TBY talks to Robert Fadel, Chairman & CEO of ABC Group, on the retail sector, the group's competitive advantages, and online shopping.

Robert Fadel
Returning to Lebanon in 1995 upon completing his studies in France, Robert Fadel joined ABC, the retail group run by his father and which today employs some 1,000 people at eight locations around Lebanon. Approached a few years later by Monitor, the US consulting firm that specializes in advising businesses and governments, Robert Fadel left Lebanon for Monitor’s headquarters in Boston to work as a strategic consultant and to acquire work experience at an international level. After six years he returned to Beirut in 2003, strengthened by this international work experience and rejoined ABC. He was in charge of the group’s new mall in Beirut’s Achrafieh neighborhood. Since August 2009, Fadel has been the Chairman & CEO of ABC Group. Fadel is also an MP representing Tripoli.

What are the strengths and weaknesses of the Lebanese retail sector?

Overall, 2013 has been a difficult year in terms of retail. We had negative growth, and this is in the context of increasing costs; the cost of labor, real estate, and energy have all been increasing, while revenues are going down. This is also in the context of increased competition and the opening of new shopping centers, and, therefore, the combination of inflating costs, more competition, and a reduction in revenues is a difficult situation that we have never seen before. The mix of travel warnings, lower consumer confidence, and also the fact that there are more suppliers has together made an impact. Also, it is normal that in the beginning people want to go and see the new shopping centers.

What are ABC's competitive advantages?

ABC has been in the market for 75 years; it is part of Lebanese culture. It is the second home for Lebanese people, and I would say that is one of our most competitive advantages. We are part of the Lebanese lifestyle, we are part of the values, and we are a household brand. The other advantage is that we try to be an entertainment destination. It is not just about retail; it is about being in the family, walking around, having a coffee, and going to the movies, for example. It is not only about the buying; it is about the whole experience, and that is what we try to do to keep ahead of other competitors.

How is the leasing part of the business developing?

We have what we call a “brand committee," which is a team that decides on the brands. It is not about price; it is about finding the right combination of low-, medium-, and high-end brands and the right categories of products. It is about understanding what people want, what our customers want, and then providing them with these brands. There are many, many selection criteria, and every brand that comes to us has to go through this process.

“ ABC has been in the market for 75 years; it is part of Lebanese culture. It is the second home for Lebanese people. "

ABC Group has invested in Dbayeh. What are your plans for this mall and what other short-term investment plans do you have in mind?

We invested a lot over 2012, and we have expanded and renovated our current locations. We also just signed with a partner to open a shopping center in Verdun. In our business, we cannot make our decisions based on the sales strength of the last three or six months because ours are projects that can take up to five years; we cannot wait five years to make a decision. We know of the ups and downs and we are committed to Lebanon. We still have a profitable operation and we will keep investing. The mall in Verdun will be 50% larger than Achrafieh, and it is due to open in 2017. That is a huge investment—approximately $300 million. It is bigger, so there will be more brands, and it will hopefully improve the shopping experience in this part of the country, which is the last untapped high-spending area.

What percentage of consumers shop online?

The percentage is very small. We are looking into e-commerce, like many others, but the problem that we are facing is that Lebanon is a small market, and also geographically small. It is not small in terms of dollars, therefore people come to ABC. Why would they shop online to get any product when they could spend a lot of time physically in what we call “the bricks and mortar?" The combination of those two factors is what makes it difficult to develop e-commerce in Lebanon.

What is your vision for the future of retail in Beirut?

People like to talk about Beirut as being the fashion capital of the Middle East, but I believe Beirut is somehow a trendsetter in the area. We need more stability, because there is so much potential. We have the weather, we have the culture, the freedom, the mix of people; we have everything that it takes except stability.