Internet economy in Saudi Arabia forecast to reach SAR 107 billion by 2016

By Isla MacFarlane

The Saudi internet economy contributed SAR 37 billion to the overall Saudi economy in 2010, representing 2.2 per cent of GDP, and putting Saudi Arabia at 13^th place amongst the G-20 countries.

This figure is projected to rise to SAR 107 billion by 2016, representing 3.8 per cent of GDP, according to a new report in The Boston Consulting Group’s Connected World series. It found that by 2016 the total size of the G-20 Internet economy will be $4.2 trillion, equivalent to 5.3 per cent of GDP, up from $2.3 trillion or 4.1 per cent in 2010.

The $4.2 Trillion Opportunity: The Internet Economy in the G-20′finds that if the Internet were a sector in Saudi Arabia, it would be more than twice as large as the utilities sector.

Saudi Arabia’s Internet economy growth rate of 19.5 per cent compares favourably to other developing nations in the G-20, which are growing at an average of 17.8 per cent. Projected growth rates elsewhere are: 24.3 per cent in Argentina, 18.3 per cent in Russia and 15.6 per cent in Mexico. In 2016, Saudi Arabia will rank number 10 in the G-20, with its contribution to GDP increasing to 3.8 per cent.

These growth rates are impressive compared to the Internet economies of developed G-20 markets, which are expected to grow at an average of 8.1 per cent through 2016 – for example, 10.9 per cent for the U.K. and 7.8 per cent for Germany. In 2010 developed markets contributed 76 per cent of the G-20′s Internet economy; by 2016 that will fall to 66 per cent.

“The Internet offers one of the world’s unfettered growth stories,” said Joerg Hildebrandt, Partner and Managing Director at BCG Middle East. “A robust Internet economy is an essential underpinning for Saudi Arabia’s future, providing both economic and social benefits.”

Internet boom imminent in Saudi Arabia

By ARAB NEWS – Mar 21, 2012

RIYADH: A Saudi Internet expert predicted that a boom in the Internet industry in Saudi Arabia and the Arab world would occur soon. Rashid Al-Balla, CEO of the National Initiative Company and an expert on the Internet industry, was addressing a workshop organized by the young entrepreneurs at Riyadh Chamber of Commerce and Industry (RCCI).

Al-Balla based his assumptions on the increased number of Internet users in the Kingdom, which jumped to 46 percent of the total population in 2011, or more than 13 million users, compared to 20 percent and 5 percent in 2006 and 2001 respectively.

He said there were more than 800 million visits on the Internet through mobile phone sets, 5 million accounts on the Facebook sites plus smartphones increasing by 26 percent in the Kingdom.

He said key characteristics of the Internet and telecommunications in the Kingdom are represented in the rapid development of technologies being used by the three operators, notably the G4 technology and expanded use of the Internet through mobile sets.

He said the criteria of success in Internet projects should not only be made on the basis of income but, rather, on the number of visitors.

He said any new industry needs time until its features are clearly determined.

Al-Balla advised the young entrepreneurs wishing to invest in this area to acquaint themselves with groups of entrepreneurs and technicians, not depending on un-matured technologies, attach much care on small beginnings and introduce changes when necessary based on visitors’ requirements and proposals.

He briefed the young entrepreneurs on a number of successes made by different generations in this industry who set a series of websites such as Ajeeb, Naseej, babcom, maktoob, Tadawul, and koracom.

Touching on the volume of investments in the Internet industry worldwide, Al-Balla said the investments did not exceed $94 million in early 90s, jumped to $1.5 billion in 1997 and then reached $3.7 billion in 2000.

Responding to questions raised by the audience, Al-Balla ascribed weakness of e-commerce in the Kingdom to its novelty as any new industry needs time to gain credibility and stability, and affirmed e-commerce would keep growing in the Kingdom.

Related articles:

Arab News http://arabnews.com/economy/article590249.ece

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Abu Dhabi set for a huge increase in retail space

courtesy influx_studio

By Rory Jones

Hundreds of stores are due to open in the heart of Abu Dhabi this year as Al Wahda Mall prepares to unveil a huge extension in August, doubling the size of the shopping mall.

The expansion comes as developers announce major retail plans across the country and as an enormous amount of shopping space is forecast to be completed in the capital this year.

Al Wahda will open a further 256 shops and food and beverage outlets, including a cinema and health and fitness centre, to add to the 200 it already has.

“The extension is completed and we have started handing over shops to the tenants,” said Raja Abdulkhader, the director of Line Investment & Properties, part of Emke Group, the mall’s developer and the owner of LuLu Hypermarket. “We have already leased more than 80 per cent of stores.”

The retail, entertainment and leisure sector is an increasingly important source of recurring income for developers across the Emirates, with stores reporting burgeoning revenue as consumer spending increases and more tourists visit the country.

Dubai has been a major beneficiary of the Arab Spring, with more tourists from the GCC visiting the emirate, but Abu Dhabi has also reported a big increase in visitor numbers in the past year, which has helped buoy retail sales.

Tourist numbers in Dubai increased 10 per cent to 9.3 million last year compared with 2010, and Abu Dhabi had a record year, with 2.1 million visitors, up from 1.8 million in 2010.

A total of 260,000 square metres of retail space is expected to be completed this year in Abu Dhabi on top of 1.67 million sq metres currently available in the capital, according to the property consultancy Jones Lang LaSalle.

Builders are scheduled to hand over three malls: Paragon Bay Mall on Reem Island; Capital Mall in Mohammed Bin Zayed City; and Deerfields Townsquare in Al Bahia.

There are also new smaller developments such as Etihad Towers, Galleria at Sowwah Square and Emporium at Central Market also forecast to open.

“Abu Dhabi is still a pretty strong market that’s undersupplied with retail,” said Matthew Green, the head of consulting at the property consultancy CBRE.

“There is considerable supply coming on, which will lead to softening of rents, but the major malls and the ones that are established are likely to continue to do well,” said Mr Green. “It’s going to be difficult for the newer malls to come in and take consumers from those malls.”

Many analysts also remain sceptical about whether all the planned developments will open on time.

But Mr Abdulkhader said he was confident Al Wahda’s extension would open on time and that about 40 per cent of the brands would be new to Abu Dhabi, having already opened in Dubai and other GCC countries.

“We will declare the names of the brands a little later. But we are expecting [the mall] to be open in the third quarter, targeting August,” he said. “The extension has facilities that are currently missing. It has a cinema and one unique [point] is the largest health club in the UAE.”

Al Wahda Mall had more than 9.5 million visitors last year, up 15 per cent on 2010, and Mr Abdulkhader expects that figure to reach 20 million once the extension is complete.

“Retailers are satisfied with their representation in Dubai and Al Ain, but not with their representation in Abu Dhabi,” said Andrew Goodwin, the head of retail for the Middle East and North Africa at DTZ, a property specialist. “With Al Wahda, retailers recognise it’s somewhere they can do business.”

This year, Emke Group is also set to open RAK Mall in Ras Al Khaimah and Galleries Mall in Fujairah.

The National:  http://www.thenational.ae/
Via: http://bit.ly/z3JXaF

Who is the Chinese Consumer of 2020

Image courtesy of influx_studio

By 2020, Chinese consumers will join the ranks of the world’s choosiest and most sophisticated consumers

By Yuval Atsmon, Max Magni, Lihua Li, Wenkan Liao – Published by McKinsey Quarterly

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country.

These differences are set to become more marked, with significant implications for companies that fail to grasp them. Since 2005, McKinsey has conducted annual consumer surveys in China, interviewing a total of more than 60,000 people in upward of 60 cities.1 Our surveys have tracked the growth of incomes, shifting patterns of expenditure, rising expectations—sometimes in line with those of the respondents’ Western counterparts and sometimes not—and the development of many different consumer segments. Those surveys now provide insights to help us focus on the future. We cannot, of course, predict it with certainty, and external shocks might confound any forecast. But our understanding of consumer trends to date, coupled with an analysis of the economic and demographic factors that will further shape them in the next decade, serve as a useful lens for contemplating the profile of the Chinese consumer in 2020.

Changing demographics

Many of the changes taking place in China are common features of rapid industrialization: rising incomes, urban living, better education, postponed life stages, and greater mobility. Japan saw similar changes in the 1950s and 1960s, as did South Korea and Taiwan in the 1980s.

But some unique factors are also at work, such as the government’s one-child policy and the marked economic imbalances among regions. Our analysis reveals important insights into the likely demographic and socio-demographic profiles of Chinese consumers at the end of this decade.²

Changes in economic profiles have been and will continue to be the most important trend shaping the consumer landscape. The Chinese are certainly getting richer fast: the per-household disposable income³ of urban consumers will double between 2010 and 2020, from about $4,000 to about $8,000.⁴ That will be close to South Korea’s current standard of living but still a long way from its level in some developed countries, such as the United States (about $35,000) and Japan (about $26,000).

Luxury Connect and SDA Bocconi come together in India for Luxury Business Management Programs

Italian business school SDA Bocconi school of management, in association with Luxury Connect of New Delhi, will commence delivering  executive education programs in India with a special focus on the luxury business. These programs, based on the global experience of SDA Bocconi, are further guided by a special survey conducted by Luxury Connect across the Indian luxury segment on a pan-India basis.

The school of management has in fact tied up with Luxury Connect and will work on developing this sector of education. The schedule foresees  a 5 day executive learning program which will target people already working in the luxury industry, but not necessarily qualified in the same. With the opening up of FDI in India, it is expected that more brands coming into the country will seek experienced and qualified professionals for a better management system of their operations.

Upon successful completion of this first phase, the programs are proposed to be then followed with a longer program of around 3 months for executives with lesser experience. Luxury Connect also envisages that the market will be ready, in the next two years or so, for a fully fledged luxury business program.

“We decided to start this programme in India because Bocconi already has links and exchanges with many Indian universities and many of our top performing students are Indians who come from these exchange programmes. Furthermore, SDA Bocconi has this year launched the Mumbai International School of Business Bocconi (MISB Bocconi), a new school in Mumbai born from the partnership between Università Bocconi and a group of Indian entrepreneurs, devoted to offering high-quality postgraduate and executive education. Keeping the demands of international luxury students in mind, we have chosen India as a destination,”  says Stefano Caselli, SDA Bocconi professor and MISB Bocconi project manager.

Abhay Gupta announces Launch of new initiative Luxury Connect in collaboration with Bocconi and Sacha Orloff Consulting Group

©Luxury Connect 2012

New Delhi 29 February 2012 – Mr Abhay Gupta, Founder and CEO of Luxury Connect held a Press Conference for the launch of his new Company Luxury Connect, as well as for an educational program in collaboration with the prestigious SDA Bocconi.

Luxury Connect and Sacha Orloff Consulting Group are proud to announce their collaboration. The partnership between Luxury Connect and Sacha Orloff Consulting Group has been initiated to bring continuous added-value to the current and future activities of Luxury Connect, from partnership development and the creation of a high-value talent-pool, through to the organization of specialist summits and publications that will raise the profile of this highly valuable industry sector and enable India to sustain its position as a major force in the market.

Ms. Alexandra de Kerros Boudkov Orloff is also part of the Advisory Board of Luxury Connect with other prestigious members

Press Release and Presentation download:

Presentation – LUXURY CONNECT media launch 29 02 12

Retail Icon Abhay Gupta’s years of experience in luxury, carves a new model ‘Luxury Connect’

Abhay Gupta, recent recipient of the Retail Icon title by Asia Retail Congress, announced the launch of his new initiative ‘LUXURY CONNECT’ (LC).

Mr. Abhay Gupta, Founder, promoter and CEO of Luxury Connect, is the former Executive Director of Blues Clothing Company Ltd. A pioneer and veteran of luxury in India, he helped not only bring in but establish  luxury brands like Versace, Versace Home, Versace Collection, Corneliani, John Smedley, Tween Damat ADV, Arredo Classic etc in  India. Having helped Blues grow from single location to over 30 locations on a pan India basis, he announced his exit from BCC and the formation of Luxury Connect.

Luxury Connect is a service based organization with a clear focus on luxury, aiming at 4 verticals:

1.    Luxury  Training and Education
2.   Consulting
3.   Luxury e-Commerce
4.   Sourcing

Mr. Gupta is supported in this endeavor by Mr. Rajat Bhattacharya, Co-founder & Chief Sourcing Officer and Mr. Love Ranga, Co founder & Chief Strategy Officer. Mr. Bhattacharya comes with a experience of over 35 years  in the sourcing and education business with  a vast international exposure of joint ventures tie up’s. He was instrumental in setting-up and operating for 5 yrs of Pearl Academy of Fashion’s Bangladesh Campus. Mr. Love Ranga, a NIFT graduate, brings in the required youthful incisive mind and energy, as a specialist in the fields of Planning, Luxury Buying & Merchandising, E-Commerce and Sourcing.

Abhay Gupta CEO; Rajat Bhattacharya, Co-Founder and Love Ranga, Co-Founder & Chief Strategy Officer - Courtesy of FashionUnited

Saudi Arabia – Retail Prospects and Outlook for 2012 – Report

By Alexandra de Kerros Boudkov Orloff

Download full report: Saudi Arabian Retail Prospects – Sacha Orloff 2012

Immense opportunities in the fast growing retail market in Saudi Arabia – its constraints and challenges.

The Middle East Retail Sector forecast for 2013 has identified Saudi Arabia and the UAE as the markets with the most potential and dynamic retail sectors in the region. These two markets have sustained their dominance within the retail landscape for more than a decade and will continue to do so in coming years. The presence of a large expatriate population and the majority of region’s retail investment being centred in these countries have helped to maintain the growth momentum.

The GCC retail industry is poised for a healthy growth and known to be one of the fastest growing sectors in the Middle East. It is the second largest sector in the oil-rich GCC region, and is considered to be the most favoured means of endorsing diversification and continual economic development in the area.

In general the Saudi retail sector is spread across malls that have mainly replaced the old markets and souks all over the Kingdom. Malls attract consumers to purchase in a more modern and stylish environment; enabling to build a consumer experience with both a social and entertainment purpose.

1.0        The Kingdom of Saudi Arabia economic landscape.
1.1          Total retail spending in KSA 2011
1.2         Total retail spending in UAE 2011.
1.3         Total retail spending at Dubai Duty Free.
1.4         Global GDP growth.

2.0        Global Trends.
2.1          Key Trends in the MENA retail market.
2.2         Trends in the Saudi real estate and retail market.
2.3         Riyadh, the future capital of the retail sector.

3.0        Key impacts on the retail market in KSA.
3.1          Cultural differentiations:
3.2         Religious tourism.
3.3         Saudi Retail Market Concentration.
3.4         Recruitment and customer service.

4.0        E-Commerce in KSA is the next growing trend.

5.0        Conclusion.

5.1        Input and outcome analysis of KSA retail

Download full report: Saudi Arabian Retail Prospects – Sacha Orloff 2012