14 October 2008

Fasten your Seat Belts

A quick visit to Geant/Bahrain Mall today prompted a bit of thought. Driving through the massive parking lot, something felt different, looked different. Nothing had been changed or moved, nothing added. But the place felt, empty:

Can you see it? This was a regular weekday night, and the parking rows by the main entrance were free. To be perfectly honest, since it's opening I don't remember a single day where the parking looked this empty; sure, there were the quiet days, but even then the rows closest to the door were busy.

The reason is pretty apparent; with the opening of City Center Mall, which offers everything from multiple food courts, all the brands you can think of, hypermarket, and everything else in between all packaged nicely in a huge shopping mall, the surrounding malls definitely take a hit. Bahrain Mall wasn't the only casualty; Seef Mall is obviously suffering with a few shops closures (that transferred to City Center) and reduced traffic even on weekends. So has Dana Mall. So has A'ali Mall. And so has the general retail industry in Bahrain.

So you would assume that, to have an actual thriving business, you should open up in City Center, correct?

Seems the answer to that is also negative. A quick trip to City Center verifies that the mall is so big that, even on a busy day, the place still isn't very busy. The number of customers in each mall has been spread so thin that you start to wonder about the losses some of these retailers are starting to face; especially with the over-inflated prices they pay for store rental.

Between 2005-2007, the population of Bahrain grew by almost 25% (most of which seemed to be happening under the table), sustaining all sorts of growth; growth in real estate, land prices, new retailers, etc. However, with the discovery of this last year, cases were opened into why this was allowed to happen without transparency and regulation, and this has caused the ridiculous boom in Bahrain's population growth to stop.

However, one thing doesn't stop; the continued opening of new retail shops, continued building of towers, business offices, and so on. But without the growth in population to sustain it.

Are we looking at the makings of another market crash? This time one that isn't affected by the outside forces of the US financial meltdown, but rather one that was inspired by our own naivety? Factor into that the slowly approaching woes of a global market depression, and it seems that we're heading for quite a bit of a rough ride.

Fasten your seat-belts.


lizardo said...

ohh my god, i've been always dreaming about these days, less crowed everywhere.
shopping, eating and even taking rounds are more easier.

Ali G said...

Dood, its a nice blog, but a few factors effect your analysis here, consider the following questions:
1) What date of the month were you visiting on? Salaries tend to dry up fairly quickly in back-to-school months and after the summer months as everyone starts to pay off their credit cards that had accumulated large sums (travel expenses + school fees).
2) What time of day was it? Again, self-explanatory as trends change and accordingly the traffic does.
3) Dana Mall is not representative, as its only full on the weekends.
4) The amount of retail space in Bahrain is still not large compared to other cities of similar size.

In general though, I do agree with you that the opening of the city center mall has had a dampening effect on others. It is only natural for any new attraction to steal the limelight once its launched. I believe with time, the organized retail market will spread across Bahrain as Adhari Mall, the Lagoon, Muharraq's E-Max, Al Areen's downtown, and other areas start accomodating organized retailers.

As Far as your population statement is concerned, it is seriously lacking in a full undertanding of the local market. It fails to consider that there is an average of 7 million floating population that visits Bahrain annually, which in turn shops in it during the weekends. So 7+1 million, is quite a lot of people for Bahrain, Dana, Seef, Moda and City Center Malls alone.

Just thought that I would add my five cents and add some positivity to your website ;p

The Samster said...

I'm really happy to see this kind of conversation taking place... I did really enjoy going to City Centre on Friday with my family at 2.30pm and not have to worry about parking and over crowding! Nevertheless, i also wondered how many sales most of the shops will actually get with the number of people i saw there and unfortuantely the kind of salaries people get here. Sure its really nice to look at but not many can afford. Only time will tell...

Redbelt said...

Both Ali G & Ammar make a lot of sense.
My take is that retail will take a huge hit. Couple that with the LMRA and EDB rules and business CANNOT operate like they did before.
From someone who did run a retail operation in a mall, most of my clients were coming from across the border.
The Bahrainis have such little disposable income, that Saudis form a legitimate revenue source.
If you take a trip to Saudi, Qatar or UAE, you will see malls busy all month, almost all days with buying customers. Not so here.
Some retailers will try to battle it the stupid way by increasing prices. Effectively decreasing demand and sinking themselves deeper. Others need to be more creative.
Nearby malls will get more proactive trying to secure tenants and prices should come down.
Or they'd die.
It's Darwinism baby. Survival of the fittest.

ammaro said...

lizardo; true, it is a bit of a relief not to have to go through horrendous traffic everytime we try to go somewhere!

ali g; some valid points there, but i'm basing my argument on what i've seen over the past few years, not over the past month, and the parking lot, or the mall, has never been that empty. sure, the visitors who come account for quite a bit, but now that its all spread out, you're looking at some definite people getting hit. who survives? usually the big fish

samster; yup, it'll take a few months to a year before we start to see some closures, im pretty sure of that

redbelt; points well taken.

Anonymous said...

Well you know, thats what Bahrain needed actually :

- The existing malls were so jam packed even on Weekdays that thinking of Seef was always a big no-no.

- Theres nothing to do in Bahrain like outdoors etc.

- I don't mind this Ghost look - at least some chum won't be scratching my car or smoking in my face or etc

This is still better than China/Dubai where malls have over reached their numbers so much that they can't attract vendors! :)