Role of Shopping Malls in Promoting Brands Concepts

Role of Shopping Malls in Promoting Brands & Concepts BIFEX 2012 Beirut, May 23 rd 2012

Shopping malls are among the most visited sites in the world Annual visitors to selected top tourist destinations, Millions Times Square, NY Annual footfall of most visited Shopping malls, Millions Orchard Road Singapore Central Park, NY Dubai Mall, Dubai Union Station Las Vegas Strip Niagara Falls Bintang Mall, KL Mall of America, USA Disneyworld Grand Bazaar, Istanbul Mall of the Emirates Dubai Notre Dame, Paris Westfield London Forbidden City, China Aventura Mall, USA Sacre Coeur Basilica Victoria Peak, Hong Kong Westfield Stradford Source: Web sites of shopping malls; annual reports of mall managers; Wikipedia 2

Dubai is at the forefront in shopping mall development in a region lagging behind versus developed markets 2010 Mall GLA / Capita (m 2) USA 2, 2 Australia 0, 6 Dubai 1, 4 Abu Dhabi 0, 8 Doha 0, 5 Bahrain 0, 5 Riyadh 0, 4 Sharjah 0, 4 Muscat 0, 4 Ajman 0, 3 Jeddah Beirut 0, 2 Damascus 0, 0 Cairo 0, 0 Source: Majid Al Futtaim Properties internal market research 3

Shopping malls are a key factor for tourist attraction Key factors in decision to come to Dubai Extremely important Somewhat important Safety and Security 4% Cleanliness of city 5% Good beaches/pools 8% Malls 10% Variety of Cuisine 10% Family activities available 18% Good hotel deals 21% Nice weather 35% Good flight connections Specific event (e. g concert) Somewhat unimportant 15% Visiting friends/family Good holliday package Neither important nor unimportant 23% 31% 35% 100% Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 4

UAE Retail Sector | A progressive journey From Souks… 1980’s UAE retail market size: Less than US$ 1 Bn. … to street retail … to the ultimate mall experience 1990’s 2000’s US$ 10 Bn US$ $50 Bn Sophistication and progress in line with tourism and business evolution Key international brands operating directly in the market (LV, Chanel, Prada, Cartier, etc. ) Dubai is the 2 nd highest ranked city in the world for Global retailers, behind only London according to CBRE (2012) Source: Alpen Capial Retail report 2011; Majid al Futtaim estimates 5

Dubai is part of the club of retail destinations *: MAFP Research **Ties with Kuala Lampur *** MAFP Research Source: UNWTO, Euromonitor, Retail International, MAF Properties Research 6

Middle East has become a top destinations for international brands Source: CBRE, 2011 Edition of ‘How Global is the Business of Retail’ 7

Leading Dubai malls are world-class in terms of footfall and sales densities Dubai Mall of the Emirates (Dubai) Orchard Road (Singapore) Bintang Walk (Kuala Lumpur) Westfield London (London) Westfield Stratford (London) 2011 54 Mn 2011 36 Mn 2010 73 Mn(1) 2010 40 Mn(1) 2011 29 Mn(1) 2011 24 Mn(1) GLA~ 340 K sqm GLA~ 228 K sqm GLA~ 600 K sqm GLA~ 133 K sqm GLA~ 150 K sqm GLA~ 175 K sqm MAF Malls Dubai USD 7, 250 per sqm Unibail-Rodamco malls portfolio Westfield’s US malls portfolio ‖Sonae Sierra malls portfolio USD 8, 318 per sqm USD 4, 800 per sqm USD 3, 902 per sqm Strong footfalls in leading malls High disposable incomes reflected in high sales densities Tier 1 malls in Dubai offer a compelling business case for retailers (1) Estimates Source: corporate websites, MAF research 8

Malls are mainly visited during weekends and after working hours Weekdays Preferred day to visit a shopping mall Percentage of answers 13% 33% Weekedays + Weekends 54% Preferred time to visit a shopping mall Percentage of answers Weekends Evening (after 5 pm) Shopping malls are a social hub for after work hours and weekends Afternoon (2 to 5 pm) Midday/Lunch (11 am to 2 pm) Morning (before 11 am) Don’t have a preferred time Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 9

More than half of visitors come at least 2 -3 times per week How often do you visit shopping malls ? Percentage, Dubai residents only Everyday 4 -6 times Per week 2 -3 times Per week Once a week Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 2 -3 times Once a month Per month Less than Once a month 10

Shopping malls is much more than just shopping Main purpose to mall visits Percentage of respondents Retail Shopping Family Entertainment • Less than half of the visitors come to shop as main reason to visit mall Sightseeing Socializing • Socializing and spending time with family is 2 nd most important reason to visit mall. Relaxation Dining • Nearly 1 out of 10 came to mall to dine as main purpose Adult entertainment Others Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 11

Profile of mall visitors in UAE Indicator Value % of Tourists of total mall visitors 15%-45% Average monthly household income USD 5, 000 Dwell Time 2. 5 -3. 5 hours Average visits per year 35 -45 Average expenditure per visit USD 100 -130 Average number stores visited 4. 0 Conversion ratio (Stores purchased/stores visited) 35%-50% Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 12

The Future of Shopping Malls? Much more than a place to shop • Generally, anything and everything one might want to buy, in the shopping malls SHOPPING • From the weekly/monthly household grocery shop, to music, gifts, fashion, home furnishing • Cinemas Options and more Options: • Fast food, Casual, Fine dining • Cuisines from around the world DINING MALLS ENTERTAI NMENT • Family Entertainment Centers • Live shows • Kids play areas • More than food – Experiences!! • Unique Leisure Offers CONNECTI NG WITH OTHERS • Place to interact with friends and family • Interaction over coffee, entertainment, dining 13

Mall are more and more remembered because of their unique leisure What feature of the mall would you miss the most? Size of the font relative to frequency of response Mall of the Emirates Dubai Mall Source: Market research conducted by Majid Al Futtaim 2011 – Dubai Malls 14

Examples of NEW mall entertainment Wave House (indoor surfing and beach party) Cirque Du Soleil (Unibail Rodamco, France) Play. Nation – Skydiving, Bowling, Edutainment Ski Dubai – Mall of the Emirates (Dubai) Source: R&D project Majid Al Futtaim, web search, Mirdif City Center, Mall of the Emirates 15

Old entertainment with new twists: New Cinema experience • Screen numbers and IMAX are no longer competitive advantages. • Digital projectors are quickly becoming standard NEW !! • Seats are ‘ 5 D’ – seats with vibration features that simulate real time action scene on the screen (e. g. car chase) • VIP rooms concepts are the rigueur – Rent cinemas for small parties of friends and family. Vox Cinema Gold Class (upcoming in Beirut City Center) • Bringing fine dining to the movie – dinners with menus related to movie themed, with offers of fine wine and freshly prepared on the spot by chefs Source: R&D project Majid Al Futtaim, web search United Kingdom examples 16

‘Affordable excellence’ F&B through upscale casual dining • In the past, fast food (food court) was the predominant F&B offering in shopping malls • Current F&B trend is to bring upscale casual dining to the mall - Restaurants of celebrity chefs (Jamie Olivier, Gordon Ramsey) - Restaurants with ‘theatrics’ and ‘unique atmospheres’ that enhance experience Bread St. Kitchen Gordon Ramsey Zetter, Clerkenwell Barbecoa Jamie Olivier Wa. Ha. Ca Mexican Street Food Th. Miers Source: R&D project Majid Al Futtaim, web search 17

Food Court? So yesterday, tell a story, sell a experience SINGAPORE • Food courts themselves are evolving: - From collection of fast foods (and often unhealthy) American chains in noise food court - To ‘themed ambiance’ spaces showcasing international food and healthy choices Source: R&D project Majid Al Futtaim, web search 18

Product manufactures are developing the direct retail channels • • • P&G developed line of products focused on men’s shaving P&G had issues obtaining desired shelve space – both quantity and quality - in traditional distribution channels such as department stores or hypermarkets. P&G decided to create their own direct retail channels to satisfy its needs, specially on creating a new brand Source: R&D project Majid Al Futtaim, web search 19

Apple retail stores are as much about branding as on sales channel Apple store in New York Apple store in Westfield London • 363 stores in 13 countries owned by Apple Inc. • Located in iconic high street locations and top shopping malls. • Each store can generate between USD 60 MM and 80 MM in annual sales. • Stores are considered anchors for a mall Apple store in Paris Source: Interview with Apple, web search 20

Mall architecture is evolving to adapt to new needs UNIQLO store Beijing Timberland store, Unibail Rodamco, France Selfridges, Birmingham Source: R&D project Majid Al Futtaim, web search Louis Vuitton, ION Singapore 21

Brands have developed their own direct retail channels to ensure presence Multi-brand Electronic Retailer Source: photos taken by Majid Al Futtaim research team Vs. Direct Manufacturer Retail Channel 22

Electronic category has been at forefront of trend of direct channels Source: photos taken by Majid Al Futtaim research team 23

Malls are not only sales channels but key advertising space Source: photos taken by Majid Al Futtaim research team, web search 24

Winner malls will be those that apply key success factors ü Update continuously the tenant mix to keep it fresh – 5%-10% annual turnover is healthy. ü Attract the new anchors tenants – the cult brands (e. g. Apple, Abercrombie & Fitch). ü Ensure convenience factors are in place – road access, parking, easy mall navigation. ü Develop differentiator factor(s) – unique leisure, unique façade, unique anchor tenant. ü Increase quality and quantity of Entertainment and Dining options – around 25% of the mall. ü Architecture must adapt to need of tenants and create uniqueness: § Double ceiling shop fronts (to properly display brand) § Encourage Innovative shop front designs. § Creative mall facades with iconic mall entrances. § Quality control of fit out designs – mall developer must approve tenant designs. ü Design with environment in mind – public demands it and it could be cost efficient. ü Integrate latest information technology – Large digital screens, Wi. Fi, visitor tracking. ü Keep the mall fresh with live events, campaigns, community involvement. ü Integrate ‘Brick&Mortar’ and ‘Online’ worlds – social networks and loyalty programs are key Source: Majid Al Futtaim 25

THANK YOU 26