Salam of Qatar, which owns stores in Dubai, Abu Dhabi, Al Ain, Qatar and Oman, plans to invest $300 million (Dh1.1bn) over the next five years as it opens branches in Saudi Arabia, Kuwait, Syria, Lebanon, Egypt and Iraq.
The expansion plan was revealed by Issa Abdul Salam Abu Issa, Chairman and CEO of Salam International Investments Ltd, which owns and runs 25 companies in a range of sectors.
In this exclusive interview with Emirates Business Abu Issa talks about the challenges facing the group and its ambitions for the future.
How was 2007 for the company and how has 2008 been so far?
Last year was a successful year for Salam stores in terms of sales and profits. This year has also been a successful year so far with sales figures higher in this period compared with the previous year.
What are your future plans for Salam stores?
Salam aims to establish itself as the leading name in the region's retail store sector, which is currently dominated by a number of US and European chains. We are going to achieve this over the coming years by opening more branches here, as well as in the neighbouring countries. Recently the company invested Dh110m in its new store at Dubai's Wafi mall. It is among the best retail stores in the region in terms of design and size – it measures 11,000 sq m.
What are the company's latest achievements?
Salam recently won the RetailME regional award, which is given annually to the best stores. This gives us the motive to aim for bigger awards in the near future.
What about your expansion plans? What new markets are you looking at?
Salam, which has some 40,000 sq m of store space in the UAE, Qatar and Oman, has an expansion plan largely focused on the Saudi market. Saudi Arabia is like the economic lung for any commercial venture given the size and diversity of its markets and the high purchasing power of its residents – especially the medium and medium-upper category targeted by Salam. I expect three stores to open in Saudi Arabia in the next five years. Financing will not be a problem as Salam will seek to secure it through partnerships.
What about your expansion plans in the other GCC countries?
Salam's store in Qatar's The Gate commercial complex will soon see a big expansion, with the total area increasing to 15,000 sq m. Once this is ready, it will offer better and wider range of options to our customers.
What about the challenges facing your company in the UAE and elsewhere?
The company can design and build the most luxurious retail stores in terms of the type and quality of goods on offer as well as the services extended to customers. But the most important challenge facing such a company in the UAE – especially Dubai – is the relatively high rents charged for retail stores and other large projects. The presence of Salam in Wafi for 15 years has helped us to secure preferential rents of up to Dh150 per sq m, the lowest available in such a prestigious centre. But elsewhere retail space – including decorating and supplying goods – now costs some $3,000 per sq m. But despite high rents Dubai is still attracting investment from the Gulf region. And rents in Dubai are a third less than those of Europe.
What about the competition? Is it affecting your business?
It is another major challenge. We are facing tough competition from global and leading regional and Dubai-based companies. But I have confidence in the company's quality services and efficiency.
How has your presence in Dubai helped you in your expansion plans?
Dubai is the commercial window to the Middle East and the springboard to the region's service and marketing sectors. Also the city has a large number of the type of customers targeted by Salam
How do you differentiate your brand from others?
It is necessary to keep abreast of world trends in luxury garments, accessories and other goods and to be the first to bring them to the local market. Salam finds itself in a strong situation as an Arab company with a special identity. This means it is free from the financial pressures that result from operating through an international brand as competitors in Dubai and other cities do.
How important is diversification for your group?
We are keen to diversify our investments. Currently, Salam has investments in the fields of technology and communications, construction and development, luxury and consumer products, energy and industry, investments and real estate. This is one of the main reasons for our success.
What helps you the most in meeting your customers' needs?
The retail sector benefits from the financial and corporate stability of the group. And Salam has great experience in the region's retail sector, which has made it more capable than others of meeting consumers' needs.
Are you planning to add Arab goods to the items you stock?
Salam has no plans at the moment to add Arab goods to the list of items on display.
What is the reason behind this decision?
The quality of some Arab goods exceeds that of European items, but the producers of Arab goods lack systematic marketing procedures.
What about the prices in the UAE and GCC region compared with other global markets?
Traders sometimes have to raise the prices of their European goods by 50 per cent as a result of the rise of the euro against the US dollar. And some stores have turned to the US market to benefit from the weak currency. Traders incurring the most damage are those who have supply contracts with European companies. But despite this, prices in the region, and in Dubai in particular, are at least 20 per cent lower than those in European markets. This is because labour costs in the region are lower and rents are relatively reasonable in most Gulf cities.
PROFILE: Issa Abdul Salam Abu Issa, Chairman and CEO of Salam International Investments Ltd
Salam International Investments Ltd (SIIL) is a listed public shareholding company, which operates more than 25 business units. Abu Issa, as head of one of Qatar's largest and most established companies with a 55-year heritage, engineered the transformation of SIIL from a family-owned businesses into a regional conglomerate. Abu Issa oversees his company's diverse investments and operations in the fields of technology and communications, construction and development, luxury and consumer products, energy and industry, investments and real estate. SIIL's operations extend over Qatar, UAE, Palestine, Kuwait, Saudi Arabia, Oman, Bahrain, Jordan, Lebanon and Syria. On the International front Abu Issa is a member of the World Economic Forum and the Arab Business Council. Abu Issa has a BSc in business administration from the University of San Diego in the United States and is the Secretary-General of the Qatari Businessmen Association.