DUBAI // The closure of a third Magrudy's store last week has book-lovers in the country wondering if the story of paperbacks has entered its final chapter.
The branch at the Ibn Battuta Mall was shut from May 1, after a decision not to renew its lease that expired on April 30. The UAE-based bookstore said high rents and a decision to put quality before quantity were the reasons for the closure.
"The publishing industry worldwide is undergoing a sea change," said Isobel Abulhoul, a director and co-founder of Magrudy's.
"We want to focus on developing a better range in fewer shops. We are quite stretched in skills and services, and it is difficult to deliver uniform services in all the stores. We are more in control now.
"The rents were not sustainable at the Dubai Mall. People who sell books do it for the passion and love for books. If rents are too expensive for turnover, we have to make a business decision," Ms Abulhoul said.
The 36-year-old bookseller previously downed the shutters on stores in Deira City Centre and the Dubai Mall in February.
"The lease had ended with Deira City Centre and Ibn Battuta. We had a chance to renew, but unless malls have an offer we can't refuse, it is difficult."
In March, Magrudy's decided against renewing the contracts of six retail concessions within Spinneys stores, which were taken over by the Jashanmal Bookstores.
Magrudy's outlets in Dubai Festival City, Jumeirah, Al Wahda Mall in Abu Dhabi and Al Bawadi Mall continue to operate. There are no plans to close more stores.
In the past five years, international chains such as the US-based Borders and the Japanese giant Kinokuniya have established a strong presence in the Emirates, increasing pressure on local bookstores.
However, Ms Abulhoul says the rivalry is beneficial. "Competition is good. International brands bring a level of expertise. That is good for the market. If we can't sustain, something is wrong with our model. Every business needs to adapt to survive," she said.
According to the manager of one international bookstore franchise, however it is "natural" and inevitable that international chains will have an impact on local book retailers.
"If there are more stores, there are more options," said Mahendra Malhotra, general manager of Borders in the UAE, an Al Maya group franchise with seven outlets in Dubai.
In February this year, the international group filed for bankruptcy in the US and announced it would close up to a third of its stores.
Some outlets in the Emirates closed, but the company said this had little to do with the problems facing its American counterpart, and that business in the UAE continued to grow.
"E-readers have grown quite a bit. But there are not as many e-readers in the UAE and that is why our books are selling. We have bigger stores and higher volumes. Our pricing is quite competitive," Mr Malhotra said.
Even if shopping in a bookstore remains popular in the Emirates, technological innovations such as the iPad, Kindle and Samsung Galaxy Tab are expected to throw up challenges to conventional trade.
Jashanmal Bookstores has begun moving part of its business online in an attempt to adapt to evolving market trends. About 5,000 titles are available through souq.com. Buyers can opt for home delivery or collection from a store.
"We plan to expand this to 15,000 titles by June," Narain Jashanmal, the store's general manager, said.
He said there would always be demand for physical books. "After a decade of digitisation and piracy, the face of the music industry has changed. However, 50 per cent of all music sales are still physical," Mr Jashanmal said.
Cyberspace avoided the problem of high rents, but building a site, maintenance and marketing were equally expensive. The view that e-commerce was less costly was a myth, he said.
The Jashanmal group has 14 branches and will open a new concept bookstore in Dubai this month.
Mr Jashanmal said he believed small bookstores in high-traffic areas offered a way forward.
"If one can maintain one's relevant market share, there is no reason it's not a sustainable business," he said.
pkannan@thenational.ae
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
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MATCH DETAILS
Liverpool 2
Wijnaldum (14), Oxlade-Chamberlain (52)
Genk 1
Samatta (40)
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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