Al Hokair and Arabian Centers Company has announced this week that they will acquire a majority stake in online fashion retailer Vogacloset, a UK Based fast fashion platform offering over 400 brands to the Middle East.
This acquisition speaks volumes about how big groups perceive the coming era. Al Hokair is one of the largest franchise owners in the Middle East boasting representation of over 90 brands and over 1800 stores. Arabian Centres Company on the other hand is one of the largest shopping mall owners in the Middle East.
How do they perceive the future?
The future is based on the share of the wallet. And across the globe, the share of wallet is fast-moving from in-store to online. When we look at these giants and their purchase; which is around 30 Million dollars; it is less than the cost of remodeling a mall. So there is nothing to be surprised about this purchase as the role of retail will stay.
Boutiques or Shops?
Starting with the car brands which are fast converting their showrooms modeled around glorified warehouses to a more subtle VIP concierge experience. Tesla started with it and Rolls Royce is following the suit. Will we see more and more brands converting their existing spaces to more experiential? our bet is yes, and the customer can always purchase online. This helps the brand by ensuring lower inventory costs and lower rental costs.
eCommerce is not only convenient for the customers but also for brands that pay far less compared to what they have to do with third-party retail. Taking the example of Noon and Amazon; the share that these marketplaces take is typically less than 20% for most of the product categories while when we talk about mass-market retail or pharma retail; the centers demand north of 30% on a good day as their cut and typically reached 50%. This forces the brands to provide better deals on eCommerce platforms compared to retail stores and only accelerates the move towards digital. Retail with a different type of cost structure can not possibly compete with eCommerce and in the coming days, we see difficult days for multi-brand stores. Want to develop Amazon or Noon storefronts? Centric offers this as a service; to know more; please drop us a message at firstname.lastname@example.org
Shopping Mall or Experience Center?
It is quite evident that shopping malls suffered a great deal because of COVID lockdowns. The typical model for a shopping mall had been rent-seeking landlords but this will have to change for them to stay successful. Malican, a shopping mall loyalty solution by Centric, provides loyalty solutions to malls with no integration required with tenants. This enables the mall to do personas on their best customer and develop services catering to that segment. Besides, to find out which brands should they attract to double down on their most profitable segment. To know more; please drop us a message at email@example.com
In the end; we believe by 2030; shopping malls will segment for different personas instead of trying to appeal to all the demographics.