Saks Fifth Avenue. Only Bloomingdale's and Macy's, both US retail legends, are perhaps more immediately recognisable.
There are few names closer to the heart of the dedicated American shopper than Saks Fifth Avenue. Only Bloomingdale's and Macy's, both US retail legends, are perhaps more immediately recognisable.

Until the end of 2001, you could only shop at Saks in the US. And then, in one of the boldest steps in international retailing, Saks opened a store in the Kingdom Centre in Riyadh's Olaya district.

The Arabian connection was established in the 1980s, when Investcorp, the Bahrain-based investment bank, took control of the retailer in a leveraged buy-out. On divestment, a stake in the firm was snapped up by Prince Alwaleed bin Talal, chairman of Kingdom Holding. So when he decided to develop the Kingdom Centre, it was natural that he should look to his own portfolio of investments for tenants in a project that is now one of the defining images of modern Saudi Arabia.

Two-and-a-half years later, Saks is poised to launch a Gulf expansion plan that will see outlets opened in four other GCC states. Leading the drive is Rusi Motiwalla, general manager of Style Avenue Middle East, licensee for the US retailer in the UAE, Qatar, Bahrain and Kuwait. The Dubai-based company is owned by some of the best-known luxury goods retailers in the region: Al-Mana Group, the Chalhoub Group, Damas Jewellery and Kapico Group. Motiwalla advised Saks about setting up in Riyadh and was general manager of the store until the end of 2003.

Saks is the anchor store for the new phase of the Bur Juman centre in Dubai, where it will have 80,000 square feet of retail space. The expansion is now due to open in September. A 30,000-square-foot outlet is being finalised in Manama. The Doha store, which will occupy 20,000 square feet, is under negotiation, and Style Avenue is working on identifying the right location for a planned 50,000-square-foot outlet in Kuwait.

'The original plan called for not just one store but a regional set-up,' Motiwalla says. 'Once the first Saks international store was opened in Riyadh the next step inevitably involved expanding on the opportunity.'

The move into the Gulf was preceded by a detailed study by AC Neilsen, the US market research firm. 'We found there is a Europe-oriented awareness of luxury brands in the region,' Motiwalla says. 'So there was an opportunity for American luxury brands, [although] awareness of the Saks brand was very low. The challenge for us is how do you transplant a quintessentially American retail brand to the Middle East?'

Saks laid the ground for the opening by becoming the official fashion house for the 2004 Dubai World Cup in March. A mini-Saks store has been opened in Dubai to introduce shoppers to the firm's products and services.

Saks is now hiring more than 100 assistants. 'We are taking on people with a passion for the brand,' Motiwalla says. 'And we are hiring on the basis of attitude rather than knowledge. We can train them about the products but we cannot give them the right attitude.

'In the US, each of our stores is different. We tailor each one to the individual city. So what we carry in Riyadh will be different to what we have in Dubai. To make this work you have to have buyers with local experience.

'We will be active in the community and we have adapted a loyalty programme to this market,' Motiwalla adds. 'We have also recognised the importance of price sensitivity, especially in light of the rise of the euro and local competition in the market.'

'Riyadh has been a learning experience,' he says. 'Almost 65 per cent of the store was dedicated to women only and this was its most successful part. Our customers loved the residential feel of the floor. The merchandising was spectacular. But we should have had more in-store events and more associates from the US working with staff in Riyadh. We should have more product training. The women's-only cosme

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