Age of the mega mall

ABC

ABC opened its much-trumpeted 120,000m2 shopping mall in November and there are five more massive retail projects in the pipeline – the Habtoor Group’s Metropolitan City Center in Sin al-Fil, ADMIC’s Geant in Dora and Carrefour Dbayeh, Solidere’s Souqs, and the Landmark mall, also in the BCD. But what does this mall craze mean for Lebanon’s retailers and shoppers? If the reaction to ABC’s latest venture is anything to go by, malls are impacting on us in more ways than one.

“The ABC mall is a brave step,” said Mark Jones, a consultant for Cushman & Wakefield’s representative office in Beirut. “It is hard to change shopping habits, but introducing this mall means that one is reshaping the way people shop in Lebanon – from high street to indoor shopping and it should pave the way for the other malls.”

Shopping malls, albeit, smaller ones, are not new to Beirut. Dunes, Verdun 730, Verdun 732, and the ABC outlet in Dbayeh are all ingrained in the Lebanese retail consciousness. But all eyes are monitoring the performance of the new ABC mall in Ashrafieh, which cost $120 million to build and has 40,000m2 of net retail space. The experts are confident: “There’s been a giant leap in the retail sector. The market is shifting and we are expecting that shopping malls will have the majority of revenues, especially since those planned [in the next two years] will have twice as much retail space as the ABC,” said Jones.

The rush to fill Lebanon with shopping malls is inspired by Lebanon’s mission to be the Levant’s retail hub. Such a boast would need to be backed up with modern, well-specified shopping centers selling international consumer brands. Retailers can already point to defined shopping periods: summer, ADHA and FITR, while statistics show that most of the retail activity occurs in Beirut – mainly in the BCD and Verdun. Arabs are very discreet shoppers and prefer to do it away from home, so Beirut is the ideal destination. According to the World Tourism Organization, tourists arrive in Lebanon with roughly $2,000 per person, most of it allocated for shopping. It is these people that the ABC hopes to woo. With a total of 170 shops on three retail floors, the ABC mall has, according to the mall’s director Robert Fadel, already reached 80% occupancy. He expects the shopping complex reach cruising speed in about three years. “If all goes as planned, we should be gaining back our investment in 10 to 15 years,” he added.

Estimates in a feasibility study commissioned by ABC and carried out by Horizons Europe, a British retail consulting firm, predicted that the mall would achieve annual sales of $255 million, 16% share of the local retail market. Many see the figures as optimistic. “That’s revenues of $5,600/m2 per year,” said one retail consultant. “In the short term, they will struggle to do this.”

Most shops dream of such revenues, but ABC felt it had to woo local retailers to take space in the mall. Attractive rents (in some cases as low as $500 per m2/annum) were used as incentive. Some, like Pa Kua upped sticks and moved but Eden Park, an upscale men’s boutique, is staying put. “I decided to stay out, as I believe that stores with a unique identity have nothing to worry about. It’s the shops that sell things that can be found in the mall that are threatened,” said Mazen Moussallem, Eden Park’s owner.

Whether or not more shop owners in the Sassine area decide to join the ABC venture, a lot of changes are expected to happen in the area. “There’s going to be a lot of shuffling around within the mall,” said Jones. “People, who have stores in and out of the mall, might decide to close their store outside and remain in the mall – or the opposite might happen.”

In fact, most of the retailers that have so far joined the new venture have been with ABC for years. “I have been with ABC for over 15 years and because I trust the way they do business, I decided to join them at the new mall,” explained Nadim Amm, owner of Milord stores. However, not everyone is as satisfied. Two storeowners have complained that they have not been doing as well as they expected, not even during the holiday season. “We are paying a great deal of money [in rent] and had high expectations, but so far it has been very disappointing,” said one shop owner. But not all retailers at the ABC are concerned about the sluggish holiday sales and high rents. “One should not judge and cannot expect to make money instantly,” said Milord’s Amm. “Personally, we are giving ourselves six or seven months to evaluate our situation. So far so good, but we are expecting better sales when the mall is completed.”

Whatever the outcome of the ABC effect on Sassine, at least one positive factor on independent businesses in the area will be that small landlords and retailers will be forced to improve their services. “We’re not happy with the situation, but we know that in this business, competition is fierce and we know that it’s our job to improve and create better facilities for retailers,” said a local landlord. “We cannot sit and complain; we have to work around what’s available now, and maybe benefit from the mall.”

Trouble next door

Despite conducting a traffice impact study before constructing ABC in Sassine, the new development has earned itself the ire of locals, harassed by a surge in traffic to the mall

In addition to concerns regarding negative repercussions for individual outlets in the Sassine area, many residents and commuters are concerned about the recent increase in traffic congestion that the ABC has brought with it. “It’s been crazy all throughout the holidays,” said one angry resident. “It took us hours to reach home everyday. I can’t believe they got planning permission!” Despite complaints, the ABC seemingly went by the book as far as Lebanon’s urban development laws are concerned. Code 523 specifically states that whoever wants to create a development of any size must conduct a traffic impact study on the desired area, so the ABC turned to traffic consultants, Team International, to design the best possible multilevel access and parking facilities to cope with Beirut’s traffic. As a result, many mitigation measures, including a new bridge from Alfred Naccache Street to the 2nd level, are in process of being implemented to enhance the flow of traffic to and around the mall, which is expected to be completed in the summer of 2004. “Although there has been no one following whether or not ABC is implementing the law, ABC decided to do it,” assured Tamman Naccache, partner and one of the directors at Team International, who also added that this is the first time such a traffic study was conducted in Lebanon. The issue of parking is another sore point among retailers and prospective shoppers. As a result of the lack of parking space in the Sassine area, ABC owners are charging their customers to park at their facilities, despite many complaints.

Several retailers suggested that when people buy from the mall, the parking should be validated. Jones agreed. “I see the point in charging – the area lacks parking spaces so anyone can park and just walk out of the mall. But I would suggest a different approach.”

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