REDTAG is a popular lifestyle brand in Saudi Arabia that runs about 61 fashion and lifestyle stores across the GCC. The REDTAG Group has two main areas of operation – the newly launched REDTAG value fashion and home stores which look set to grow tremendously in the retail industry and discount fashion and home stores that showcase a collection of well-known regional brands. Saudi Gazette caught up with Ernest J. Hosking, CEO of REDTAG, to ask him how he has managed to sustain a consistent 20 percent annual growth rate in the Kingdom. What has the progress of REDTAG been in the last five years? Our business is “born in the GCC” – it has been operational in various fashion and homeware formats since 1988 with the largest presence in KSA followed by Kuwait. We conceptualized a new store design and commenced this with a pilot store conversion in Abu Dhabi in 2006. Once we were satisfied with this format we commenced our expansion of new REDTAG stores and conversion of existing old format stores to REDTAG in KSA, Kuwait and more recently, the UAE and Bahrain. Since our debut in 2006, we have established 46 REDTAG stores. How does REDTAG rate itself as compared to the other retails brands in Saudi Arabia and the Middle East? The secret of REDTAG's success is our “value” proposition – a combination of good quality fashionable merchandise for the family in a comfortable shopping environment at very affordable prices. Whilst we are a “value” business, we are by no means “cheap and nasty”. That is why we challenge the customer to “rediscover value” in our branding message and to visit our stores and try us out as we are confident that they will leave pleasantly surprised, having got more than they expected for less than they thought. REDTAG is a value-focused retailer offering a range of fashions for the entire family and homeware for budget-conscious shoppers, offering the latest in fashions and accessories for men, women, children, infants and newborns. This is supplemented by a vast range of merchandise for the home, dining, bed, bath as well as home décor items and toys. A one-stop destination concept which is a compelling proposition in the retail market space. How different is the approach to brand building in Saudi Arabia vis-a-vis the rest of the world? Localization is key. We have to be aware of and sensitive to the country's customs and beliefs. There are norms to follow which vary as per media and lots of dos and don'ts that need to be comprehended in reaching out to the consumer. It's challenging but our extensive experience in this market over many years has given us a deep understanding of both the market and our target customer; we adapt our brand building to fit these nuances. We are able to communicate our messages as intended. What have been the most significant milestones achieved by REDTAG in 2010? We opened 19 REDTAG stores in the year 2010; more stores than in any previous year which surpassed our internal targets. This was in spite of economic challenges still facing business in the region and elsewhere. With the growth of the business in 2010 we are able to take advantage of increased volumes in our dealings with our suppliers. Furthermore, we are involved in a number of Business Improvement Projects to improve our operational efficiency – we see this as an ongoing process. These benefits we then pass on to our customers, which is a promise we are able to deliver. The store opening in Othaim Mall, Dammam marks a stronger presence in Saudi Arabia and provides us with a springboard to establish ourselves even more strongly as a value fashion retailer. Our aim is to continue to build the REDTAG brand in Saudi Arabia and within the GCC states. 2011 looks very promising for us and in the next two months, apart from the new store opening at the Othaim Mall, REDTAG plans to open an additional four new stores in the region. How is the current scenario of global real retail in the MENA region? In our view, retail is currently stronger in the MENA region than Europe which undoubtedly is still facing economic challenges. Nevertheless, the financial crisis of 2008 has left the consumer wiser, more value conscious and more demanding. This is where we are confident our REDTAG brand more than meets our customers' expectations. Are there any new regulations regarding retail in the Kingdom? How would you rate the openness of the market to new brands? Saudization is one. It has been our constant endeavor to invest in local talent. We are involved key initiatives to recruit, develop and train local people to minimize attrition. Logistics is another key area where new regulations have come into effect. Associated costs and lead times have to be planned so not to affect the availability of right merchandise at the right time for the consumer. Every market has it's own set of challenges for new brands and retailers have to research, understand and overcome these to be successful. What else can we look forward to in 2011? We still see tremendous opportunity for organic growth within the GCC itself. However, we have started investigating opportunities in the broader MENA region with Jordan and Egypt on the radar screen in the short to medium term. These will, in most instances, take the form of a franchise model. In addition, we continue to look at refining our merchandise assortments to give our customers more of what they are looking for. We have 15 new stores in the pipeline which will be opening between now and the end of December this year. We have, over the past few years, set about building the capacity of our people both by bringing in expertise and by developing our existing associates. This effort will continue and gain momentum going forward and will be one of our key drivers to our on going future success.
