Retail and Fashion Business Development in the United Arab Emirates
Dubai-based Kamal Osman Jamjoom Group (KOJ) has announced that it has acquired the operators of The Body Shop retail stores within the UAE. The acquisition of The Body Shop Stores (UAE) will allow KOJ to extend its Body Shop business beyond its already-established stores in western Saudi Arabia. This investment now makes KOJ the largest franchise operation for The Body Shop International in the MENA market, and extends their strong retail footprint on the brand into another dynamic GCC country. KOJ operates more than 650 retail outlets across the region including The Body Shop, Early Learning Centre and Lego, as well as its own home-grown brands Nayomi, Moda, Mihyar, and Mikyajy.
The Lucrative Apparel Market in Dubai
Boasting a large and affluent population, Dubai presents a lucrative market for high-quality apparel. The garment market in the United Arab Emirates is worth $15 billion and expanding; moreover, it accounts for the majority of the retail sector in the country. Notably, the apparel sector is a major contributor to the Emirati economy, surpassing all other industries except for oil in terms of revenue generation and employment. The UAE's strategic geographic location at the crossroads of European and Asian fashion hubs positions it as a premier center for apparel trade.
Key market advantages include:
- Gateway Location: Dubai bridges the East and West, offering a strategic advantage for import, export, and global market access.
- Favorable Business Climate: Dubai is renowned for its streamlined business setup process, minimal bureaucracy, and transparent regulations.
- Tax Benefits: No personal income tax implies businessmen can invest more profit in building their fashion brands, and the VAT rate is a nominal 5%.
- Economic Stability: Dubai boasts a stable and growing economy with a focus on diversification beyond oil.
Steps to Establish a Readymade Garments Business
To establish a readymade garments company in the UAE, follow these strategic steps:
- Understand Dubai’s Garment Business Framework: Learning practical techniques to help your business flourish is one of the best ways to avoid becoming simply another struggling apparel business.
- Define your Target Audience: Establishing a fashion company without a target audience in mind is like taking a road trip without knowing where you're going.
- Determine Cloth Sourcing: One of the advantages of living in Dubai is the proximity to some of the world's largest textile manufacturing centers, including Bangladesh, India, and Ethiopia.
- Apply for a Garments Trading License: You can apply for a readymade garment license in Dubai through the DED (Mainland) or a Free Zone authority.
- Have an Omnipresence: One of the cost-effective aspects of running your business is to sell online, as fashion e-commerce sales are increasing with projected growth of 20.9% by 2027.
- Market your Products: Having a good social media presence for your company will help you market your items and strengthen your relationship with your customers.
Legal Structures and Jurisdictions
The legal structure you choose for your clothing business in Dubai is a critical decision with significant implications. Common options include:
- Sole Proprietorship: A cost-effective approach that exposes the owner to unlimited personal liability.
- Partnerships: Facilitates shared ownership and decision-making among partners.
- Limited Liability Companies (LLCs): Offers the benefit of limited liability, safeguarding personal assets from business liabilities.
Furthermore, entrepreneurs must choose their jurisdiction. Dubai Mainland is best for retail outlets and local consumer accessibility, while Free Zones offer attractive benefits such as 100% foreign ownership and tax exemptions.
Financial and Trade Data Overview
The following table summarizes the costs and trade figures associated with the garment and apparel industry in the UAE:
| Category | Details / Costs |
|---|---|
| Readymade Garment License Cost | Around AED 15,000 |
| Free Zone Setup Cost | AED 12,000 – AED 25,000 | Value Added Tax (VAT) | 5% (Nominal rate) |
| UAE Textile and Apparel Exports | Approximately $4.5 billion |
| UAE Textile and Apparel Imports | Approximately $7 billion |
To ensure long-term success, brands must also consider Brand Registration under UAE intellectual property law and open a Business Bank Account for effective payment handling. With strategic planning, this emirate offers a promising environment for establishing a successful apparel business.
