Macy’s, a holdout on the international scene, has finally decided to open an overseas store, which will be in Abu Dhabi, WWD has learned.
This story first appeared in the October 28, 2014 issue of WWD. Subscribe Today.
Macy’s will open a 205,000-square-foot, four-level store at Al Maryah Central, described as a “super-regional shopping destination” under development on Al Maryah Island in Abu Dhabi.
A 230,000-square-foot Bloomingdale’s will also open in Al Maryah Central, marking that retailer’s second overseas store. The first opened in Dubai in 2010.
Bloomingdale’s and Macy’s, both divisions of the $28 billion Macy’s Inc., plan to open their Abu Dhabi locations in 2018. They will be operated under license by Al Tayer Group, which already operates the licensed Bloomingdale’s store in Dubai.
Macy’s international plans confirm a WWD report earlier this year that Macy’s and Bloomingdale’s were headed to Abu Dhabi.
Further international expansion for Macy’s seems likely, in light of recent reports on executives visiting the Middle East and China for partners and real estate opportunities. “Whether there will be additional stores depends on whether we have success here in Abu Dhabi. Based on what we know, we feel confident,” Terry Lundgren, the chairman and chief executive officer of Macy’s Inc. told WWD.
“We are continuing to study various international markets and to better understand how customers worldwide shop in stores, online and via mobile,” Lundgren added. “While macys.com and bloomingdales.com have been selling online in about 100 nations since 2011, we are especially interested in the omnichannel dynamics of worldwide markets, and the role that physical stores play in that equation.”
Lundgren wouldn’t comment on plans for China, which he has visited several times to consider putting up a Macy’s store, but he did discuss Canada, which he discounted as a destination. “We concluded it wasn’t the right strategy,” in large part due to the relative small population there and few cities that would work for Macy’s. “It would just be more of a market share game as opposed to creating new opportunities,” Lundgren said. Other retailers, including Saks Fifth Avenue and Nordstrom, are flocking to Canada.
In Abu Dhabi, Al Maryah Central is being developed by Gulf Related, a venture between Related Cos. and Gulf Capital. The 3.1-million-square-foot mixed-use development will include retail, cafés and restaurants, entertainment options, a cinema, health club, luxury hotel and residential towers, with about 1.8 million square feet for retail, food and beverage. Construction is scheduled to commence before yearend, with an opening date set for March 2018. Last year, the 350,000-square-foot Galleria waterfront phase of the mixed-use complex, which houses luxury retail and restaurants, opened. It’s all part of Abu Dhabi’s sweeping master plan, calling for new infrastructure, an airport, cultural, medical and university facilities, including a Cleveland Clinic, which will be fully opened in the spring, and a campus for New York University, which has partially opened.
“Abu Dhabi historically has been a business center. It’s evolving into a cultural center as well, and we’re complimenting with a mixed-use project,” said Ken Himmel, comanaging partner of Gulf Related and president and ceo of the parent Related Urban.
“I just think Abu Dhabi is booming,” Lundgren said, noting that the hospital, university and museum facilities are springing up close to the mixed-used development Macy’s and Bloomingdale’s are entering. “There is an already built-in consumer,” Lundgren said. “We are going into the center of Abu Dhabi, which has been developed.”
The decision to open Macy’s and Bloomingdale’s in Abu Dhabi was also based on Bloomingdale’s track record in Dubai. That store is among the top five most productive stores in the Bloomingdale’s chain, with only the 59th Street flagship; Aventura, Fla.; South Coast Plaza, Calif., and San Francisco stores more productive.
Macy’s online does a minimal volume overseas, impacted by duties and taxes that are tacked on. Yet Lundgren said, “The Web site is very valuable for our international tourist business,” since their online visits inform their visits to the stores in the U.S. Macy’s also wholesales its private brands to certain retailers, including some overseas.
While many U.S. retailers have opened stores in many countries, Macy’s is a Johnny-come-lately, though it’s more difficult for a department store to expand internationally than it is for specialty stores, considering the real estate requirements and complexity of the business model.
“If you are going to go international, you need to be sure you have the right partner. I have become very comfortable with Al Tayer,” Lundgren said. “They are excellent partners. It doesn’t mean we will have this [licensing] model elsewhere should we choose to open in other countries.” It could go either way, Lundgren suggested.
He said Macy’s will assist Al Tayer in what to buy for the store and how to execute the merchandising, and that it is too early to discuss what goods will be sold, other than fashion and home goods. It’s possible some locally relevant product, not sold at Macy’s in the U.S., gets sold in Abu Dhabi. Macy’s and Bloomingdale’s will be the sole anchor tenants in the mall.
Al Tayer Group, based in Dubai, is involved in several sectors, including automotive, contracting, distribution, retail and services, in 12 countries. The group represents more than 600 brands, including Ferrari, Ford, Land Rover, Jaguar, Alexander McQueen, Boucheron, Bottega Veneta, Coach, Dolce & Gabbana, Emilio Pucci, Giorgio Armani and Jimmy Choo.
Al Tayer is also responsible for opening and operating the largest Harvey Nichols outside the U.K. as well as the first Bloomingdale’s stores outside the U.S. The group’s portfolio includes Gap, Banana Republic and Crate and Barrel, and ventures with Bulgari, Gucci and Prada.
Mortimer Singer, ceo of Marvin Traub Associates, acted as an adviser to Al Tayer Group and Gulf Related. “The UAE has become one of the main focal points of global retailing. There are two billion people within a six-hour plane ride of the UAE. The potential for business has been underestimated. The Dubai Mall does about $1,000 a foot across 5 million square feet. It’s massive business. Stores that open in the UAE tend to be within the highest performers worldwide; right up there with stores in New York, Hong Kong and London,” he said.
Said Khalid Al Tayer, ceo of retail for the Al Tayer Group: “Al Maryah Central provides an ideal home for these landmark introductions, forming one of many significant developments under way in Abu Dhabi over the coming years, which serve to strengthen its position as a cultural, commercial and tourism leader.”
Dr. Karim El Solh, ceo of Gulf Capital and comanaging partner of Gulf Related, commented, “Located at the center of Al Maryah Island, and acting as a meeting point for old and new Abu Dhabi, Al Maryah Central will be naturally integrated into the heart of the community.”