WHILE business owners throughout T&T are downsizing, consolidating or closing down because of Covid-19, 36-year-old entrepreneur and director of Sports & Games Ltd, Omar Hadeed, is expanding the group’s retail footprint, which focuses on fashion brands and quick-dining options.
Last Friday, Hadeed opened the third T&T retail outlet of the American footware brand, Skechers, at the Trincity Mall in east Trinidad. By the end of this month, he is opening a Victoria’s Secret retail space at Gulf City Mall in San Fernando, which he says is “highly anticipated” by women who know of that brand’s lingerie, clothing, and beauty products. And, also in July, Hadeed expects to open another franchise, Parfois, a Portuguese franchise brand of jewellry and accessories, which he says is one of the fastest growing brands in its category in the world. The first Parfois retail outlet will be located at The Falls at Westmall, in west Trinidad.
The group also plans to open a new Domino’s pizzeria on July 10 and is expanding its Sports & Games business into the health and fitness arena with the opening of its first gym, to be called Live Life Fitness, which is expected to open on August 1 at Shoppes of Arima.
Hadeed says the group has passed through the 2008 financial crisis, the devastation to retail, brick and mortar businesses caused by online shopping and now Covid. But the company is expanding while other retailers are contracting.
“While others are drawing back, we believe that there are still opportunities in these times and you just have to dig deep to find them,” Hadeed says.
Asked if his optimistic attitude—and his investment in expansion—bespeaks a confidence in the recovery of the T&T economy, the entrepreneur said, “I am confident that, as a nation, we are in a much better position than most of our neighbours. When you look at other countries in the region that are forced to open their borders because they depend so heavily on tourism, I think we are much better poised because our economy is mostly locally based.
“And when I look at the fact that people are not able to travel for a significant period of time—and when people travel they shop—and the fact that online shopping has become more difficult, with longer wait times and higher costs, I have taken all of those factors into consideration and I have said to myself, there is opportunity here.”
Currently, the Sport & Games group employs “just over 500 employees” and expects to add another 75 to 100 employees with the opening of the new stores this month and in August.
The addition of new Victoria’s Secret and Parfois outlets brings to ten the number of franchises that the Sports & Games group has partnered with to introduce to the local market, comprising: Skechers, Aldo, Pita Pit, Converse, Aeropostale, Bath and Body Works, RAW, Victoria’s Secret, Parfois and Dominos.
And, Hadeed admits that tapping in to foreign franchises that have a proven track record of retail innovation and success is one of the reasons he is able to expand the retail empire.
Outlining the advantages of the franchising model, Hadeed says, “I always quote the facts, which are that 97 per cent of franchise businesses are successful and on the odd occasion that it isn’t, it is always due to the operator. And the unfortunate statistic, in reverse, is that 98 per cent of self-owned businesses, that aren’t franchised but are start-ups, actually fail. So you actually have a much better risk-reward ratio with the franchising model.”
He points out that, even though the franchising model requires more capital at the start, there is a greater chance of sustainable profits because the business owner is adopting a successful model.
The businessman describes sourcing foreign exchange to pay his franchise fees and stock his stores as “an absolute nightmare, to put it mildly.
“We obviously have a commitment to each brand to continue its expansion and growth within this territory, but the foreign exchange situation and allocation has been very difficult and time consuming as it is something that we spend a great deal of time manoeuvering,” Hadeed says, adding, “We have had to bank with several different suppliers. For instance, Parfois is a brand that is European, so we negotiated to pay them in euros. Some of our other franchises, like Aldo and Pita Pit, are Canadian.
“It is sometimes easier to attain the euro and Canadian currencies, which is difficult, but not as difficult as getting US dollars.”
Asked if he is staying away from the informal market for foreign exchange, Hadeed replies, “Absolutely. First of all, the informal foreign exchange market is not regulated and is prohibited by the Central Bank. And, most importantly for us, we cannot afford to buy at higher than the bank rate because we price our goods on US retail prices. So, for us to be competitive in today’s world, we have to be comparative with online prices, which I am proud to say we are. There is probably a ten per cent price difference give or take. We price our goods here at the pre-tax price that you would see in the US. That gives us a bit of an edge.”
The business owner says the group operates 42 stores in all of the major malls in Trinidad, with retail store locations at Westmall, Trincity Mall, Gulf City Mall, C3, Price Plaza, Grand Bazaar “as well as many other street and strip malls.”
Operating in the major malls gives him the ability to contrast the traffic flows through large retail spaces in Trinidad and tabulate that against the lease rentals he pays.
Asked to rank the malls based on traffic flow versus lease costs, Hadeed says, “It is not a difficult question, but with being respectful to our landlords and not giving anyone the advantage, I would answer it by saying we see a significantly better return at our central and south Trinidad locations. The malls within central to south in comparison to their lease rates, due to their revenue flow, are much more profitable.”
Asked what he thinks accounts for the advantage of the central and south malls, Hadeed opines, “The East-West corridor has become somewhat saturated. There are more options in that area. The rental rates along the East-West corridor have become, in my opinion, a bit more exorbitant.
“And then, obviously, you have seen a shift in spending power to the south and central areas, as well as more people relocating to locations there to reduce their cost of living.” Questioned on why, then, he opened his new Skechers store at Trincity Mall, Hadeed responds, “We already have a Skechers in the south at C3 Mall and we have one at West Mall in the west, so the logical location for the next Skechers would have been in the east.”
Running a retail empire means all of his stores were deemed non essential and were closed during the lockdown period. Following the confirmation of T&T’s first coronavirus case on March 12, business almost came to an abrupt stop, Hadeed says.
“At that point in time, most of realised that it was only a matter of time before the Government implemented a shutdown. We saw what was happening around the world and how we would be affected, he says. Hadeed says his group paid 100 per cent of the salaries of his 500 or so employees during the month of April. In the month of May, employees were asked to proceed on their annual vacations “and we did pay 50 per cent of salaries during May.”
In May, things “started to become difficult,” because of cashflow constraints, as the company maintained its commitments to its suppliers and stakeholders, including its landlords, and to the Board of Inland Revenue, the agency in T&T that collects corporate taxes and the Value-Added Tax.
Hadeed said: “It was an extremely difficult period, as we were not sure, up until the end of May, when we were going to be able to reopen.
“But, thankfully, after a fantastic job by the Government, we were able to reopen our doors on June 1 and we brought back in all of our employees. We have not reduced their salaries in any way nor have we laid off anyone in the companies. That’s because, at the end of the day, our employees are the lifeline of our businesses. Our employees are what makes our company what it is. We appreciate them and we want them to be appreciative of us.