It’s hurray time for Lebanon’s consumer society. Shopaholics, retail marketers, mall strategists and their assorted public relations minions are gearing up for the launch of the third ABC Mall in Lebanon. The new retail temple is slated to open its doors this summer in Beirut’s Verdun quarter. It will accommodate over 200 stores, including its signature 10,000 square meter (sqm) department store. With a total gross leasable area (GLA) of 50,000 sqm, the mall promises to provide plenty of leisure opportunities, from a multiplex cinema, to a roof garden and restaurants. The mall was designed by US-based architects Callison (today CallisonRTKL), a Seattle firm specialized in mall architecture, and a leader in the design of retail environments. With its design, commercial and leisure offerings, and a built-up-area (BUA) of 120,000 sqm, the opening of ABC Mall in Verdun is going to change the urban fabric of the Lebanese capital, both in terms of shopping and in terms of communal living – or so hopes Frank Kuntermann, deputy CEO of the mall’s operating group, ABC.
The Verdun project, in Kuntermann’s view, is the next stage in development after the success of the group’s mall near Sassine Square in Ashrafieh, which dazzled competitors with its design and architecture when it opened almost 14 years ago. “It is the 2.0 of [ABC] Achrafieh, integrating all the needs of the community. What are the aspirations of the population living in the surrounding area, and how can we answer those aspirations? That is the real question,” he says. (see interview)
Describing the Verdun project as a “community mall,” he explains that the concept behind both the new department store and the entire mall is “by the community and for the community.” According to Kuntermann, this approach led ABC to take new measures in considering its design, such as responding to the area’s lack of green spaces by allocating more room for a roof garden than was initially planned. They also sought to address Verdun’s propensity for traffic by focusing on pedestrian access and increasing the parking capacity to 1,700 spaces.
“The model of the community mall, as ABC conceives it, is extremely interesting, and the approach is [apparent] in how it is constructed and even in the priorities of recruitment,” Kuntermann says, explaining that the first round of hiring focused on candidates from the area around Verdun.
ABC also sought to extend the mall’s offerings to a very wide bracket of consumers, from those with student budgets to upper-middle income earners. This is reflective of the wide range of income strata in the potential catchment area, which according to Kuntermann is not conclusively defined at this time, but presumably stretches from West Beirut to southern parts of Lebanon.
In investment terms, the mall is a $300 million project, excluding the land value, Kuntermann says. He confirms that a joint venture for the development was formed between Verdun 1544 Holding, a company under the portfolio of the Bahaa Rafic Hariri Group (BHG), and ABC group. ABC brought its knowhow and concepts, whereas BHG brought the land and Verdun 1544 Holding invested in the project. Kuntermann denies knowing the land value of the joint venture, saying the assessment was done several years ago, before he joined the ABC Group. Kuntermann began working at ABC in 2013; his previous position was Middle East general manager at a regional company representing French luxury group Hermès.
Shopping malls have encroached on Lebanese consumer habits since the beginning of Beirut’s gradual recovery from internal violence in the 1990s. In the early days of this development, malls were created in existing commercial buildings or as small-scale affairs. Walking through Verdun quarter in the late 90s, one could stumble up a narrow escalator in the Concorde Center and venture between the racks of a hastily put-together fashion sales zone to buy a suit from German brand Boss, or browse through a crowded (with paper, not people) bookstore in a dark first-floor corner of Verdun 730, where three floors of retail space made an attempt to emulate a mall.
Given that consumption and imports have been prime drivers of the Lebanese economy over the last 25 years, it did not take very long for larger purpose-built malls to debut in the Beirut market. ABC Achrafieh and CityMall in Nahr El Mott provided enough size to draw crowds and serve as regional centers, to go by the definition of the International Council of Shopping Centers. A third project, the Souks in the Beirut Central District, had plans dating back to the 1990s, but was held up by non-commercial delays.
With the opening of these ‘real’ malls between 2003 and 2009, the story of Lebanese retail centers entered a new phase, but not one that was void of difficulties. Some 1990s shopping centers attracted significant footfall for a while, but had to settle back into more modest C-Class or neighborhood malls, as their attractiveness was eclipsed by larger and newer malls. Others launched with fanfare only to flounder within a few years, such as a project on the Mkalles Hill, or languished during the various difficult economic periods of the 2000s and 2010s. Further malls opened in and after 2009 in various parts of the Beirut conurbation, only to be quickly affected by an apparent dichotomy of increasing purchasing power and the rollouts of new grade-A retail GLA.
Even more convincing malls like Beirut Souks, ABC Achrafieh and CityMall, underwent serious remodeling and numerous changes in terms of retail concepts, anchor tenants, and leisure offerings to arrive at their current incarnations. Some sins bred into their designs by obliviousness to optimal circulation (whether of exterior car traffic, interior pedestrian traffic or just air flow) proved impossible to breed out.
Given Lebanon’s economic vagaries over the last 20 years, ABC Group has developed its skills for operating retail environments in a school of hard knocks. Today the company aspires to transform itself from a family business to a veritable corporate player on the regional retail scene.
ABC has retained and expanded its brand equity to a level where the group can boast of very strong brand awareness in Lebanon. Kuntermann cites brand awareness and assisted brand awareness to be at 95 percent, and says, “BHG decided to go into this project with ABC because they knew that we were the ones that could not only implement a project that was in line with the aspirations of this community, but also, would be able to attract the brands, who would be confident enough that this mall would be run in a way to make it a success. I think the brand value of ABC is what allowed this chemistry to happen.”