Dubai retail mogul Bin Hendi charts a cautious course
Source: BI-ME , Author: Trevor Lloyd-Jones
Posted: Tue December 16, 2008 12:00 am

UAE. Leading conglomerate in luxury jewellery and watches, fashion, hospitality and trading Bin Hendi Group reports that its Dubai retail sales are tracking down 20% and the company is preparing for staff cuts and putting a freeze on expansion. It is time for all individuals, companies and countries to take prudent action, says one of the founding fathers of Dubai’s retail sector, President of Bin Hendi Enterprises, Mohi-Din Binhendi.

The Gulf market for luxury products and hospitality concepts has never been a very unified market and recent reports suggest it is about to go through hard times after a decade of red hot growth. As the credit crunch seems to permeating from the real estate sector into consumers' minds, the concern is now that 2009 could shape up to be one of the most testing years ever in the history of the UAE.

Companies are quietly shedding jobs or not hiring, according to recruiters, while the Arab world's biggest listed developer, Emaar Properties recently gave buyers more time to pay for new homes given difficulties in obtaining mortgages.

The UAE's biggest bank has stopped lending to foreigners who work for top Dubai property firms on fears a slowdown could jeopardise their jobs and income and an Islamic mortgage lender, Amlak has suspended new loans altogether for now.

‘There is less footfall in the stores, people are tightening their belts," said one unnamed retail manager recently. “It's never been like this before.”

The global financial meltdown came just as the world's biggest mall opened in Dubai last month and this seems to have had a compound effect, putting more pressure on the city’s other major malls such as BurJuman, Mall of the Emirates or Deira City Centre.

Mohi-din Bin Hendi, President of Bin Hendi Enterprises, says in this interview that his retail business is 20% down currently, which he says is “acceptable and manageable” from the previous highs of the Dubai retail boom.

“In the beginning, people did not take it seriously. When they start to get their ATM cards refused from the bank, that's when sense come back, that this is serious,” he says.

Bin Hendi, whose retail-based conglomerate operates in the Gulf Arab region and India and offers everything from jewellery to sofas, said the firm would take steps to ready for a further decline in consumer spending and would “cut the desirables, go to the essentials.”

Job cuts in the whole retail sector are also on the way he adds, declining to be specific on figures.

Bin Hendi takes pride of place amongst the handful of family business groups that brought luxury brands to Dubai since the 1970s. It holds the franchise for famous names such as Hugo Boss, Brioni, Carrera, Casamilano, Cerruti 1881, cK Calvin Klein, Flexform, Flos, GF Ferre, Graff, Martin Braun, Minotti Cucine, Moooi, Navitec, Noa, Nubeo, Orrizzonti, Philip Stein, Porsche Design, Texas Instruments, Ulysse Nardin, Vitra, Zilli and Shanghai Tang.

The hospitality brands under Bin Hendi’s umbrella now include names that are highly visible in just about every mall in Dubai, such as Japengo, Bella Donna, China Times, Business Café, Sammach, Inferno, La Brioche Café, Mini Chinese, Ruby Tuesday and Second Cup.

Mohi-Din Binhendi’s passion for creativity and new concepts has resulted in the BinHendi Group hospitality division expanding into more than a dozen restaurants and coffee shops, each uniquely positioned and extremely successful. BinHendi Hospitality offers an exciting selection of dining options available throughout Dubai.

The company has seen tremendous change since the mid-1970s when it started with the first Pierre Cardin outlet in the Middle East, and this change has even accelerated over the last seven to eight years. That's when the rat race started and Dubai now has almost all the branded goods of the world represented, leading to a new level of competition and choice for consumers.

So it is an ideal market for brands to be in. Retailers are fortunate to have so many visitors in the UAE and people spend more when they travel. Psychologically, they want to shop. The question therefore is whether the local trade at the ‘pure luxury’ level is sufficient to support the luxury retailers and brands or whether the re-export trade, particularly for gold, and tourists are going to hold up as a key segment.

In this interview Bin Hendi was candid in his answers and said that in this financial climate one has to be proactive, calculative and “be mechanical” in response to cutbacks from the banks, which are putting a halt to even newly-polished expansion plans. He also provides an update on the broadcast media company City 7 TV, the subject of a controversial televised interview just prior to meeting with BI-ME.

BI-ME: Looking back over the years, since you started, what stage would you say that Dubai is at now in terms of retail and other developments? What effects of the ‘crisis’ are you seeing?

MB: I started in 1972 with Pierre Cardin, the Armani of its time, with a store in Deira. I was very young at that time and wanted to do things that we not done, things that other countries had that we did not have.

Now, if we look at the current period, I would answer that we cannot change negative into positive. We are a part of this world, and the financial crisis, as we call it, is happening in every city around the world, including our beloved city and country. Being commercial and business driven, what is happening around the world has impacted on us by 20% in the retail sector, which is acceptable and manageable. I am sure in time our leadership will be able to turn the corner and we will all forget about it. It is essential for us to look to our opportunities.

BI-ME: What changes are you making in answer to the slowdown?

MB: We are downsizing and cutting costs and doing things in the category of the essentials, and avoiding the desirables. By this I mean it is desirable to fly first class, although it might be essential to get there. That luxury, or fat is trimmed off. When we decided to look at all the companies that are not making money for us we were evaluating those businesses, such as City 7.

It means people who are extra in the company have to be evaluated. The whole operation has to be evaluated and we have to take measures that the company works with very lean and mean staffing.

BI-ME: During a downturn, there are usually the two segments in the luxury business that are affected differently: those customers that can always afford them, and those who cannot, or who buy for very aspirational reasons. Which segments of your business are being affected? Is it tourist or the local market?

MB: The high end product strangely does get affected the least. People with wealth do not feel the immediate pressure on their spending, so they spend in hard times. I feel and I have heard from people in industry that local businesses have been hit. So it is a correction time. It is a time for discipline for all, for individuals, corporations and even countries.

BI-ME: Can you put any figures on job cuts or other cuts that might be necessary?

MB: We are looking at the workforce and we are really assessing the number of people that should be doing the jobs. The conclusion is that we have to apply a technical formula to every business and select the people that are required and the relevance of them to the business.

BI-ME: Can you give any comments on your City 7 TV channel and the rumours and reports on blogs and various websites about staff worries and late payment of salaries?

MB: When this financial crisis hit the world, obviously it also came to this region. City 7 is a very unique company, which is a local community channel catering to those people who do not speak Arabic. My idea was to address and create programmes for that group. City 7 is still doing that job very well and by doing that, I am proud of everybody involved. They thought I was going to close the channel, but obviously I am not, and the reason for its position still exists in the market.

But we will start looking at everything, from sales and marketing onwards, in a drive to ensure that City 7 is a strong medium for companies to promote ideas, products and employment requirements. I take pride in launching City 7 and I value my people who work to ensure that City 7 is a channel that broadcasts quality to the people. We have no intention to close the channel.

BI-ME: You are known for your personal flair but what does a business like Bin Hendi have to do, to take a brand from the West and transport it to the Middle East? How do you advise brands that are coming to the region for the first time?

MB: To quote two of our newest [restaurant] brands, Ruby Tuesday and Burj Al Haman which has opened in Beach Park Plaza on Jumeirah Beach Road, we say that there is always room for more.

What attracted me about Ruby Tuesday was its philosophy of all fresh food for clients. We do not serve any frozen food at all. With Burj Al Hamam, we have built on the core values of the Lebanese flagship. The restaurant in Dubai has an exciting new look: bolder, brighter and more glamorous to reflect the vibrancy of the city yet maintain its authenticity. This will also be a significant step towards adding to our portfolio of high quality dining.

The new brands that we have coming in fashion are very creative designers. We are bringing in such new lines. The world has to have some newcomers in this area to maintain the excitement. So I would say that the newcomers are very much knocking on the door of the established names.

Our relations have been for a very long time with some of our brands. For example we have been working with Brioni for over 20 years and with Boss for a long time, and with Porsche Design for more than that. So we have a great relationship and professionally we are very experienced in the requirements of these brands. We know how to take a new brand and market it. We have been working in this market for a long time with elite products. When it comes to introducing a concept to this market, we can call ourselves the experts.

BI-ME: The retail downturn in Dubai is starting to be talked about, and business is still being done, but how can groups like BinHendi adjust their focus in this climate?

MB: The biggest effect comes from the banks; they are the backbone of any business. If they stop lending, for [letters of credit] for example or other finances, then companies stop expanding. This is what we are all seeing.

BI-ME: So you mean all the expansion plans for the future are on hold? Could we take a ‘virtual tour’ of the GCC region? Are there still markets that are interesting for your portfolio?

MB: Regarding expansion, we are taking a wait and see approach, rather than being aggressive. Kuwait and Saudi Arabia are especially important and they are markets that we are looking at, then Qatar and Bahrain. Of course we are also in India, which is a big market and a challenging market.

There are good malls coming to India, whereas the issue previously was always where to place luxury products in the market. MAF is developing great shopping malls in new countries, which is also very encouraging. But getting the positions and HR are still difficult in India, because the world that we bring to the country is all new. You have to train people from the ground up.

BI-ME: In conclusion, what is the direction and strategy of the group now?

MB: Just very recently, we said that one year from now Bin Hendi was going to invade the world with food & beverage and fashion businesses. Sure enough we have reached India with Boss and we have got to some of the difficult parts of the region.

We have launched Japengo [the casual Asian dining concept] in Oman and the GCC is very much in our business plan. But as the financial world is in crisis, we have to suspend this expansion until such time as the world goes back to normal. This situation cannot persist for very long and it if it did, I predict it will be no longer than a year.



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