The second Paperworld Middle East show takes place from 6-8 March in Dubai. One leading local OP company which will be exhibiting is Dubai Library Distributors (DLD), a firm with wholesaling, distribution, retailing and direct selling activities in the UAE.
"It is important for us to have a presence at Paperworld Middle East," DLD’s Managing Director Rashed Al Kaitoob told OPI. "It’s a Dubai show and we are a leading player in the Dubai market, so it’s a good branding opportunity for us."
DLD was founded in 1969 by Al Kaitoob’s father while the UAE unification process – finalised in 1972 – was just getting under way.
Today, retail is still an important part of DLD’s business. It has 18 outlets in the UAE with two more slated to open in 2012. Most of the stores are between 1,500-4,000 sq m (15,000-40,000 sq ft) and offer a range of products in the office supplies, school, arts, gifts and IT categories.
Al Kaitoob says the Dubai Library brand enjoys strong loyalty from customers who grew up with the name in the early years of the UAE.
“We are part of the history of the growth of education in the UAE. Students who bought their supplies from Dubai Library in the 1970s are now parents and bring their children to the stores.”
The school and education sector has always been a key market for DLD. As well as retail, it also supplies schools directly with textbooks and other materials.
The education sector has also been more resilient during the economic downturn – which notably hit the property market in Dubai in 2009 – even though Al Kaitoob admits that the last couple of back-to-school seasons have been challenging.
Nevertheless, DLD managed to post relatively flat sales of around $30 million last year and Al Kaitoob is expecting to reach a similar figure for 2012.
Office supplies slide
This performance came despite a huge 60% decrease in DLD’s sales in the office supplies category following both the economic crisis – with firms cutting back on white-collar jobs and keeping a close eye on spending – and the completion of a number of major construction projects.
“I think office supplies spending has reached ‘new normal’ levels of activity after the departure of a large number of high-spending office consumers,” notes Al Kaitoob.
He also says that the economy has been negatively affected by the 2011 Spring Revolution in a number of Arab countries. The UAE has many expat workers from Middle East and North African regions and Al Kaitoob argues that, with the uncertainty in their home countries, there has been a tendency to save more than was previously the case.
In order to achieve growth, DLD has branched out into other areas such as licensed products. It has an established licensing division – including brands such as Disney – which sources products from the Far East and distributes them in the UAE and other markets in the region.
In the office supplies category, DLD is the exclusive distributor of a number of well-known brands including Clairefontaine, Schneider, Snopake, Herma and Fila. It also has its own private label brand Alka for office and technology products to go with its DLD brand for school articles.
As well as acting as the local wholesaler for these brands and other imported products, DLD supplies local educational establishments with their office supplies needs and deals directly with government departments and businesses.
This blurring of the channels in the UAE is not something that shocks Al Kaitoob. Local rivals such as Farook and Al Malik – which are also traditional, family-run firms – have a similar business model.
“This is not a big market,” he explains. “It would not be possible to achieve scale by focusing on just one activity.”
This is one of the reasons why Al Kaitoob thinks that the globals will not be in a hurry to develop a strong presence in the UAE market. Office Depot has one store in Dubai as part of its franchise agreement with Kuwaiti retail giant Alshaya, but Al Kaitoob has his doubts as to the impact that firms such as Depot can make.
“I’m not convinced that Office Depot will be able to compete with local companies in the B2B channel and, at the retail level, they appear to have a limited assortment,” he says.
“Even local companies are operating with very small margins, and I’m not sure that the business models of the international players will work in the UAE.”
For a start, any business in the UAE has to be majority-owned by a local national, and then the system of exclusive distribution partnerships makes it difficult for third parties to operate outside the traditional channels.
“Why purchase from a company like Office Depot when you have been dealing direct with the local agent for over 20 years?” questions Al Kaitoob.
Areas such as e-commerce, where the globals could theoretically leverage their expertise, are not well-developed in the UAE. Many firms still purchase office supplies from retail locations or fax orders to local resellers, and in the consumer market there is still a strong culture of shopping in local malls and shopping centres. DLD’s stores, for example, are open from 9am to 11pm or even midnight during the back-to-school season.
Leading Saudi retailer Jarir has reportedly been eyeing the UAE market recently, but Al Kaitoob believes that even firms from within the region will have trouble expanding outside their own borders.
Competition, believes Al Kaitoob, is more likely to come from the multiple retail channel where players such as Carrefour and Panda already have an established presence in the market.