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Splash vs H&M

H&M, Splash, KylieFor years, local brands have been growing in sectors not yet touch by international competition. When Dubai-based clothing retailer Splash was launched in 1993, it was free to roam the market and develop at its own pace; it now has 68 Splash stores and 54 multi-brand stores across the region. It has built up a wide range of own brands (including Ms, Nexus, Zync, Scarlet and Retro) along with the rights to several international brands (Lee Cooper, Bossini, Kappa, Maui & Sons, Yishion and Lining).

Then along came global competitors and the game suddenly took a fiercer, faster turn. One of the major competitors is global fashion brand H&M (Hennes, ‘hers’ in Swedish, & Mauritz, a store that founder Erling Persson acquired in 1968). It entered the regional market in 2006 under a franchise agreement with Kuwaiti conglomerate Alshaya (which runs over 900 franchise stores in eleven countries, including Boots, Body Shop, Debenhams and Starbucks). The Sweden-based retail giant, established in 1947, definitely steps on Splash’s territory. Besides, with more than 1,500 stores in 28 countries (including franchises in Dubai and Kuwait), the name immediately rings a bell. H&M’s expansion plans are ambitious: it now has five outlets in the UAE, four in Kuwait and one in Qatar, and seven more throughout the region are in the pipeline.

Big move

With a broad spectrum of nationalities and age groups, not to mention significant purchasing power, the Middle East is highly attractive to a business such as H&M. Still, breaking in the Arab world with a local partner was a unique step for the Swedish company, which is known for its conservative expansion policy; all of its other foreign markets are under tight management control, from location of stores and shop fittings to range of merchandise and staff training. H&M couldn’t have entered the region otherwise, but the prospects seemed convincing enough to make this exception: “The market is new to us and the franchise business is new to us, but it’s a market which is perfectly suited to this type of arrangement. Alshaya knows the market, the regulations, the authorities, and the shopping patterns,” said chairman Stefan Persson.

The brand’s website nevertheless states clearly that this deal is to remain one of a kind: “Except for the Middle East, franchising is not part of H&M’s expansion strategy.”

Recognition and stardom

Whether H&M will be able to eat at Splash’s share of the retail market is another story. Whereas the Swedish newcomer may enjoy a wider global brand awareness, the Dubai retailer aims at remaining firmly entrenched in local habits by building a strong regional image.

Splash, which once was perceived as a clothing store retailing value clothes outsourced from Asia and the Far East, has been longing for international recognition. It has been collecting awards all over the place for the past three years (the 2005 Retail ME Business Excellence Award, the Gold at the 2006 UAE Web Awards, Marketing Campaign of the Year at the 2006 Retail ME Awards and more importantly, inclusion in the Forbes Arabia Top 40 Arab brands) but none was as significant as its runner-up position at the inaugural Grazia ME Style Awards 2007 for UAE’s “Best high street store”. Even if it was just a second place, Splash proudly boasted it, taking pride in the fact that it was up against 15 international power house brands (including H&M).

H&M is in another position altogether: true, it was awarded Retail Middle East’s New Retail Brand on the Year in 2006; but the brand first aims at carving itself some room in customers’ habits. In order to achieve that, H&M may rely on one of its most exclusive assets: over the years since 2004, the retailer launched various exclusive collaborations with fashion moguls or even pop stars. Obviously, such glamorous signatures as Karl Lagerfeld, Stella McCartney, Viktor & Rolf, Roberto Cavalli and Madonna cannot but spark a fashionable buzz in a region fond of symbols, celebrities and names.

Slick fashion

Identifying the brand with a celebrity in order to gain popular favor is something that Splash also learnt to implement recently: in January 2007, the retailer sponsored Arab pop star Amr Diab’s show at Dubai Media City Amphitheater. At the time, Splash was revamping its image for the fourth time in 13 years, an evidence that “Splash is constantly moving with global changes in the fashion retailing industry,” said managing director Raza Beig whose motto is “Think globally, act locally”.

This initiative, a first for the brand, fitted its new approach. “At this point, Splash has evolved into a global brand catering to a cosmopolitan audience. We have a created a brand identity that is vibrant, alive and personal so by collaborating on projects like the Amr Diab we believe we are connecting with our loyal local customer base”, said Beig. Splash went further just a year later, not only sponsoring a Diab’s concert in Dubai, but also giving away VIP tickets and chances to meet the music star.

The brand pampers its clients, as it best shows in the fashion nights the retailer puts on twice a year in Dubai, couture style shows to which numbers of local VIPs (some being flown in for the occasion) are invited. Attention to such details can make a huge difference.

 
 

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