RIM Plans for Dubai Store to Surge in Retail

Research In Motion Ltd. (RIM), seeking to offset plunging U.S. sales, is preparing to open stores across the Middle East as part of a push in a region where demand for its BlackBerry phones has held up better.

The company is in the final stages of negotiating a lease on a flagship store of as much as 1,500 square feet (140 square meters) in Dubai, the United Arab Emirates city-state known for its malls, said Sandeep Saihgal, managing director of RIM’s Middle East business. Stores with local partner Axiom Telecom are planned across the region, he said.

“We’re getting the first one up and running and then we’ll be looking at other cities across the Middle East — Saudi Arabia, Kuwait, Qatar,” Saihgal said in an interview this week at RIM’s headquarters in Waterloo, Ontario, where he was visiting from his base in Dubai.

While Americans are dumping their BlackBerrys for Apple Inc. iPhone or Android devices, RIM is counting on first-time smartphone buyers across the Middle East, Africa and Asia to choose a BlackBerry. Helped by features like the free instant- messaging BlackBerry Messenger program, shipments in the Middle East and Africa more than doubled to 2.29 million units in the fourth quarter from a year earlier, outselling the iPhone by a margin of 4-to-1, IDC data show.

RIM’s push into retail mimics the strategy of Apple, which is relying on its own stores around the world in addition to partners to sell its products. While additional stores add sales channels, they alone won’t help RIM revive global demand — it also needs better products, said Anil Doradla, analyst at William Blair & Co, as Bloomberg stated.

“Apple stores do well not because of the store experience — which definitely is a positive — but because they make good phones,” said Doradla, who is based in Chicago and rates RIM the equivalent of a hold. Until RIM “addresses the phone issues, they’re not going to get a lot coming out of these stores.”

The Middle East expansion will probably be followed by Africa, with RIM planning flagship stores in markets including Nairobi, Kenya, and Lagos, Nigeria, Patrick Spence, RIM’s global head of sales, said in the interview with Saihgal.

In February, RIM said it’s planning about 4,000 outlets across Indonesia, including dedicated BlackBerry stores, store- in-stores and kiosks, a “proving ground” for potential additional locations across Southeast Asia.

To cater to local tastes, RIM plans to customize the look of its Middle Eastern stores with Axiom, which bills itself as the Middle East’s largest mobile-phone distributor.

“The Middle East is different from Indonesia and what we need to do is a little bit different in terms of the experience we want to deliver,” Spence said. “We’re being very focused in terms of the countries and cities we’re doing it in, based on where the brand is and what we think we need to do.”