How To Open A Retail Shop In Dubai

Shopping is a fundamental part to the economy in Dubai and accommodate amazingly well to the rich and wealthy. There are around 100 malls in Dubai which caters to shopping needs of the people and tourists of the Emirates.

Retail shop proves to be a thriving business in the majority of the areas with significant population because they offer every day necessary items. If you intend to open a retail shop in Dubai you need to consider the area where majority of population is economically stable. In Dubai there are the two things that are plentiful.

Firstly, most of Dubai’s population of is a mixture of foreign people as well as locals and both are relishing a slightly stable income. Secondly, tourists from all over the globe visit Dubai every year in a large number and that is a major reason for the rapid growth in the retail sector of Dubai. Hence, retail is one of the major portions of economy apart from oil sectors in Dubai.

Undoubtedly, Dubai does not have any scarcity of retail shops. But new prospects are always present in the market for such a business.

Dubai Shopping festival and other such events provide great support to those who intend to open a retail shop in the city and is highly beneficial. There are some requirements that a businessman needs to stick to before commencing a retail business in Dubai. So, let’s get into the detail of how to set up a retail business in Dubai.

Retail Shop In Dubai Free Zone:

In comparison to other businesses, any small financer can open a retail shops provided that they can give employment to huge number of people. You are permitted to setup your retail business either in Dubai mainland or any of the free zones in Dubai. Most of the free zones in UAE offer residential facility to employees and their dependents. Therefore, establishing a retail business can be beneficial in Dubai free zone.

Retail Shop In Dubai Mainland:

Dubai mainland is by far the paramount position for setting up a retail shop in. But setting up a retail shop in mainland comes with a few restrictions and procedures.

Following are steps required to establish a retail shop in Dubai mainland.

First and foremost is to get a local sponsor. It is compulsory to get a local sponsor with 51% shares before establishing a shop in Dubai mainland just like formation of other businesses.

Getting your business registered of your business from all relevant authorities. You need commercial license to commence retail shop in Dubai. For this reason, you are required to submit all the documents to the authorities and obtain permission to start the business. Major authority is the Department of Economic Development in Dubai (DED). Also approval from Ejari, Ministry of Economy UAE, Dubai Municipality (DM) and other departments to is also required complete the procedure.

The most important step is selection of appropriate type of area for your business. You can select Malls or meena bazaars to establish your shop in. But it is essential to follow all rules and regulations of these areas that are linked to your business.

As you are aware of the fact foreign investors cannot buy property in Dubai mainland. That leaves us with an option of leasing a shop for business. For this reason, you need authorization from DM and other related authorities.

Starting a retail shop in any place of Dubai, can be a successful venture for investors. So, let’s understand the type of business that you want to establish.

Understanding The Type Of Business That You Want To Set Up:

The type of license that you will be required for establishing a retail shop depends on the product you will deal with in the shop. Certain products for example operating a jewelry and food business requires further approval from particular government departments. The Department of Economic Development in Dubai (DED) has a list of more than 2100 activities that you can opt from. Apart from that you can get in touch with the DED in case you are unable to find a specific activity in the list.

Getting a Local Partner In The Business:

It is mandatory to have a UAE local partner in order to operate a business in UAE. The local partner supports the business and has 51% share in the business. However, need of a local partner is not a must if you intend to open up a shop in any of the free zone in Dubai.

Formalities Completion Of Business Registration And License:

The second step in the process of setting up a retail business in Dubai is to acquire the trade license and other key certifications from the authorities. The DED is the government body that authorizes permissions to set up a retail shop in Dubai.

 Know The Jurisdiction For The Retail Shop:

Considering the jurisdiction is imperative, despite of whether you set up a store at Meena Bazaar or a shop in Dubai Mall. Retail shops tend to get scrutinized under the terms of jurisdiction very much like to any other offshore company establishment. You need to have a suitable shareholding arrangement to demonstrate to the authorities.

The Special Permissions Required For Getting Shops On Lease:

Opening a shop on lease in Dubai comes with certain additional steps. Deciding the right location for the shop is not the only important bit. You will be required to acquire permissions from the Dubai Municipality and other associated organizations.

 The Laws Regarding Hiring Employees For Retail Shop:

Generally, you will be required to hire a professional manager to supervise the operations of your shop. On the other hand, if you have the Intelaq license, you will not be permitted to hire staff. At the most, you can appoint contractors for the work.

The Process Of Setting Up A Retail Shop In Dubai:

The process of setting up a shop in Dubai is fairly straightforward as compared to other parts of the world. By following these easy steps, you can get your shop up and running within a week.

Business Plan:

You need to come up with a solid business plan to decide how much funds you will require to set up your business.  The research conducted for setting up a retail store should include practical calculations and the monthly operating costs to manage your store. This business plan will give you an idea about the time taken for business to each its break-even point. The BEP is the point at which revenue and expenses are equal and will show you that there is no gain or loss.

A carefully assessed business plan gives you an idea about the finances required for your business and lender required by the business. You will be required to show the bank that your idea is a sustainable one as well as well as that you have considered all costs and risks and finally that you are worth their investment.

Overestimating Your Expenses

When considering loan for your business, the cost of operating expense for starting  a business is normally directly related to the multiple risk involved: higher the risk, higher the cost of the project.  The major mistake many business owners make is underestimating their operating cost. Be practical and overestimate rather than underestimate your costs.

Costs that were not part of the actual business plan for will surely occur as you set up the store for opening. Failure to oversee these costs will be little, but in some cases can be much bigger than anticipated and they can all combine in longer run to influence success of your business. You can avoid these unexpected costs by being as methodical, precise, and practical as possible in the planning phase.

Fundamental Startup Costs

The startup costs for a retail shop requires a lot of research on the each line item will basically cost.

Typically for startup costs of retail business you should take into account your location and the size and type of your store. Apart from that you keep into account the following.

Rent is an important aspect to keep into account and business owners need to make sure that they have enough capital preferably for atleast 2 years to cover the rent.

Licensing And Permit fees: These consist of licenses and permits, e.g. for tax purposes an Employer Identification Number, as indicated by the SBA state and local licenses, a Resale Certificate in case you are not selling entirely independent products, seller’s permit and most importantly a certificate of tenancy. These costs vary from $200 to $2,000 depending on business activity and the location in which you are working.

Store Fixtures: Depending on the size and activity of business that you intend to start, you will be required to have shelves, display racks, cases, and other furniture.

Initial Inventory: The most important bit in any retail business is that you need to be completely stocked with inventory on opening day and sufficient product to last for four months at least. If you do not know the accurate cost of your products, exercise an expected markup assumption to back into the rates you are expected to see from your distributors.

Equipment And Technology: Prerequisites such as point of sale systems, web access, computers, mobile payment platforms, televisions, and other IT expenses are not economical. POS systems price is around $2,000 and another $550 for each workstation is an additional cost. Televisions cost around $300 to $500 each while web access rate is approximately $100 a month.

Web Hosting: If you intend to get website for your retail business, you need a website designer and a host. Free web designers exist, but their abilities are inadequate and may give a poor image of your brand. On the other hand if you seek professional expertise you would be expected to spend around $30 to $200 a month on a website.

Janitorial Services And Supplies: If you prefer to employ a cleaning service, you can anticipate to spend between $50 and $200 a week. Managing cleaning in-house will costs $500 to $1,000 for preliminary investment in supplies and heavier equipment such as vacuums.

Business Insurance:  Property insurance together with liability to workers’ compensation and any coverage necessary for employees or yourself should be considered.

Advertising: The decision of advertising your business on any social media platforms is up to you. You can either advertise your business yourself or can also appoint an ad agency, which will charge you around $1,000 to $10,000 a month.

Branding: The form of branding you prefer will dictate the price, but you can be expected to spend $500 to $1,000 for interior and exterior branding.

Interior Decor And Aesthetics. You may be required to paint the walls, mount shelving, counters, replace flooring, and make other necessary changes. All of these may cost you around $50 to $100 an hour in addition to other cost of materials involved.

Professional services. You will need a lawyer to incorporate your business and filing for taxes can cost around $1,000 to $10,000 or in some cases even more. Apart from that your business might need miscellaneous item such as security cameras, and office supplies such as paper, pens, and schedule books etc.

Total Cost Involved To Open A Retail Store:

Generally, in order to make an impact and help business to be noticed most retail business need to organize an event. For that an impressive opening event will definitely will provide exposure to the public and expectantly guarantee a stable flow of clientele on your first day. This is not compulsory but if you do organize an high end event, you could assign 20 percent of your first-year marketing budget or no less than $6,000 to the advertising and promotions resources that go into this crucial day.

So, this is your guide to how to setup a retail shop in Dubai. In a nutshell you need to decide where you need to set up a retail store, it could be in Free zone or mainland Dubai. Then devising a perfect business plan, getting a license and registering your business, selecting the jurisdiction, taking permission from authorities and finally estimating cost of setting up a retail business.