Overcoming challenges to expand Dubai's retail market

There are few world cities more closely identified with retail than Dubai. Indeed, its duty-free and lowtax shopping is one of the hallmarks of the emirate. Dubai is home to some of the world’s largest malls, most diverse retail outlets and most value-added shopping experiences, with everything from giant aquariums to ski slopes adorning its air-conditioned retail spaces. Various substantial projects are set to come on-stream in 2019, with established centres also seeing new extensions and refits.

Meanwhile, a range of special events, such as Black Friday, White Thursday and Cyber Monday, have extended the shopping calendar far beyond the original Dubai Shopping Festival, which will also extend its running time from four to five weeks in 2019.

However, the sector is facing various strong headwinds. The overall regional and global economic slowdown, combined with the introduction of value-added tax (VAT), have had an impact on consumer confidence and spending. “VAT has had a significant effect on disposable income, impacting demand for all non-essential goods. However, it is likely that in the medium to long term the positive effects of VAT will end up outweighing the negative ones, as transparency in the market will be enhanced,” Patrick Chalhoub, CEO of Chalhoub Group, told OBG.

Alongside this, e-commerce is making inroads, obliging physical stores to find ways in which to more fully access the online retail market. There is also the issue of over-supply of retail space, with a number of major new openings due to take place at the same time that existing malls are competing to keep their tenants.

In many ways, then, in 2019 Dubai is a much more mature retail market than it was even a few years ago, with more price-conscious consumers experiencing more choice about where – and how – they shop. Retailers are thus looking for ways to adapt to the new normal, with Dubai’s long tradition of entrepreneurial innovation certain to stand them in good stead.

Size & Performance

The emirate’s retail sector consists of both contemporary and traditional outlets, with an increasing focus on the modern, mall-based format in recent years. Indeed, in late 2018 Dubai was home to 65 malls, with 10 more under construction. Those currently operating include one of the world’s largest, the Dubai Mall, which is also the world’s most visited, averaging more than 80m visits per year for the last four years. Given that the emirate itself had a resident population of just 3.2m in January 2019, Dubai thus not only has a high ratio of mall space per capita – around 4.5 times higher than that of the UK, for example – but also a very high percentage of non-national shoppers among its customers. The retail and tourism sectors are thus closely interrelated.

According to data from Mastercard, in 2017 Dubai ranked fourth in the world when it came to total overnight visitors, with some 15.79m, 6.7% higher than in 2016. These visitors also had the highest per capita daily spend in the world, at $537. Figures from the previous year suggested that around 31% of that went on shopping and 22% on food and beverages (F&B). Dubai also scores well when this visitor spend figure is compared to average rents for prime retail space. In 2017, according to research from property services firm CORE, Dubai saw about twice the overnight visitor spend of London, yet prime rent was less than onefifth of that in the premier shopping streets of the British capital. A similar picture emerged when Dubai was compared to New York.

This is one of the reasons that the emirate continues to attract not only shoppers, but investors and brands. In 2017 some 59 retail brands opened their first store in Dubai, the second-highest number in the world after Hong Kong. Around half were in the cafe and restaurant category.

GDP Contribution

In terms of the overall economy, retail is one of the largest contributors to GDP in the emirate. In 2017 wholesale, retail and F&B together accounted for 30% of GDP, with retail accounting for some 27%. This made it the largest economic sector, dwarfing even construction, which contributed 7%, and manufacturing, which accounted for 9%. Unsurprisingly, retail is also one of the emirate’s largest employers, with 17.9% of Dubai’s workforce being in wholesale, retail and repairing services in 2017. This made it second only to construction (27.6%) and more than twice manufacturing (8%). The ratio has been growing, too, in line with the expansion of the sector: the percentage of those working in wholesale, retail and repairing services stood at 14.5% in 2014.

According to the emirate’s Department of Economic Development (DED), in 2017 Dubai’s GDP was at Dh389.4bn ($106bn), indicating 2.8% growth at constant prices over the Dh378.8bn ($103.1bn) recorded for 2016. This was a higher growth rate than for the UAE overall, which showed a more modest 0.8% expansion. Dubai’s large non-oil and gas sector stood it in good stead, with government expenditure much less dependent on hydrocarbons revenue than the UAE’s biggest emirate, Abu Dhabi. Dubai has thus been less affected by the recent period of low oil prices. Nonetheless, the economic slowdown elsewhere has clearly had a knock-on impact on Dubai, with both visitors and locals becoming more price-conscious.

The Emirates NBD Economy Tracker, which measures economic activity in the emirate, hit a two-and-ahalf year low in October 2018, at 52.5 points (anything over 50 represents growth), although it picked up in November, to 55.3. The bank’s wholesale and retail index also rose, from 53.7 in October 2018 to 55.4 in November, although this was still lower than it had been in January, at 56.1. Another striking aspect of the sector’s 2018 performance was the heightened level of price discounting. The Emirates NBD index showed that in November, wholesale and retail selling prices continued a steep decline, falling at the fastest rate since the first quarter of 2016 to reach 42.0. This price discounting took place despite a rise in input costs, which hiked to just under 60 points in January with the introduction of VAT, fell away in the early part of the year, but then rose again and stayed in the 50-55 point range throughout the year, rising at their fastest rate in four months in November.

These figures suggest that the year was one of overall growth in activity in the sector – the index measures input, output, sales prices and employment – accompanied by a major squeeze on retailers’ bottom lines, as they cut prices to boost sales, yet also had to absorb higher input costs. Margins are thus likely to have suffered across the industry. Figures from Euromonitor International also suggest that 2018’s difficulties have come on top of slowing growth from sales. In 2016 total retail sales in the emirate grew by 7.1%, while store-based retail sales grew by 6.5%. In 2017, however, the respective numbers were 2.1% and 1.4%, well below the historical average of 7% on both counts over the last 10 years.

Continued Expansion

Nonetheless, the retail sector continued to expand physically in 2018, reaching some 3.7m sq metres of gross leasable area (GLA) by the end of the third quarter of the year. At that time, a further 360,000 sq metres of GLA was expected to be added by the end of the year, bringing the total to over 4m sq metres. A further 1.1m sq metres of GLA is expected to open for business in 2019-20, with the largest part of this consisting of super-regional malls (65%) and regional malls (26%). The super-regional category of malls are those with over 74,000 sq metres of GLA and three or more anchor stores, while regional malls have 37,000-74,000 sq metres of GLA and at least two anchors, according to the International Council of Shopping Centres’ definitions. In terms of occupancy and rents, the third quarter of 2018 saw the market continue to soften, with overall vacancy rates rising from 12% year-on-year to 16%. Super-regional malls saw average rents decline 19% year-on-year, while regional malls experienced a drop of 17%. Smaller, neighbourhood (2800-13,900 sq metres) and community (9300-32,500 sq metres) malls also saw reductions in rents, ascribed to developers offering better deals to store-holders on the back of progressively declining sales. Figures from CORE’s July 2018 report show the average rents for regional and community malls at Dh150-200/sq feet ($40.83-54.44), while prime super-regional malls averaged Dh700-1500/sq feet ($191-408).

Structure & Oversight

Both federal and local level laws and regulations apply to retailers doing business in Dubai. Until recently, under the federal Commercial Companies Law (CCL) of 2015, retail businesses outside the UAE’s free zones always had to have a local partner, who owned not less than 51% of the business. The Emirati sponsor could be inactive, however, signing on in return for an annual fee, while handing over 100% operational control to others. Retail businesses setting up in a free zone did not have to respect this requirement, with free zones allowing 100% foreign ownership. Then in 2017 an amendment to the CCL allowed for different ownership ratios, at the discretion of the UAE Cabinet. This move was followed in November 2018 by a new UAE-wide foreign direct investment (FDI) law, which allows 100% foreign ownership of certain companies outside the free zones. Under this law, two lists, one “negative” and one “positive”, are to be issued, defining which companies must continue to abide by the 49% maximum foreign ownership rule (the negative list), and which are exempt from this requirement (the positive list). As of January 2019 only the negative list had been issued, with this specifically mentioning only one retail branch, namely retail medicine, although a range of retail-related services are also covered; these include printing and publishing, postal and transport (important for e-commerce), cash payment and handling services (likewise), and labour and recruitment services. The UAE Cabinet also has the right to amend this list at any point, and it may also enable different emirates to allow different foreign ownership requirements, in order to channel FDI towards particular local needs.

The UAE Ministry of Economy has suggested that a definitive positive list will be issued in the first quarter of 2019. In addition, two new governmental bodies have been established to deal with administration and implementation of the new law. These are the FDI Unit and the FDI Committee. The latter, headed by the UAE minister of economy, has the power to amend the negative and positive lists, while the former is orientated towards policy goals, proposing and developing overall FDI strategy.

Consumer Profiles

Rules governing foreign investment and foreign residency are extremely important in Dubai, as around 90% of the emirate’s current population of around 3.2m is non-Emirati.

According to figures for the third quarter of 2018 from the Dubai Statistics Centre (DSC), the population expands to 4.3m during the day, as people resident in neighbouring emirates entered the city to work and shop. Of the total resident population, around 70% are men and 30% women, due to the fact that large numbers of expatriates are male workers employed on short-term work and residency contracts in sectors such as construction and manufacturing. Amongst native Emiratis, the balance is slightly in favour of females, at 50.5% to 49.5%.

Another key factor is the age range. Dubai has a burgeoning youth demographic, with the 25-39 age category accounting for around 50% of the whole resident population, at 1.5m. The emirate’s population is also expanding, and grew 7.7% between the third quarters of 2017 and 2018. These demographics all have an impact on Dubai’s diverse retail customer profile, with a wide variety of nationalities and income groups present in the emirate.

In a time of tighter budgets, consumers have been spending less, while also becoming far less brand-loyal. A recent McKinsey report showed that, in the UAE as a whole, in April 2017, 45% of consumers would buy their preferred brands at any cost. A year later, that figure had fallen to 35%. “There was a decrease in demand for luxury cars in the first quarter of 2018 but it recovered in the second. This is an indicator of how the economy is shifting, as locals now prefer to focus in buying the best value-for-money, instead of the most luxurious car,” Ahmed K. Al Habtoor, CEO of Al Habtoor Motors, told OBG.

At the same time, however, the market remains highly fragmented, with a significant percentage of consumers still willing and able to trade up to higher-priced brands. The same report showed that the UAE was eighth out of 30 countries when it came to the percentage of people who bought higher-priced brands than they had previously. It is also noteworthy that well-established malls have not experienced so much of a slowdown in footfall in recent times than less high-end shopping centres.

As the fourth-most-visited city in the world, the emirate’s consumer profile is also heavily influenced by the presence of tourists, whose purchasing power has been influenced by a shift towards visitors from countries with lower per capita incomes, such as Russia and China. Indeed, Russia was the country that provided the fastest growing number of visitors during the first half of 2018, with arrivals up 74% to 405,000, while Chinese arrivals were up 9% to 453,000. Some 302,000 Germans also visited during the same period, as well as 327,000 US citizens.

Licensing & Permissions

The DED is responsible for licensing and other permissions for retail outlets outside the free zones. It also has an important regulatory role, inspecting stores and souks and the products they sell to ensure they meet correct standards. Crackdowns on fake goods are regularly organised by the DED, which imposes strict fines on those found to be selling them.

Work permits and visas for expatriates working in the retail industry are handled by the UAE’s Ministry of Human Resources and Emiratisation (MOHRE, previously the Ministry of Labour), which is in charge of labour and employment issues across the country. It is split into two parts. The human resources division deals with applications for visas and labour law, as well as its implementation and monitoring, including regulations on working hours and the number of shifts that can be worked. The Emiratisation division, meanwhile, deals with the implementation of the UAE’s Emiratisation targets for the sector. Emiratisation is a key part of Vision 2021, the UAE’s development plan, under which companies and government bodies have been set targets for the percentage of their employees who must be nationals of the UAE. Vision 2021 aims to see a tenfold increase in the number of Emiratis working in the private sector. The MOHRE thus meets regularly with businesses to discuss the strategy and help them boost the employment of locals. At a meeting in September 2018, for example, a target of 2000 more jobs for Emiratis in the retail and tourism sectors was set to be achieved within 100 days. By November a follow-up meeting was able to report that 340 jobs had thus far been created in the retail sector under this initiative.

While Dubai has long had a vibrant merchant tradition, retail has not generally been a popular career choice for Emiratis. As in other GCC countries, nationals have tended to prefer public sector to private sector jobs, while also regarding retail as a generally low-wage, long-hours sector. A study in 2012, for example, found that only 1.9% of Emiratis in employment worked in the wholesale and retail sector. Nonetheless, a concerted effort is under way to create more jobs in retail for nationals, with firms obliged to fill these posts in order to meet Emiratisation targets. Fines are imposed for non-compliance, and the MOHRE announced in October 2018 that penalties of up to Dh20,000 ($5440) per Emirati employee could be imposed on any employers who did not meet targets.

Free Zone Rules

Retailers operating in the free zones are not required to meet Emiratisation targets. Instead, the zones have their own regulatory authorities, which operate under their own law. In Dubai, the authorities are the Dubai Creative Clusters Authority (DCCA); the Dubai International Financial Centre Authority; the Dubai Multi-Commodities Centre (DMCC); the Jebel Ali Free Zone Authority; and the Dubai Airport Free Zone Authority.

The DCCA is the licensing and regulatory authority for nine different free zones, focused on seven different industries. Dubai Media City, Dubai Studio City, and Dubai Production City cater to the media and entertainment industry; Dubai Internet City to ICT; Dubai Outsource City to this growing sector; Dubai International Academic City to higher education; Dubai Knowledge Park to human capital development; Dubai Science Park to the science sector’s whole value chain; and Dubai Design District aims at building “brand Dubai” in this key sector.

Free zones provide retailers, whether they are bricks-and-mortar outlets or online enterprises, the possibility of 100% foreign ownership, as well as a range of tax exemptions; Customs exemptions when importing goods and equipment from abroad; 100% repatriation of capital and profits; the free transfer of funds; and one-stop-shop services to expedite permissions, visas and other requirements.

Sector Players

On the professional side, Dubai’s retailers are represented in the Middle East Council of Shopping Centres, which represents mall owners, developers, marketing managers, consultants, financiers and real estate specialists with a retail interest, government officials and retail suppliers across the MENA region. In addition to this, the Dubai Shopping Malls Group (DSMG) is a non-profit that operates under the DED’s patronage in order to bring together various of the emirate’s community malls. Some 70 malls currently come within the DSMG umbrella, with the DSMG taking a key role in promoting events such as the Dubai Shopping Festival and Dubai Summer Surprises. These festivals also have a government agency overseeing their development, namely the Dubai Festivals & Retail Establishment. This comes under the Department of Tourism and Commerce Marketing’s portfolio, further demonstrating the strong links between the tourism and retail sectors.

At the same time, while Dubai has a large number and wide range of malls, the sector is dominated by a handful of principal developers. Between them, these outfits own some 87% of the stock of those malls, with 10,000 sq metres or more of GLA, while 15 retailers operate the substantial figure of 90% of the international brands. Amongst the largest of these developers are Nakheel Properties, Dubai Holding Group, Emaar, Majid Al Futtaim and Meraas.

The first of these has some 1.6m sq metres of GLA in its retail portfolio, which includes the Nakheel Mall on Palm Jumeirah, Dragon Mart (now renamed Dragon City and undergoing expansion) and Dragon Mart 2, and the Ibn Battuta Mall. Nakheel is also active in the residential, hospitality and leisure sectors, and is owned by the Dubai government. The same is true of Dubai Holding, which has in its portfolio financial services, real estate, health care, media and ICT companies, as well as two outfits with retail establishments, Dubai Properties Group (DPG) and Jumeirah Group. DPG is behind JBR, a 1.7-km beachfront promenade that features 305 retail outlets and some 696,773 sq metres of GLA at Business Bay, while Jumeirah has 38,000 sq metres of GLA across Burj Al Arab, Madinat Jumeirah, the Jumeirah Beach Hotel and Jumeirah Emirates Towers.

Emaar Malls, meanwhile, has 622,450 sq metres of GLA in Dubai, with this including prime assets such as Dubai Mall, Dubai Marina Mall, Souk Al Bahar and the Gold & Diamond Park. Emaar Properties held an IPO in 2014 and is now a publicly listed company.

Majid Al Futtaim, meanwhile, has around 1m sq metres of GLA in its global portfolio, including the Mall of the Emirates, which boasts the Middle East’s first indoor ski resort and snow park. This private company is also behind the City Centre brand of malls, which is represented in Dubai by branches at Deira, Me’aisem, Al Shindagha and Mirdif. It also added to its foreign operations in Cairo, Muscat and Beirut in 2018, and became the second company to obtain a license to operate cinemas in Saudi Arabia.

The Dubai-based conglomerate Meraas, meanwhile, has a retail division that includes the Outlet Village, Boxpark, Al Seef, City Walk and Bluewaters in its portfolio, among several other facilities.

Changing Attitudes

While these companies dominate existing space, another recent phenomenon has been the entry of real estate investment trusts (REITs) into retail property. In 2014 Emirates REIT bought Le Grand community mall in the Dubai Marina, while in 2017 Emirates NBD REIT bought the Souq Extra Retail Centre in Dubai Silicon Oasis. The fact these are community retail spaces demonstrates the confidence of institutional investors in these facilities’ ability to provide long-term returns.

A further recent shift has seen developers offering smaller retail groups leases that include contributions to capital, while others have offered “turnover only” leases. This is a shift from the previous “take it or leave it” mentality of developers, and is a further indication of the softening of the market, with developers having to compete more on the terms they offer in order to fill GLA. Some of these major developers also have brand franchises. Majid Al Futtaim, for example, has the Carrefour brand, which started out MENA in Deira City Centre and now has stores in 38 markets across the region, while Emaar recently entered the e-commerce field with Noon.com.

Other key retailers include Al Tayer, which represents luxury brands such as Harvey Nichols, Bloomingdale’s, Armani, Dolce & Gabbana and the home-grown Areej; Azadea, which has the Mango, Bershka, Paul, Pull&Bear and Calzedonia brands, amongst many others; the Chalhoub Group, with Estée Lauder, L’ Occitane, Christian Dior, Louis Vuitton, Swarovski and Lacoste; Apparel, which has Levi’s, Tommy Hilfiger, Calvin Klein, and a range of F&B outlets, as well as running the Grand Centrale malls in the neighbouring emirates of Sharjah and Ajman; and one of the biggest travel retailers in the world, Dubai Duty Free (DDF). This last has operations at both Dubai International Airport and Al Maktoum International, with its retail facilities supplemented by leisure businesses which range from tennis courts to hotels.

Binhendi, meanwhile, has brands such as Hugo Boss, Artioli and Porsche Design, as well as a range of Italian designer furniture and fashion houses. In addition, Lals Group has US Polo Assn., G2000 and Homes R Us, along with mall-management operations and a health-and-leisure brand. UAE Trading has boutique operations in a range of malls, where it provides the Paul & Shark, Rodeo Drive, Stefano Ricci, Versace and Lagerfeld brands, amongst others. Al Nabooda has a range of automobile retail operations, as the authorised dealer in Dubai and the Northern Emirates for Audi, Porsche and Volkswagen. It also has an interiors business, with brands such as Bentley, Kingspan, Sentinel and many others. Gulf Marketing Group is also a regional leader, with brands such as Supercare pharmacies, Sun & Sand Sports and Good Health Nutrition, with other interests in logistics and distribution, such as Farm Fresh.

Other retailers have fewer brands, but they are often key ones, as in the case of RM Retail DMCC’s Hallmark and Toy Store operations. Others provide store frontage for a variety of manufacturers. Sharaf DG is an example, selling electronics products from Apple, Microsoft, LG, HP, GoPro and Sony, amongst others, in its DG4U and DG+ format stores. Other retailers have focused on a single line, such as Damas, which has become a leading international jewellery and watch seller. Founded in Dubai in 1907, it now has 300 stores around the Middle East.

New Moves

A host of new malls have opened during 2018, or are in the pipeline for 2019. These range from more community and neighbourhood formats to the giant, super-regional facilities for which the emirate is famous. In 2018 highlights included the completion of Dubai Mall Phase 2 in the first quarter, adding a further 52,400 sq metres of GLA. In the second quarter, two new retail centres in The Springs development were completed, adding 23,000 sq metres of GLA, while in the third quarter the Badrah Pavilion Community Centre, located within the Jebel Ali waterfront development, was also completed. This added a further 5000 sq metres of GLA. In the fourth quarter, The Pointe on Palm Jumeirah held its grand opening. A Dh800m ($217.8m) Nakheel development, with a 1.5-km waterfront, this houses over 100 restaurants and retail outlets.

As the year ended, work was still ongoing at the Deira Night Souk development, which is another Nakheel project. This is to feature some 5300 shops and 100 cafes and restaurants, and is billed as the biggest night souk in the world. The souk will have a ground floor of retail outlets and a first floor of F&B outlets, and is part of the Deira Island development. Dubai Properties’ Culture Village was also scheduled to open its Souk in 2019, with this being the retail section of a Dubai Creekside mixed-use development.

Big Beasts

Several further large shopping centres are slated to open in 2019 and 2020. The Nakheel Mall on Palm Jumeirah will include 418,064 sq metres of GLA, with 350 shops, restaurants and leisure facilities, in addition to a monorail station set in a crystal dome and 4000 parking spaces. The Nakheel project was 85% complete in March 2018, according to the developers. However, as of January 2019, a final date for the opening had not been set.

Nakheel is also behind the Dh2bn ($544.4m) Al Khail Avenue project, which has a late 2019/early 2020 opening target. This will feature some 102,193 sq metres of GLA, with 70% of the space already booked by July 2018, and also involves the construction of two flyovers aimed at easing access to the site, which is close to the Jumeirah Village, Jumeirah Islands and Jumeirah Park developments. The project seeks to capitalise on a growing local population in these residential and mixed-use areas.

Another major new shopping centre is the Dubai Hills Estate mall. This is an Emaar project, which will feature some 650 retail and F&B outlets on 185,807 sq metres of leasable space, as well as an 18-screen cineplex, a 5899-sq-metre hypermarket and parking for 7000 vehicles. The mall is set to open in late 2019. Dubai Hills is also a residential and commercial project, being developed jointly by Emaar and Meraas, and it is hoped the mall will capitalise on new residents, plus those in the nearby Mohammed bin Rashid City and Arabian Ranches districts. In October 2018 contracts were issued for a Chinese company to undertake road connection construction work, a development that suggests the project is moving ahead on schedule.

In 2020 developer Meydan will see its Meydan One Mall open, featuring a 1-km ski slope, more than twice the length of the Mall of the Emirates’ slope. A retractable atrium space will provide a venue for outside events, while 580 retail outlets will be present, split among 30 anchor stores, 80 flagship luxury stores, 190 dining outlets and a 13,200-sq-metre hypermarket. In 2021 Nakheel’s Deira Mall is also expected to be completed. This will be located in the same Deira Island development as Deira Night Souk, with 38,839 sq metres of GLA, which will make it the largest mall in the Middle East. Some 1000 shops, cafes and restaurants are to open in this facility, as well as a 1394-sq-foot entertainment zone, a hypermarket and a multiplex. It will be covered by a retractable glass roof to let in fresh air and light during the winter months. In addition, Nakheel is developing a mall at Nad Al Sheba, due to add a further 46,451 sq metres of GLA. Some 200 shops, restaurants and entertainment venues will characterise this development, for which the construction contract was awarded in April 2018. The completion date is also 2021, with the mall forming the retail lynchpin of Nakheel’s new Nad Al Sheba community, which will eventually contain 11,000 high-end villas. All told, Nakheel Malls has thus embarked on a Dh22bn ($6bn) expansion programme, taking its total retail space to over 1.6m sq metres of GLA across some 18 different projects, ranging from super-regional to neighbourhood shopping centres. “There are some fantastic new malls in development that will continue to keep Dubai in a top place in global retail,” Lea Venezuela, director of the Middle East Council of Shopping Centres, told OBG.

In addition, plans for the construction of the world’s largest mall, Dubai Square, were also unveiled in August 2018. This $2bn development will be in the centre of the Dubai Creek Harbour area and have some 743,224 sq metres of GLA, twice that of Dubai Mall. It will include the Middle East’s largest Chinatown and a 3D projection entertainment zone with an omnichannel shopping experience. This will allow for a combination of online and physical-presence shopping approaches, intended to appeal to millennials, an ever-more important demographic.

Outlook

Dubai has a major global reputation as a retail destination. This is certain to remain the case in the years ahead, thanks in part to new eye-catching malls and growing tourist numbers keeping footfall high, in addition to Expo 2020, which is set to boost visitor numbers. The softening economic health of the region and the wider world, however, does pose some challenges. Another potentially problematic factor is the major new supply pipeline. Some projects may see a slowdown in the year ahead, as developers take stock of market conditions. At the same time, competition on prices and rents will pressure margins for developers and retailers. The threat of cannibalisation will also prove to be a worry, with new mall developments aiming to tempt customers away from more established ones. However, these challenges may also prompt the sector to move into newer and more innovative areas. E-commerce is still a relatively small part of the industry, but it is likely to increase its share of the market going forward. However, retailers and developers may try to curtail its expansion by combining the online and brick-and-mortar store experiences, giving shoppers the best of both worlds.