Friday, February 13, 2009

Castles in the Sand

I’ve often been asked about prospects for U.S. retailers opening stores overseas. My standard answer has been that with very few exceptions — Wal-Mart, Costco, Staples and fast food chains being the major ones — American retailers have their hands full on the domestic front. Most U.S. retailers still have not attained national status, so they don’t see the need, immediate or even long-term, to plant their logos on foreign soil.

My concluding (laugh) line sarcastically would note that most U.S. retailers have enough trouble operating here, so why should they export their troubles.

Those comments notwithstanding, the last few years witnessed an increasing interest by retailers, especially department stores and high-end specialty stores, to exploit the oasis in the desert known as Dubai, United Arab Emirates.

With office and residential towers scraping the sky and malls offering cool comfort from the desert heat, the Persian Gulf seemed to be the perfect international expansion outpost. Its economy based on finance, real estate and tourism, Dubai attracted the global wealthy elite and those who built and serviced their surroundings.

But the worldwide financial crisis has humbled Dubai. Construction projects have stopped in mid-air; workers are fleeing the country, as The New York Times reported earlier this week.

At least for now, what was once a retail oasis is now no more than a mirage.

— Murray Forseter

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