ABC Dbayeh: The Veteran
Established back in 1979, ABC Dbayeh was one of Lebanon’s first department stores and is part of many a childhood memory — a fact that the ABC team proudly promotes. But, as any pioneer, ABC Dbayeh had to grow with the times and keep up with the competition or risk being left in the past.
Tania Ezzedine, head of retail and marketing at ABC, explains that, historically, the motivation to expand the aging department store was driven in part by ABC’s strong customer relations program, which allowed them to tap into shoppers’ concerns and desires. ABC Dbayeh had its first major renovation in 2006 with the construction of the 8,000 square meters (sqm) children’s floor at the basement level, which included a variety of kids fashion brands and a play area (recently expanded again). Renovations then moved up floor-by-floor, with little tweaks in each until the final remodelling in the summer of 2012: the addition of the food court terrace, the movie theater and other extended sections. Stores remained open throughout the renovation process, and work was done at night so as not to disturb shoppers.
Is it a, b or c?
Finally, what started as a 17,700 sqm department store grew into a 32,500 sqm hybrid store — the term the ABC team uses to describe the Dbayeh branch: “We do not consider ABC Dbayeh to be a department store because of its huge size and the presence of the newly launched movie theaters and renovated food court, which you don’t find usually in department stores,” explains Ezzedine, admitting however that in terms of fashion layout, at least, ABC Dbayeh is still considered a department store. Not quite a mall, and not a department store anymore, ABC Dbayeh seems to hover somewhere in between.
On top of the physical reconstruction, ABC stores also underwent an image revamping to portray a more modern and contemporary feel. The ABC colors changed from orange and blue to a more stylish silver and purple, and the ABC Dbayeh changed from a heavy structure to a brightly lit and futuristic one. “We chose our brands deliberately to move our positioning into a more fashionable and trendy one. We upgraded our (in-store) magazine and worked on our brands, to give them more of an accessible fashion mix,” says Ezzedine.
Though the ribbon-cutting for ABC Dbayeh’s latest renovation in May 2012 came at a tough economic time for the country, Ezzedine says footfall has increased significantly, peaking during the holiday season and is expected to reach around 5 million customers per year. At this rate, ABC Dbayeh is expected to return investment on the latest renovation in five to seven years.
As they stand today, ABC stores, and according to Ezzedine, target families with young parents between the ages of 35 and 45, and women shoppers of the medium to medium-high income level. This is evident from the choice of labels available in the store, including Sandro and Mage for women, Ralph Lauren and Tommy Hilfiger for men, and Tartine Au Chocolat and Kenzo for children. High budget shoppers told Executive that ABC is where they head when they want to buy quality brands.
At the operations level, ABC is both a retailer, having bought brands in several departments, and a landlord, leasing parts of the department store according to a percentage of sales or fixed monthly fee. “What matters to us most is the brand: if we can buy and operate it, then fine, and if not, then we lease it,” explains Ezzedine. ABC’s leasing prices are among the most expensive, but Ezzedine maintains they are in line with the footfall ABC provides and the profit its name generates.
At approximately the same time that ABC Dbayeh began external renovations, Le Mall was opening for business just a short walk away. In this situation, nerves on behalf of ABC Dbayeh would be understandable, yet management there insists that Le Mall, with its different brand mix and positioning, is complimentary to ABC Dbayeh and that, together, the two shopping outlets have created a badly needed hub in the region.
This love story is certainly true when it comes to fashion; shoppers Executive interviewed had a distinct preference for one of the two outlets and generally fell into the target groups set by the respective mall operators. Where the two stores get into a tiff is in the entertainment sector, as they both have premium quality movie theaters and the most competitive food and beverage outlets in the country.
What ABC Dbayeh has that Le Mall currently doesn’t is the loyalty card, which offers cardholder benefits relative to points collected from purchases at ABC. This may help encourage loyalty cardholders to watch a movie or eat at one of the ABC outlets instead of at Le Mall, where they will not be adding any points to their card. ABC currently has 120,000 loyalty cardholders.
While ABC is well established in Lebanon, Majd Al Futtaim Holding’s City Center is opening in Hazmieh in April and with competition stirring among other mall operators, ABC cannot rest on their laurels. This, perhaps, is the reasoning behind the $200 million plans to open a 170,000 sqm ABC mall in Verdun by 2017, a joint development with Verdun 1544 Holdings.
Whether any of the new kids on the block will play the role of usurper is still uncertain, one thing is for sure: the mall operations business is on the rise in the country and ABC is no longer the only player in the field.
Le Mall Dbayeh: The Upstart
When you have a company that owns many of the most successful fast-moving fashion outlets in the country, it is the logical next step to create venues in which to house them all. Acres Holdings, a retail real estate company established in 2006, is a subsidiary company of Azadea Group and is behind Le Mall, the most recent chain of malls to open in Lebanon.
Acres Holdings’ first project, in 2009, was to breathe new life into the then Habtoor Mall in Sin El Fil; they remodeled and rebranded it into the first Le Mall. Their second venture was Le Mall Saida in 2010, the city’s first mall. Finally, in a daring move, Le Mall opened in Dbayeh in the summer of 2012, a few meters away from ABC.
Georges Kamal, chief executive officer of Acres Holdings, is the first to admit that it seems odd for a mall to choose a venue at a walking distance from a big player in the area. There was also the risk of cannibalization, according to Kamal, as many Azadea brands have outlets in Kaslik, close to Dbayeh. However, he explains: “ABC Dbayeh today targets the A-class buyer, while City Mall targets the C-class. No mall in the area caters to the B-class consumer.”
He bases these statements on the research his company carried out in the region falling between the Antelias Bridge and the Zouk area, which shows that though the catchment area has a high population density, 80 percent of their purchasing power is considered to be of upper C level and B levels. The classes are based on spending power, with A being the most affluent and C the least.
Kamal explains there are two main considerations when choosing a location for a mall: the catchment area population density and the residents’ purchasing power, both of which were in line with the company’s vision for Le Mall Dbayeh.
Le Mall Dbayeh targets the B class consumer between the ages of 15 and 35, and is therefore — theoretically at least — not in direct competition with ABC, which targets an older, more affluent set. Indeed, a visit to Le Mall Dbayeh on a Friday afternoon feels like a walk in a high school playground and young shoppers Executive interviewed spoke enthusiastically of their favorite shops at Le Mall.
Kamal admits that the cinema theaters and the food court are the areas where ABC and Le Mall have similar offerings and so must be in competition. Yet, he plays the youth card again and says, “In our food courts, we created a very strong and consistent tenant mix targeting the C and B class consumers between the ages of 15 and 35. Our indoor outlets such as Classic Burger, Hot Dog and Beyond, Olio and Sotto prove that.”
As for the cinemas, the numbers show both theaters are performing along the same lines (roughly 400,000 visitors per year). “It seems we are both creating a new market for movie goers as the numbers in other theaters in the area have not decreased but new people are coming to our venues, and so it seems malls are playing a social role in the area,” Kamal says.
Though Azadea is a sister company, Acres Holdings does not own any brands itself and acts solely as a mall owner and operator following a rent formula of either percentage on sales or rent, depending on which is higher. All leasable space in Le Mall Dbayeh is now taken, and Kamal says the waiting list is long. Kamal, describing the relationship between Azadea and Acres Holdings says: “For us, the synergy between the two companies is great because we open a mall with an already very high occupancy. Plus, Azadea has brands which create traffic in the mall, and increased traffic means increased sales, which is good for Azadea and for us because we take a percentage of sales.” Azadea occupies 20 to 40 percent of leasable space in Le Mall developments.
The biggest challenge for Le Mall Dbayeh, according to Kamal, is the parking situation; all their three parking lots fill to capacity on some weekends and holidays, with the valet service in full action mode. “The difference in traffic between weekends and weekdays is challenging by itself but you cannot create a parking lot solely for the extra weekend traffic,” says Kamal.
Though it is still too early to have any tangible figures on how well Le Mall Dbayeh is performing, Kamal uses the benchmark of other Azadea stores in the country to say that Le Mall Dbayeh outlets are performing as well as the best of those brands in major shopping areas in the city, such as Verdun and Beirut Souks. Le Mall is expected to reach the traffic flow of 5 to 6 million visitors per year and return its investment in five years.
Acres Holdings is brimming with plans for the future. Having the advantage of testing the market potential through its Azadea outlets, Acres Holdings has deemed the areas of North Lebanon and the airport road as lacking in quality malls and is planning to establish two more malls in Lebanon within eight years.