Category Archives: Saudi Arabia

KSA to inject $30.9b in tourism in 10 years

Tourism is being ranked a top priority for Saudi tourism officials. The Saudi government is investing heavily in its tourism sector, principally to provide employment opportunities for Saudi graduates.

According to a 2013 MENA tourism and hospitality report by research consultancy Aranca, investment in the travel and tourism sector is expected to increase at a CAGR (compound annual growth rate) of four percent to SR 30.9 billion over a 10-year period from 2013-23.

The number of tourists visiting KSA is estimated to increase at a CAGR of two percent to 21.3 million over the period 2013 – 23. Revenues will total SR60.9 billion by 2023 – due to an increase in number of Haj and Umrah tourists and growth of international shopping centres.

To cope with the increasing number of visitors, the Saudi government has outlined a plan to invest more than $30 billion in its airports by 2020, including $10 billion in private investment for the sector. More than $12.5 billion has already been earmarked for the country’s four main international airports in Jeddah, Riyadh, Dammam and Madinah.

Based on the expected growth of the region, the annual Arabian Travel Market (ATM) roadshow took off in Riyadh to deliver a presentation at the offices of the Saudi Commission for Tourism & Antiquities.

“The travel and tourism sector’s direct contribution to Saudi Arabian GDP is projected to increase at a CAGR of four percent to SR83.7 billion by 2023. Put that into perspective, it is equivalent to about nine percent of current Saudi GDP, which is a great achievement. This is solely as the Kingdom looks to diversify its economy away from hydrocarbon receipts,” said Mark Walsh, portfolio director, Reed Travel Exhibitions.

Riyadh is the final leg of the six Middle East destinations being visited by the ATM team during its roadshow which took in Bahrain, Kuwait, Beirut, Muscat and Dubai. A strong delegation from the Kingdom is expected at ATM.  Led by the Saudi Commission for Tourism & Antiquities it includes, Saudia Airline, Umrah & Makarim Hospitality Group, Fursan Travel & Leisure, Hanco Rent a Car, EbreezTech, Rahhal International, and Unique Choice.

Meanwhile, Saudi Airlines Cargo will increase its belly capacity on new international routes beginning April 1 through Saudia Arabian Airlines’ new passenger flights to Manchester and Los Angeles.

The Manchester service will be operated by the airline’s B777-200 aircraft and will have a capacity of 9 tons from Riyadh/Jeddah and 12 tons into Riyadh/Jeddah, while the Los Angeles service will be operated by the B777-300 aircraft and will have a capacity of 6 tons from Riyadh/Jeddah and 8 tons into Riyadh/Jeddah. Both destinations will be served three times per week.

Source: Saudi Gazette – http://saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20140220196352

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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 Souq.com, with a sizeable chunk of Saudi e-buyers at 13 percent. Sukar.com 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

Read more: http://saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20131119187121

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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 http://bit.ly/102UHgC


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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

More on: http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20130123150249

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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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Saudi Arabia first pick of global retailers for expansion in MENA

Saudi Gazette – JEDDAH – For retailers looking to make early international moves, particularly at the luxury end, the first annual Retail International Program Expansion (RIPE) Index, published Monday by global built asset consultancy, found that Saudi Arabia, Qatar and UAE present good opportunities, ranked 8th, 11th and 15th respectively.

The countries scored well for the quality of their transport infrastructure, capability of their construction supply chain and their supporting legal framework.

Luxury brands such as Bloomingdales are succeeding in the Middle East with high quality retail space on offer and an overall willingness to do business in the region.

The Kingdom topped the list for MENA region.

Qatar took the second position in the region.

The overall ratings for all the MENA countries were “high” but the only watch-out being project delivery issues.

“What we find is that even the most opaque local bureaucracy can be overcome if the investment into the relationship is made by native speakers with the patience to understand the people, the culture and the procedures,” the report said.

It was the presence of “strong” trading partners and franchise operators such as Majid Al-Futtaim, Al Tayer, Landmark Group, Al Shaya and the Chaloub Group, the report said, meant that market-testing moves can be made with relatively low resource and capital requirements.

Luxury retailers are profiting from the ease of being able to deliver in this market, the report said.

It cited Bloomingdales, as an early mover, whose first store outside of the US opened two years ago, anchoring the Dubai Mall.

The 15,000 square metre, three-level development was undertaken in partnership with Al Tayer and is trading well.

Qatar’s World Cup success presents interesting brand showcasing opportunities, the report said, adding it was anticipated that several major malls will come to market in the lead up to 2022.

International expansion presents great opportunities for retailers experiencing low growth in their domestic markets. Consumer appetite for luxury international brands is strong across the Middle East, and our report suggests that retailers are able to set up much more easily here than in markets such as China or India. Successful international expansion is about balancing the desirable with the feasible. Success is down to making a careful and committed choice, maintaining realistic expectations, and making plenty of adaptations along the way, the report said.

The Ripe index ranks 40 important consumer markets based on five success factors for large-scale roll-outs, drawing out the nuances property leaders should consider as their own organization’s expansion plans evolve.

The report said: “International expansion is the new battleground for retailers experiencing low growth in their domestic markets. Consumer appetite for Western brands in Asia makes these markets attractive, but not always easy to enter.  Successful international expansion is about balancing the desirable with the doable.  Much like a marriage, success is down to making a careful and committed choice, maintaining realistic expectations, and making plenty of adaptations along the way.”

In August, Jones Lang LaSalle’s third quarter global market perspective, said the slowing global economic environment had resulted in European retailers seeking to increase their presence in the Dubai market in recent months, which was fuelling rental growth in popular centers. – SG

Read more on Saudi Gazette: http://bit.ly/RBhOiu

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Saudi Arabia largest export market for Dubai

Gulf News – By Zaher Bitar

Bloomberg Images

Dh3603 billion is the value of Dubai export to Saudi Arabia

Dubai: Saudi Arabia largest export and re-export market for Dubai Chamber members in first half of 2012 with a total value of Dh36.3 billion, a recent study developed by Dubai chamber of commerce and Industry said.

While the study highlighted that the Value of exports and re-exports of 9,194 members during the first half of 2012 grew by 13 per cent at Dh136.2 billion in the same period of 2012.

Dubai Chamber members’ exports and re-exports to Saudi Arabia during the first six months of 2012 reached a total value of Dh36.3 billion, representing 27 per cent of overall exports, making the kingdom the largest export market while Iraq was second at Dh19.4 billion.

The study further highlighted that proximity and ease of movement of goods within the region had made the GCC countries the busiest export and re-export destinations for Dubai Chamber members. Continue reading

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