MILAN — Bloomingdale’s expansion in the Middle East may be via a franchise agreement with Al-Tayer Group, a major player in fashion retailing in the region with a portfolio of 30 brands, including Giorgio Armani, Bulgari, Coach, Dolce & Gabbana, Gucci and Yves Saint Laurent.

This story first appeared in the March 17, 2008 issue of WWD. Subscribe Today.

According to sources, Bloomingdale’s is in talks with Al-Tayer to open a 129,600-square-foot store in one of the two wings of Dubai Mall, which is being built by Dubai-based Emaar development company. The mall has been under construction since 2004 and is expected to open in late 2008 or 2009. When completed, it will be the largest mall in the world.

As reported, Bloomingdale’s is also eyeing Kuwait and sources say that store could also be operated by Al-Tayer.

Al-Tayer will be a major tenant in Dubai Mall, bringing in luxury fashion and jewelry stores, as well as brands such as Banana Republic and Gap. “Yes, I know Bloomingdale’s is coming to Dubai, because when real estate groups come and present their projects, they tell you who else will be located next to you,” said a source.

Michael Gould, Bloomingdale’s chairman and chief executive officer, again declined comment on the retailer’s Middle East expansion plans. A spokeswoman at Al-Tayer said the group had no comment.

The Dubai Mall is expected to include more than 1,000 stores, will encompass about 10 million gross square feet and the world’s tallest building, the Burj Dubai, with more than 200 floors and an Armani Hotel at its base. The main centerpiece will be Waterworld, with a water terrace, fountains, aquarium and a 36-acre lake. Galeries Lafayette has already signed on as a tenant in the mall.

Vittorio Missoni, who oversees institutional affairs at the family-owned company, described Dubai Mall as “a super-galactic project, in a typical Dubai way.” Missoni will open the brand’s third Dubai store in the new mall with local partner Ziad Matta. “This is a very interesting market for us,” he added.

Italian industry associations are taking notice of that region’s potential, as well, and announced last Thursday a series of missions to the Middle East to promote fashion, art and design. “Recent research from the International Monetary Fund has shown that gross domestic product growth in the six Persian Gulf states that make up the Gulf Cooperation Council [Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Oman and Qatar] has more than doubled over the past four years, from $350 billion in 2002 to $791 billion in 2007,” said Bruno Ermolli, president of Promos, a branch of the Milan Chamber of Commerce that promotes international activities.

According to Giovanni Bozzetti, president of Lumbardy’s Fashion Committee, Italy’s exports to the Middle East grew 47 percent in 2007 compared with 2006. Marking more intense relations with the countries in the region, the Italian Chamber of Fashion will help promote the first edition of Abu Dhabi Fashion Week, scheduled for March 15 to 18, with Missoni, Pucci and Albino invited to show as special guests.

Last October, Shireen El Khatib, ceo of Al-Tayer, said at the WWD/DNR CEO Summit that the Gulf Cooperation Council boasts a combined gross domestic product of about $600 billion, making it the 17th largest economy in the world. Skyrocketing oil prices, a modern and diversified economy, a growing population and a new wave of tourists all contribute to the booming economy. In particular, El Khatib pointed to the emergence of nouveau riche Russian tourists, who make up 60 percent of all Al-Tayer sales to tourists. The population of Dubai is increasing by 8 percent a year, while tourism is growing by 14 percent annually.

And the population is becoming more fashion-savvy and sophisticated. An Italian industry veteran said developers have become increasingly more expert in luxury fashion. “Offering retail space used to be based on a first-come, first-served basis, and this led to some major faux pas. Not any more,” said the source.

Local retailers have more mixed feelings about recent developments. A Saudi retailer said it was “risky to merely export a name and hope to be successful,” and highlighted the importance of qualified buyers. The retailer noted that Harvey Nichols in Riyadh, Saudi Arabia, took some time to figure out the local market. In addition to Harvey Nichols, Saks Fifth Avenue has opened license units in Riyadh and Dubai, and is eyeing other countries in the area.

“Dubai is undoubtedly a great location, but I fear it is becoming too congested, competition is fierce and it’s becoming very expensive,” said Beirut, Lebanon-based Tony Salamé, who operates Aishti and Aizone stores in the Middle East. One Aizone store is located in the Mall of the Emirates in Dubai, the largest shopping center in the Middle East to date, with 6.5 million square feet. Salamé plans to open Aishti boutiques in Bahrain and Kuwait in the latter part of the year and in Qatar in 18 months, at the Laguna Bay Mall. The retailer is also working on a 345,600-square-foot building in Beirut that will be designed by Zaha Hadid and will include a store and a boutique hotel. That store will be ready in three years.

“Increasingly, people are asking if the more mature markets in the GCC are in fact saturated, leaving little room for growth,” El Khatib said. “I disagree. I believe this is just the beginning. Al-Tayer’s performance over the past five years certainly does not reflect market saturation in the segment.”