Category Archives: Retail

E-commerce spending reaches all-time high in Saudi Arabia

E-commerce market share in Saudi Arabia will hit SR50 billion by 2015, according to Saudi Post sources. It is consistently adopting new buyers and improving revenue. About 1 in 4 Saudi Internet users are already active in e-commerce, and they visit about 70 million e-commerce pages per month. Cash on delivery is still the preferred method of payment for most e-commerce buyers in MENA, reaching up to 75 percent according to Aramex. However, new payment gateways are emerging that are working to solve this and increase trust in online transactions.

E-commerce spending has reached an all-time high in the Kingdom, and more users are getting engaged: user growth is at an estimated 9.3 percent per year. This percentage is very likely to increase faster as e-commerce companies in the Kingdom learn how to earn and leverage their customers’ trust. But the most intriguing forecast is that m-commerce, commerce through mobile devices, will become 7 times larger by 2015, due to the progressively larger demand for mobile tablets. Today the e-commerce clients over population ratio are higher for UAE than it is for Saudi Arabia, but statistics show that the tables will turn in the coming two years.

As for e-commerce market share, the biggest player in the Kingdom today is, with a sizeable chunk of Saudi e-buyers at 13 percent. follow with 8 percent of the market under their belt, then comes Namshi with 7 percent, and MarkaVIP at 5 percent. These regional companies make up just a third from the entire Saudi e-commerce market, but they are strong within the rest of the region.

Many Saudi women with entrepreneurial and career ambitions are finding e-commerce to be an ideal platform, as it allows them to build thriving businesses from home. Saudi entrepreneur Sarah Al Dabbagh, Owner of Lace Events, is an example of a successful online business. She first started to promote her wedding and event planning services on Instagram, and soon her business grew with clients from all around the Arab region.

The challenges and potential of e-commerce in Saudi Arabia will be one of the key themes at ArabNet Riyadh 2013, the largest annual digital gathering in Saudi Arabia, taking place for the second year in a row on Dec. 3-4. The forum will explore how to unlock the potential of e-commerce in Saudi Arabia, and discuss the latest trends in online payments. ArabNet Riyadh will feature 80 expert speakers and will bring together more than 800 digital professionals, influencers, entrepreneurs, and investors.

The event will also cover the newest initiatives in digital Arabic content, and will feature an exhibition with more than 40 leading companies showcasing their services and technologies. — SG

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Saudi Retail industry players discuss new strategies to trigger growth

By Samar Yahya

JEDDAH – Key retail industry players in the Kingdom gathered here Monday morning at the Jeddah Chamber of Commerce and Industry’s (JCCI) Abdul Kader Al Fadel Hall to discuss innovative strategies to drive the industry forward during the InRetail Summit Saudi Arabia event.

The summit, which was described as a strategic platform to discuss how to sustain the growth that the Kingdom’s retail industry is currently experiencing, opened with a lively discussion involving more than 140 retail executives on keeping a pace with the next generation of shoppers’ demands. The discussion hosted industry leaders including, Mohammad Alawi, CEO, Red Sea Markets Company; Nigel Clarkson, Managing Director, MASMI; Maartenjan de Wit, Industry Principal Trading and Consumer Industries, SAP MENA; and Raj MK, Director, StatLabs and SAS.

“For the retail industry to achieve substantial growth, retailers, mall owners and developers need to have a platform where innovative ideas can be shared and discussed. Many retailers are planning to expand their operations and open new outlets. This event provides the perfect opportunity to learn about their future plans and be able to respond to their needs.” said Alawi.

The main topics discussed at the summit included current and future trends, new opportunities, achieving success and growth strategies, human resources investment, redesigning the shopping experience, leveraging new technologies, attracting customers digitally and the future of retail.

One of the highlights of the summit, which was organized by the JCCI and its Commercial Committee and co-organized by MICE Arabia and dmg events, was the CEO roundtable discussion on capitalizing on new trends to stay relevant in today’s market. The discussion was chaired by Alawi and joined by Abdulkareem Al-Agil, CEO, Jarir Bookstore; Mohamed Galal, CEO, United Electronics Co (eXtra); Muwaffaq Jamal, CEO, Azizia Panda United Co., Savola Group; and Ibrahim Ashemimry, CEO, Munch Bakery. The experts explored adopting a multichannel approach to reach new customers.

Over the course of the two-day summit, the latest retail solutions and technologies by leading local and international brands such as SAP, Retail Business Solutions, NCR, Baud Telecom Network, CISCO, SAS, Dorchester Estates, Data Capture Systems, Tatweer International Software Development Company, Sávant Data System and Retail Performance Group were introduced to the Kingdom’s key brand owners, retail managers, mall owners and retail real estate developers.

Other notable attendees who shared presentations and lead discussions included Mohamed Abd El Latif Lotfy, Retail Property Manager, Dar Al-Arkan Real Estate Development co. (DAAR); Abdulrahman Tarabzouni, Head of Emerging Arabia, Google; Abdullah Alghadouni, Digital Marketing & CRM Manager, Nokia; and Majid Bin Anzan, Director General, E-Mall, Saudi Post.

Read more:  Saudi Gazette

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GCC retailers adapting to new consumer preferences

Courtesy of Saudi Gazette

Courtesy of Saudi Gazette


Jeddah – Companies across the Middle East and North Africa (MENA) are developing their business models and product offerings in a response to the changing trends in consumer preferences in the region, said in a recent report.

Companies are diversifying their product range, according to some reports. Take Almarai for example. The dairy supplier capitalised on consumers’ preferences for fresh products by expanding their offerings to include fresh poultry (over frozen alternatives) and juice. Other companies are on a similar path,  said the report.

Not only food retailers are diversifying their product lines. Jarir Bookstore, which has outlets across the GCC, has adapted to the increasing demand for electronics, which now are sold in its stores.

The move toward adapting to consumer preferences by retailers comes as a response to the growth accelerating in up and coming product niches.

According to Ernst & Young’s 2012 MENA Customer Barometer, MENA consumers are among the most brand loyal consumers in the world. Twenty five percent of respondents in the UK and the US stated that brand influences their purchasing decision compared to 29 percent in Saudi Arabia, 31 percent in the UAE, 33 percent in Bahrain, 34 percent in Jordan and 35 percent in Oman.

The report also revealed that consumers are now harder to define, understand, and please than ever before and that MENA brands are facing challenges to adapt to “Chameleon Consumers”.

Five broad trends emerged from the survey, covering ten different products and services:

1. Traditional market segmentation no longer holds true. The ‘chameleon’ consumer has conflicting preferences and facets, which need to be accommodated.

2. Brands are increasingly likely to influence purchasing decisions within emerging markets, unlike the mature markets where lower loyalty is challenging companies.

3. Personalized communication and service is a priority. There are huge opportunities for organizations that can harness digital consumers through closer ‘community’ vehicles, such as social media and other digital channels.

4. Consumers are now equipped with all possible product, price and stock information and can simply bypass retailers that don’t engage consumers with relevant information and a compelling purchase pitch.

5. These new empowered customers want a greater say in how they experience service and to be active “co-creators”, not passive consumers.

The consumer base in the GCC region is growing at five million consumers per year. It indicated that spending is highest in the UAE at over 50 percent, followed by Saudi Arabia at 40 percent, and Qatar at 45 percent.

Moreover, retailers in the region are “moving away from disorganized neighborhood vendors toward organized retail outlets, such as hypermarkets,” the report mentioned.

For instance, organized retailers in Saudi Arabia are taking advantage of the country’s developed logistics infrastructure, high access to retail outlets by an increasingly mobile affluent population, the report mentioned. One example is Saudi Arabia’s Savola Group, which owns Panda Hypermarkets.

In the UAE, however, the scene is starting to look different.

Hypermarkets themselves have been expanding their reach via small neighborhood stores, according to a report by AT Kearney.

Lulu Hypermarket is planning to open 50 neighborhood stores across the GCC, while Carrefour is setting up its express stores across the UAE.

Ross Maclean, Customer Advisory Leader, Ernst & Young MENA, said: “The survey finds that in recent years, customer behavior has changed beyond recognition. In becoming a ‘chameleon’, the consumer has undergone a radical ‘metamorphosis’ and this change has significant consequences for all customer-centric organizations.”

The challenge of categorizing consumers is demonstrated by differences in consumer behavior between regions. — by SG/Agencies

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2013 – UAE retail sector set to flourish

Mall of the Emirates Sacha Orloff 2012By Wam

In 2011, the UAE was rated by Forbes magazine as the world’s sixth wealthiest nation by GDP per capita income, surpassing most developed economies. This means the country is on the top in terms of purchasing power, which is playing a crucial role in keeping the domestic retail sector one of the world’s busiest and most vibrant.

With the announcement of new mega-projects in Dubai, with shopping malls and online market services continuing to mushroom, the domestic economy remaining strong and inflation dipping to a minimal level, experts believe the UAE’s retail sector will steam ahead in the next years. What will give this sector an additional momentum is the sophisticated shopping infrastructure in the country and the so-called Arab Spring, which is luring more tourists into Dubai and the rest of the UAE.

The UAE’s high purchasing power is reflected in its massive family consumption, which involves individual spending on consumer items and services. Formerly second only to Saudi Arabia in the Arab region, the UAE jumped to the top position in 2010, when family consumption stood at Dh575 billion. It maintained that rank in 2011 as consumption leaped to nearly Dh640 billion, more than 15 per cent of the total family consumption in the 21-nation Arab League, according to official Arab data.

The steady surge in family consumption in the UAE, mainly a result of the high per capita income, was manifested in the rapid growth in the retail and wholesale sector’s contribution to GDP over the past years.

Trade to GDP

From around Dh67 billion in 2001, the value of that contribution leaped to Dh90 billion in 2005 and Dh134 billion in 2009. It swelled to Dh138 billion in 2010 before hitting an all time high of around Dh146 billion in 2011. The rise boosted the trade sector’s share of the overall GDP to one of its highest levels of around 11.7 per cent to maintain its position as the second largest component of GDP after the hydrocarbon sector.

“The retail sector in the UAE has grown so fast over the past years that it has become a major contributor to the non-oil economy this growth was driven by many factors, including the presence of a sophisticated shopping infrastructure, the organisation of too many events and occasions every year and the opening of scores of malls and other shopping outlets,” said Mohammed Al Awadi, a prominent businessman in Abu Dhabi. “Other factors include the demographic diversity in the UAE as there are nearly 150 nationalities and cultures this means we are talking about 150 different tastes another major factor is the strong tourism sector in the country, mainly Dubai, which has become one of the world’s dominant retail business destinations,” said Awadi, who controls a big chain of jewellery shops in the country.

Awadi, a former head of the trade committee in the Abu Dhabi Chamber of Commerce and Industry, said he expected the retail activity in the UAE to pick up in the coming years because of the steady population growth, the high per capita and purchasing power, strong economic growth and plans for new mega-projects in Dubai.

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GCC retail sector is robust

imagesThe GCC’s retail sales are expected to grow at a CAGR of 7.7 percent from end-2011 2 to reach $270.3 billion by 2016, was said in a report Sunday.

Food retail sales are anticipated to expand at a CAGR of 8.8 percent during this period while non-food retail sales are likely to grow at an annual average growth rate of 6.6 percent. Food sales growth will outperform non-food sales growth during the forecast period as high-value and healthier food products could find greater demand.

Sales of supermarkets and hypermarkets in the GCC are expected to grow at an annual average rate of 10.5 per cent between 2011 and 2016. The relatively under-penetrated markets in terms of modern grocery retail formats like Saudi Arabia, Qatar and Kuwait are likely to outperform in this segment.

Duty free and travel retail sales in the Middle East are forecasted to grow at a CAGR of 11.6 percent from 2011 to 2016, outperforming the broader retail industry in terms of growth. The outlook for the luxury segment remains positive and is expected to expand at CAGR of 8.2 percent between 2011 and 2016.

The region’s retail sector has displayed strong resilience in the face of global economic downturn and is expected to continue to grow at a steady pace given its attractiveness to tourists and residents, geographic location, developed logistics and availability of diverse shopping options. While the sector presents attractive opportunities, it is highly competitive and retailers need to continue to innovate so that they can achieve sustainable growth and profitability.

“Retail industry, which is one of the fastest growing sectors in the GCC, has thrived over the last several years due to increasing purchasing power, growing expatriate population, changing lifestyle and an expanding tourism & hospitality industry. Retailers have benefited from the government initiatives and progressive policy agenda and have a healthy period of growth ahead of them”, said Sameena Ahmad, Managing Director at a consultancy.

“The region’s retail sector has displayed strong resilience in the face of global economic downturn and is expected to continue to grow at a steady pace given its attractiveness to tourists and residents in terms of geographic location, developed logistics and availability of diverse and quality shopping options. While the sector presents attractive opportunities, it is highly competitive and retailers need to continue to innovate, so that they can achieve sustainable growth and profitability,” said Mahboob Murshed.

Food retail sales are anticipated to expand at a compound annual growth rate (CAGR) of 8.8 per cent during this period while non-food retail sales are likely to grow at an annual average growth rate of 6.6 per cent. Food sales growth will outperform non-food sales growth during the forecast period as high-value and healthier food products could find greater demand. Sales of supermarkets and hypermarkets in the GCC are expected to grow at an annual average rate of 10.5 per cent between 2011 and 2016.

The relatively under-penetrated markets in terms of modern grocery retail formats like Saudi Arabia, Qatar and Kuwait are likely to outperform in this segment.

Duty free and travel retail sales in the Middle East are forecast to grow at a CAGR of 11.6 per cent from 2011 to 2016, outperforming the broader retail industry in terms of growth. The growth projection has been revised upwards from the previous report primarily in anticipation of higher passenger traffic at the Abu Dhabi and Qatar airports and concourse 3 plans at the Dubai Airport.

The outlook for the luxury segment remains positive and the luxury retail sales is expected to grow at a CAGR of 8.2 percent between 2011 and 2016. While retail sales in all the countries across the GCC region is expected to register positive growth through 2016, the outlook for Saudi Arabia is the most optimistic .The retail industry in Saudi Arabia is projected to expand at a CAGR of 9.5 percent between 2011 and 2016. All the other GCC nations are likely to register retail sales growth of around 5 percent-7 percent during the same period.

Based on a Moderate Growth scenario calculated at 80 per cent occupancy over the next five years for the supply-side estimates, occupied gross leasable area (GLA) in the GCC is projected to reach 15.8 million sq m in 2016 compared to 11.4 million sq m in 2011 growing at a CAGR of 6.8 percent during the same period. Retailers are expected to continue their focus on improving efficiencies and making optimum utilization of retail space.

Although the projected GLA additions in the GCC are unlikely to create an over-supply situation and vacancy rates are expected to remain under control, retailers may be selective in picking the right space for their stores in shopping malls.

There are several factors contributing to the growth of the GCC retail sector. A consistently expanding population base, young population and growing urbanization make demographics of the GCC highly attractive for retailers of both essential and discretionary products. A growing GDP, substantial government spending on infrastructure and healthcare, low fuel prices and low or no tax incidence, free up a substantial portion of individuals’ income for consumption of food and non-food items and fuelled the growth of the retail industry. GDP per capita (PPP) of all the GCC economies is high and is expected to see a healthy growth. — Saudi Gazette

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Italy-Qatar invest 4bln euro in joint business venture ‘ IQ Made in Italy’

ROME, NOVEMBER 19 – The Italian Strategic Fund (ISF), controlled by the CDP and Qatar Holding (QH) signed an agreement today for the establishment of a joint venture called ‘IQ Made in Italy’.The ISF and QH pledged 4 billion euro to the project over the next four years with an initial installment of 300 million euro. The agreement was signed during Mario Monti’s visit to Qatar today.According to a statement IQ Made in Italy Venture will invest in Italian businesses operating under the ‘Made In Italy’ umbrella. These include food production, fashion, design, tourism and lifestyle. ßß”By combining the local know-how of the FSI with the global comprehensive knowledge of QH, the venture is able to provide companies with a unique set of skills that enhance growth processes” said the CDP, a joint-stock company under public control.

The FSI and QH will run IQ Made in Italy with joint governance.

“This first accord with Gulf investors is of great importance for the whole group”, said CDP President Franco Bassanini, “because it will foster the development of other co-investment deals with both the IFS and other instruments of the Group”. “We are really pleased with the accord with a partner of high quality”, said IFS President Giovanni Gorno Tempini.

“The joint venture shows how certain sectors of the Italian economy can be tempting for foreign investors who understand the potential for global expansion”, he added. Italian Premier Mario Monti on Monday said he is satisfied with Italy-Qatar cooperation. ”It is multiform, with a great deal of commercial relations in both directions, and which today are moving on the investment front,” the premier said.

The premier also voiced his satisfaction at the signing of a joint venture agreement between Italy’s Fondo Strategico Italiano (FSI) and Kuwait’s Al Qurain Holding Company (QH). ”Corporate governance is equal, and the Italian part assumes a good finalization of these investments,” the premier said. He used this example to point out that anyonw who thinks foreign acquisitions in Italy are a way to sell out ”is making a huge mistake.” (ANSAMed)


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Luxury retail spending on the rise in the Middle East

By Andy Sambidge

Spending on premium goods and experiences by consumers in the Middle East is on the rise, according to a research on Luxury Spending Tracker.

The tracker said that in all markets except the UAE, consumers plan to increase spending on luxury goods and experiences through to the end of 2012, as their personal circumstances improve. It surveyed a random sample of 1,000 residents drawn from Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar and the UAE.

It found that residents of Qatar are the biggest buyers of luxury goods across the Middle East, closely followed by consumers in Bahrain.

It said Qataris spend up to $5,000 a month on luxury goods, while consumers in Oman and Jordan are the most conservative shoppers in the region – spending less than $250 per month.

“Consumer attitudes towards spending have begun to improve significantly and there is a noticeable rise in spending on luxury goods and experiences across the region,” said Mazin Khoury, CEO, American Express Middle East.

Luxury products such as cars, high end electronic goods and fashion accessories were identified by respondents as preferred purchases over experiential luxury such as holidays and spa treatments this year.

Fashion topped the list of preferred purchases in 2012, with 37 percent of respondents saying they enjoy shopping for fashion-related items.

Cars were also a leading luxury purchase in 2012, with 31 percent of respondents planning to buy new vehicles this year.

Automobile purchases were highest in the UAE with 42 percent looking to buy new cars in 2012, compared to only 24 percent of Bahraini respondents.

Consumer spending on food and dining out was also highest in the UAE, a likely reflection of the considerable array of international dining options in the country, the tracker showed.

Consumers said Dubai was the region’s prime location for purchasing branded luxury products, selected by 65 percent of respondents.

The emirate was named the preferred shopping destination by 88 percent of respondents from the UAE, 81 percent from Oman, 78 percent from Bahrain and 67 percent from Qatar.

Khoury added: “The inclination towards acquiring tangible luxury goods as opposed to participating in luxury experiences is in keeping with the new consumer sentiment that demands greater value for money.

“Tangible luxury offers greater perceived value as consumers can experience the rewards for their investment over a longer period.”

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Picture– © and credit to Faran Niaz 2012

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