By: Hashim Kadhem
MSc MRICS, Director –
Head of Professional Services Savills – Bahrain
The question I am asked most frequently by clients is ‘are there too many malls in Bahrain?’. While our culture and climate lend itself to the traditional mall-type developments, the decline in occupancy over the past couple of years somewhat answers this question.
A few of the notable retail malls which historically enjoyed close to 100% occupancy are now in the mid 80% occupancy range. In a selection of the newer, retail developments to come online, leasing periods have been considerably extended to over a year, and tenants have not renewed their leases and opted to either relocate or in some cases, leave the market entirely. To exacerbate this, the pandemic has changed how we live, shop, work and travel worldwide, likely forever.
According to the Centre for Retail Research, an estimated 15,747 retail shops closed for good in the UK in 2020. This highlights that retail is changing rapidly from the traditional bricks and mortar type set up even in mature markets. Within Bahrain, we have seen somewhat of a renaissance towards residential town ‘outer-city’ retail developments. As more people work from home, we have noted a higher demand for nearby retail and convenience where parking is also usually easier. The smaller units and associated lower costs have allowed for a rise in start- ups and new concepts entering the market, which has attracted a younger audience.
While these messages are concerning, the lessons learned in other markets should be used to identify opportunities. This is particularly critical as the level of online shopping has not penetrated this market anywhere near the western markets, and for that matter, the regional markets around us.
While the pandemic forced many retailers to switch to omnichannel strategies, the likes of Amazon and Noon haven’t wholly entered the market with shipping delays incurred and therefore, making the online offering somewhat disjointed.
This switch does not stop at creating an online offering but also by diversifying. For example, in the UK, department store John Lewis who now makes 70% of its turnover online is venturing into the development by creating residential space in 20 stores. This isn’t to say that the typical store has no place, or the traditional high street is no more. Amazon is becoming an occupier of such spaces by fully implementing and innovating technology to take the customer’s journey to the next level with augmented reality and artificial intelligence developments.
Their ‘Amazon Go’ grocery stores allow customers to shop without staff present or using a physical checkout. The Ministry of Industry, Commerce & Tourism moved very quickly at the start of the pandemic to assist the retail sector in Bahrain by creating an online ‘mall’ type platform for retailers to showcase their offerings. WhatsApp is trialling something similar in collaboration with Watford Borough Council in the UK by creating a virtual ‘high street’.
There are instances where physical retail will always work in some form. However, the days of replicating large retail focussed malls in the thousands of square meters are numbered. The Bahrain market’s physical size and the young educated population allows for quick innovation adoption for new technologies. I believe now is the time for us to lead the way and change the course that Bahrain’s retail market is on. Twinned with our geographical reach and the Economic Development Board’s strenuous efforts, a sizable opportunity can and should be seized.
This article was published as part of the fifth edition of Property Finder Bahrain’s Trends Report