Category Archives: UAE

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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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

Read more: http://bit.ly/Z9B1vb

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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.”

Read morehttp://www.arabianbusiness.com/mideast-luxury-retail-spending-on-rise-479672.html
Picture– © and credit to Faran Niaz 2012

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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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EVENT – The Role of Conspicuous Consumption in Today’s Society – Seminar

 

 

 

 

 

 

 

 

 

 

The Role of Conspicuous Consumption in Today’s Society
6 November 2012,  3-5 pm – Hilton Metropole, Brighton BN1 2FU
University of Brigthon : http://www.brighton.ac.uk/bbs/research/esrc2012/beyondbling.php?PageId=400

You are warmly invited to participate in the seminar ‘Beyond Bling: The role of conspicuous consumption in today’s society’ funded by the ESRC Festival of Social Science and hosted by Brighton Business School, University of Brighton.

The growing economic and social importance of conspicuous consumption has become a striking feature of the new consumerist societies. The supply of products and services marketed as symbols of social identity and style now represents a significant part of overall economic and commercial activity.

The seminar will bring together practitioners and researchers from sociology, business management and psychology to discuss the effect of conspicuous consumption on present day society. Seminar participants will benefit from sharing experiences with fellow practitioners and learning from cutting-edge research presentations by academics. The seminar aims to showcase the research from Brighton and will also act as a platform for future collaborations between practitioners and researchers.

Topics and speakers:

The changing face of conspicuous consumption in the UK and Middle East

Alexandra de Kerros Boudkov Orloff, CEO of Sacha Orloff Consulting Group, will draw on her own experiences to discuss ostentation among British and Arabic consumers over the past decade.

How do luxury brands promote conspicuous consumption?

Professor Christopher Moore, Glasgow Calidonian University, will discuss the conspicuous triggers used by luxury brands which influence decision making and purchase decisions among consumers.

Conspicuous consumption and value perceptions in developed and emerging markets

Dr Paurav Shukla, University of Brighton, will present his latest research on conspicuous consumption using comparative quantitative data from several developed and emerging markets.

Speaker biographies

Alexandra de Kerros Boudkov Orloff
CEO and Founder of Sacha Orloff Consulting Group.

Prior to founding Sacha Orloff Consulting Group in 2005, she was Managing Director of de Grisogono and part of Senior Management at Groupe Horloger Breguet and Swatch Group; GM of the International Television and Symposium Exhibition in Switzerland and Japan. With over twenty years in the luxury and retail industry, Alexandra brings a wealth of expertise to brand development strategy; restructuration; investments and acquisitions, and, operational performance.

Sacha Orloff Consulting Group is one of the sole consulting companies whose core expertise operates in the service and retail industry, specializing in serving the high-growth potential of GCC and Middle Eastern markets. Sacha Orloff Consulting Group works alongside leading businesses to develop and implement customized solutions, considering technology, innovation, trends and timing that address today’s challenges and tomorrow’s opportunities.

Professor Christopher Moore
Vice Dean of the Glasgow Caledonian Business School.

Prior to his appointment at GCU, Professor Moore was Chair in Marketing and Head of the Department of Management at Heriot Watt University, Edinburgh. Professor Moore has held visiting Professorial appointments at a number of Universities, including the Universities of Manchester, Surrey, Northumbria and Robert Gordon in Aberdeen. A graduate of the Universities of Glasgow and Stirling, his doctoral research was in the area of international fashion brand marketing.

His current research interests include retailer internationalization; luxury brand marketing and trends and developments in youth consumption. Professor Moore has provided consulting and commissioned research services to a wide range of retailers, financial service institutions, media companies and other consumer-facing organisations in the areas of brand management, marketing strategy and consumer intelligence management.

Dr. Paurav Shukla
Reader in Marketing at the University of Brighton Business School.

He possesses wide range of industry and academic experience from middle to senior level in healthcare and media industries. He has been delivering corporate training, teaching and consulting assignments for various organizations in the Europe, Asia and North Africa. Paurav has been involved with various EU funded research projects involving several nations from EU and Asia. He is associated with several academic institutions and corporate organizations including not for profit organizations in the capacity of advisor and board of directors.

His research interests include cross-cultural consumer behaviour, luxury marketing and branding, consumption experiences and marketing issues in emerging markets. He has published on these topics in a wide range of outlets including top peer reviewed journals, international conferences and main stream media including the Woman’s Wear Daily, Business Week, Luxury Society, and National Post of Canada among others.

To confirm your attendance at this free event please email Chris Matthews: C.R.Matthews@brighton.ac.uk
http://www.brighton.ac.uk/bbs/research/esrc2012/beyondbling.php?PageId=400

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