Majid Al-Futtaim (MAF) Holding has continued to expand its regional reach, posting healthy returns for 2015 and announcing plans to build new malls. The firm has also increased its franchise operations.

The company is split into three core divisions: developer MAF Properties, which includes MAF Shopping Malls; MAF Retail, the biggest division in terms of revenues, which runs the group’s fully-owned Carrefour hypermarket franchise; and MAF Ventures, which is responsible for the company’s fashion retail, leisure and entertainment, and facilities management businesses.

In 2015, MAF Holding’s revenues grew 8.2 per cent to AED27.3bn ($7.4bn) and its earnings before interest, taxes, depreciation and amortisation (Ebitda) by 6.9 per cent to AED3.8bn. Net profit rose 28.8 per cent to AED3.3bn. Over the period, the contribution from MAF Ventures’ entities grew 34 per cent, to AED1.4bn.

“Our contribution is significant financially, but more significant when you think about our contribution to the brand equity,” says Ahmed Ismail, CEO of MAF Ventures.

MAF Ventures’ best-known asset is Ski Dubai in Mall of the Emirates, but it also runs Vox Cinemas and the Magic Planet amusement centres, among others. Its marquee entertainment and leisure brands are central to the success of MAF Ventures, working as major attractions that help draw customers into its malls. Last year, 178 million people visited its malls.

Those attractions can be similar across the markets in which it operates, says Ismail, because the needs of consumers and their expectations once in a mall are fairly consistent. “If you look at snow entertainment for instance, we believe that Ski Egypt [in Mall of Egypt] is going to be as successful as Ski Dubai in its own right [which gets] a million paying customers [annually].”

“If we can get a million paying customers through the door in Ski Egypt – and we are hopefully going to get more – arguably it is going to attract more visitors and generate more income to the city of Cairo than the Pyramids do to Giza.”

New markets

Ismail says the tougher economic climate that has followed the collapse in the oil price has meant MAF Ventures has adapted but not abandoned its growth plans. He sees opportunity particularly in oil importing nations that have benefited from the cheaper oil price, such as Egypt, East Africa and Pakistan.

“We obviously react to significant changes in our operating environment,” says Ismail. "We think about our geographic footprint in terms of core markets, where we have a significant market share, and next horizon markets. The recent changes in the oil price have allowed us to accelerate our growth into next horizon markets that are short on oil.

“[But] a temporary change in the environment will not reset our thinking. [For] some of the investments we make, by definition we must take a long-term view, [for instance] when you are building a shopping centre in Cairo with a big ski slope. So I don’t think our thinking has fundamentally changed. Tactically, we had to readjust to make sure we benefit as much as possible, and that we emerge out of the current situation stronger than we came in.”

It is, Ismail says, an opportunity to “counter-intuitively” accelerate the company’s growth.

Strategic investments

“We have started looking at what we call ‘fast-forward’ initiatives, where we can take advantage of the current situation to accelerate our growth both organically and inorganically, by stepping into leases where some of our competitors are reluctant to gain market share when [they] are cutting back," he says. "Some of the best investments we have made were in 2010-11, at the height of the financial crisis, including the buyouts of the cinema and consumer finance businesses.”

In mid-April, MAF Ventures’ Fashion division announced a joint venture with Monsoon Accessorize in the GCC, taking over from previous franchise partner Jawad Business Group. Fashion plans to add 10 Monsoon Accessorize stores before the year ends, taking it to 65 outlets. In Saudi Arabia, where it will operate with an additional local partner, there are plans to open stores in Riyadh and Al-Khobar in the third quarter.

Ismail admits MAF Ventures is actively looking for more inorganic opportunities, “if they fit our strategy”, but will not state whether any deals are close to completion. “We’re actively looking, yes, for opportunities that fit our geographic focus in terms of core and next horizon markets, that are within our existing scope of business and are quality assets that would satisfy our standard of creating great experiences,” he says.

Those opportunities, however, will not be outside MAF Ventures' core sectors. “We see tremendous growth opportunities within all of the verticals we are in," says Ismail. "From consumer finance, facility and energy management, both in terms of geographic expansion and in terms of building market share within our current markets. We are unlikely to launch any new business.”

Egypt and Saudi Arabia are two of the three core markets that MAF Ventures continues to expand into (the other being its home market of the UAE).

MAF operates two malls in Egypt, and will add Mall of Egypt in the third quarter, when it opens. The mall will include Ski Egypt and Vox Cinemas.

An £E5bn ($536m) investment for the holding company, Ismail says the group is investing $700m overall, its largest in Egypt to date. Last year, at the Egypt Economic Development Conference, the holding company said it would spend about £E23bn ($2.59bn) in the country over a five-year period.

Egypt potential

“The reason we entered Egypt is the same reason we continue to invest in the country,” says Ismail. "We see a significant-sized population, a growing middle class, rising disposable income and a chronic shortage of quality supply of shopping and retail space."

MAF operates the Maadi and Alexandria City Centre malls, and MAF Shopping Malls has broken ground on the £E4bn Almazaa City Centre. Once complete in 2019, it will be the fourth MAF asset in Egypt and will be operated by MAF. There are also plans for a £E4bn expansion of City Centre Maadi “as soon as possible”.

Ismail, who is Egyptian, also see opportunities in secondary cities. “We’ve just signed our first lease agreement in Mansoura [for Mansoura Downtown Mall, owned by Tasweeq Shopping Malls]," he says. "Our colleagues in MAF Retail are in several secondary cities. Egypt is a country that can really absorb a lot in terms of the products and services we offer.”

Ski brand

With the success of Ski Dubai and a second snow park close to opening, the company is looking at how it can expand the brand. “We’re starting to get a lot of calls from around the world from developers that want us to come in and take over their leisure and entertainment [offerings],” says Ismail. “We are probably going to look at some of these opportunities to develop entertainment precincts for third parties.” This will likely include cinema, entertainment and edutainment options.

“We are still working on a potential redevelopment or expansion of Ski Dubai, but that hasn’t been finalised yet,” he adds.

The ‘Ski’ theme is also being introduced into Saudi Arabia. In February, the MAF Properties group announced plans to build two shopping malls in Riyadh – Mall of Saudi, which will include the ski slope, and City Centre Ishbiliyah. Once completed in 2022, the combined SR14bn ($3.7bn) investment will be added to the malls Ventures operates.

MAF Ventures already has two businesses operating in the kingdom: Fashion and its energy and facilities management joint venture Enova.

A key challenge for MAF is that of continuing to attract people into its malls in a world where people are increasingly shopping online.

E-commerce platform

“I think the size of the e-commerce business in the UAE is underestimated because you have a lot of global players delivering into [it]," says Ismail. "But they cater to the requirements of somebody who wants to shop. We cater to the requirements of somebody who wants to go shopping. Having said that, we are also investing in our own e-commerce platform.” 

That investment includes hiring data scientists and analysts to provide greater insights into customers to help drive conversion, entering a joint venture mobile payment a system (Beam) that will allow it to get more customer insight, plus investing in its Vox loyalty programme and looking at how it can integrate that data into a single view of the customer to be able to tailor offers.

“We are doing a lot of work behind the scenes that is less visible, to ensure we are more prepared to drive footfall even where that footfall at some point in time originates in the digital space,” says Ismail.