Macroeconomic factors tougher than competition for Virgin Megastore

For the President of Virgin Megastore Mena (Middle East and North Africa), the greatest challenge to her business is not competition; it’s the routine black swan events that befall the region.

Nisreen Shocair has seen most imaginable in her 11 years running the company in the region, including war, currency problems and recessions.

“The macroeconomic problems are much harder to deal with than the competition,” Shocair said in a telephone interview with Gulf News on Thursday.

Virgin Megastore is an electronics and entertainment retail chain with over 50 stores across the region

Shocair added that despite pressures, compared to previous years “2016 was definitely not the worst year for us,” as Virgin Megastore had managed to “diversify away enough from music, video and Apple.”

The retail executive was referring to the long-awaited arrival of an Apple store at Mall of the Emirates, which many anticipated would hurt Virgin Megastore’s business, as one of the few official Apple retailers.

According to Shocair, Virgin’s figures suggested that 80 per cent of their Apple product customers came back following the opening of the flagship store in October 2015.

“I love the competition, it’s the best thing that can happen to your business. It’s made us much better, we now have to constantly up our game. When you’re being benchmarked against the better and the best, you feel good when you always come out on top,” she said.

The arrival of Apple [store] was arguably a net benefit for all occupants at Mall of the Emirates, with traffic up 11 per cent by end of 2016, according to Shocair.

One of the biggest impacts of last year’s economic downturn was its impact on liquidity, particularly for small businesses, she said.

“What did hurt us is the fact that 2016 was incredibly tough on our small and medium-sized enterprises (SMEs),” Shocair said, adding: “they saw a credit crunch.”

According to the president, SMEs were not being paid by suppliers, and were struggling to get credit from banks.

“Very young start-ups had stock running out,” she said. “They just didn’t have the cash.”

Research by Euromonitor International pointed to continued lower oil prices and a strong US dollar as key factors impacting consumer sentiment and expenditure patterns during 2016, whereby many retailers reported a slowdown in value growth.

This was compounded by a change in UAE’s tourist profile, with less visitors from China, Russia and the UK. According to the market research firms, these factors impacted the purchasing power of an average tourist in the UAE, with most of them engaging more in entertainment experiences and being selective in their retail purchases.

Ultimately, despite the retailer’s number 1 video distributor going out of business last year, Virgin has invested in new suppliers and is beginning to see a rebound. “The market is still relatively soft. But that is a good thing. You can become more efficient and so on,” said Shocair. “The recovery is imminent.

source : gulfnews