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Beyond the Digital Divide:  Evolving Digital Commerce in the Kingdom of Saudi Arabia in 2014

Capture11Sacha Orloff Group Report

Beyond the Digital Divide:  Evolving Digital Commerce in the Kingdom of Saudi Arabia in 2014

Author: Alexandra de Kerros Boudkov Orlov – CEO Sacha Orloff Group

Website: www.sachaorloff.com 


In the Gulf, and in Saudi Arabia, the trend is an expansionist real estate strategy.  Leading groups prefer to cash-in with proven formulas, highly praised in the Middle East, such as malls and western franchises, even if mother-brands operate online and offline.

The Kingdom has largely accepted the principle of the evolution of the shopping Malls, and has adopted by default e-commerce solutions and payments to acquire a large part of the consumer goods and products market, encompassing the full value chain from banking system, retail, airline, hospitality, tourism, transport couriers and telecommunication sectors.  Most of these companies are changing their product mix to support margins, focusing on increasing sales, and consolidate customer loyalty to grow sales and introducing co-branded credit cards.

The Millennial Generation represents one of the most important factors in the adoption of e- and m-commerce in the region. This year, Internet penetration in the Kingdom reached 59.25 percent of the population, and has grown by 11 percent since 2013

Now is the time for the Saudi merchants and business groups to be fully immersed in digital activities. As most of the Saudi firms are still not embracing e- or  m-commerce; they should tap into the market of mobile owners to drive traffic, increase loyalty and grow sales.

To link technology, innovation and strategy to the Saudi digital sector require acquisition and retention of human talents.  Leadership, creativity, expertise, development and execution are key factors to growing success and excellence. It allies company culture to create strong relationship between human forces and firms.

In all the GCC, customer service is weak and investing in training human capital is essential to obtain a level of satisfaction to retain customers. The danger to accept mediocrity is that firms compete with others on the same average level.

The actual organizational moto is to move away from channel focus to customer focus. The business implies data analytics, supply chain optimization, integrated technology and strong customer service. Businesses have to take calculated risks, embrace disruptive changes and empower their talent forces to gain both offline and online customers.

Download the reporthttp://media.wix.com/ugd/17fd63_f7f73aaa041b46fc8de638b8544402ab.pdf


Sacha Orloff Group in the Media:

Saudi Gazette:

Trade Arabia

Technology Market Corporation


Ministry of Economy Taiwan – Bureau of Foreign Trade

Topix http://www.topix.com/world/saudi-arabia/2014/07/saudi-firms-urged-to-bridge-the-digital-divide-tradearabia

The Paypers

Taiwan Trade

Retail and Loyalty


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Bahrain Media Report

London and Manama – January 2014

Sacha Orloff Consulting Group in partnership with Tawasul Al Khaleej, have conducted a survey on the role of media as a catalyst for the dissemination of market information and data among businesses in the Kingdom of Bahrain.

Media is a key component of economic growth and the transformation of the economy in Bahrain. The purpose of this survey is to analyse current perceptions of the media industry in Bahrain, and how consumers and business professionals engage with the media.

Key findings include:

90.3 percent of the respondents agree and strongly agree that data is important to the performance of their business in Bahrain.

56.9 percent of Bahraini professionals perceive media in Bahrain as an important source to their business activities in the Kingdom.

However, approximately two thirds of the population surveyed agreed that, Bahrain is not a leader in the media industry.

A full download is available below:

SOC_Bahrain Media Report_Jan14

Author – Alexandra de Kerros Boudkov Orloff – Owner & C.E.O Sacha Orloff Consulting Group

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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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Filed under Abu Dhabi, Consumer, Luxury Middle East, Retail, UAE

E-Commerce in Saudi Arabia: Driving the evolution, adaption and growth of e-commerce in the retail industry

Report by Sacha Orloff Consulting Group

Author: Alexandra de Kerros Boudkov Orloff

Full report download: E_Commerce in Saudi Arabia_Driving_The_Evolution_Adaptation_and_Growth_of_ecommerce_in_the_Retail_Industry_SOCG_2012June

Should Saudi Arabia build on the impetus that has been created through the adoption of e-government, a domino effect would trickle down into the private sector and consumer behaviour, with a wide spread of e-commerce penetration. This would create new economic opportunities and enhance the technological innovation capabilities of businesses providing enhanced competitiveness in domestic and international markets.

The Report “E-Commerce in Saudi Arabia: Driving the evolution, adaption and growth of e-commerce in the retail industry” highlights the steps which need to be taken to support the adoption and diffusion of the e-commerce model in Saudi Arabia. Key findings demonstrate that the current spread of e-commerce has been hampered by specific socio-cultural business traits which inhibit the risk-taking characteristics of enterprises. These traits are characterized by a need to implement proven business models;   reduce the risk of failure and an aversion to adopt a business model which may not be suitable to current consumer habits. Moreover, the sluggish uptake of e-commerce technologies by major competitors continues to prove detrimental to the spread of e-commerce.

Saudi Arabia needs to take the lead in driving its retail and e-retail growth, consequently to enforce its position as a key retail business hub in the region with national and foreign direct investment, and technical expertise to drive growth, innovation and positive business confidence.

Opportunities are emerging for private sector firms in Saudi Arabia to address numerous pressing challenges to the adoption of e-commerce solutions. A clear focus on change management processes, innovation, and bridging the talent-gap must be prioritized to ensure the widespread growth of these new channels.

1.     Introduction
2.     Saudi Retail Sector Overview
3.     ICT adoption and penetration in KSA
4.     Emergence and growth of e-government and e-commerce
5.     Challenges and barriers to e-government
6.     Enablers to e-government
7.     Challenges and barriers to e-commerce
8.     Enablers to e-commerce
9.     Online Customer behaviour and intention in Saudi Arabia
10.   Case study – eXtra iconic retailer but non e-conic success story
11.    Conclusion

©Sacha Orloff Consulting Group – all right reserved – June 2012

Also in Arab News – June 21, 2012 – Despite challenges, KSA ripe for e-commerce in retail industry http://www.arabnews.com/despite-challenges-ksa-ripe-e-commerce-retail-industry


Filed under Consumer, eCommerce, Luxury acquisition, Luxury Middle East, Report, Saudi Arabia, Study

The importance of Innovation in the UAE Retail Landscape

By Alexandra de Kerros Boudkov Orloff

Editorial and released on Dxbuzz magazine May 31st 2012 with the Khaleej Times newspaper.

I have been travelling to Dubai before it was known for being the most opulent retail destination in the world. However, I have increasingly been observing that since 2009, there has been a significant shift in the retail market. Whilst travelling to Dubai this month, my belief that the end of ‘malls as we know it’ has come to a close. The luxury mega malls boom in 2011 should be seen as a sign that some of the existing retail concepts are maturing. Nonetheless to sustain this growth, and adapt to more complex consumer habits, innovation and creativity should form the basis of new retail trends to maintain Dubai’s position in the retail sector.

The robust fundamentals of the UAE consumer market is a fact. Emiratis and GCC consumer have got a higher purchasing power than their European counterparts. Nonetheless, the saturation in the retail sector is leading to questions on how new retails concepts and infrastructure designs can respond to consumer needs. Astute moves by mega-retailers such as Emaar has focused on making retail central to the concept of ‘lifestyle entertainment’.  Malls no longer just offer retail spaces and shops, but consumers are able to enjoy aquariums, water features, skiing, ice-skating and leisurely activities. This not only enhances the consumer experience, but provides much needed activities in a region where nine months out of twelve need to be spent indoors.

The evolution of the retail sector in Dubai and Abu Dhabi has not stopped competing retailers from opening new malls, although primarily a ‘copy and paste’ model is being adopted; modelling on what has worked and not projecting how demographic, social and purchasing power affects consumer behaviour and expectations. For example, Wafi Mall, one of the first malls to open in Dubai is undergoing a complete refurbishment to attract the consumer base it has lost to Dubai Mall or smaller, more local retail spaces. In addition, Dubai Mall is adding thousands of square meters to its existing space in response from the growing demand of international commerce to have a retail space in Dubai.

The desire to be the biggest and most powerful will come at a cost and will outpace market growth. New retail stores will have to drastically shift their marketing strategies to attract consumers, which in turn will off-balance their competitors who will find it difficult to maintain their profit per square meters.  .

Immediate and fairly cost-effective steps can nonetheless be taken by retailers in a segmented approach. First and foremost, investing in consumers is crucial, as they remain their unique assets and is the only manner to spur consumer retention and growth. To achieve this, efforts should be geared towards enhancing the knowledge and skills base of sales as well as sales staff. Employees are the first and sometimes only representation of the retail brand, and regularly lack the necessary brand and company awareness that can then be transmitted to the target consumer. Aside from improving customer services, retail brands have to focus on generating best-practices in the processes and operations. This can be achieved by understanding customer needs through loyalty schemes and rewards, an understanding of the customer mix and segmentation and the promotion of products according to local trends. 

Dubai retailers need to consider seeding new foundations of vertical sources of growth, outside of their existing core business. Whilst brick and mortar are a sound approach, click and mortar is also another source of growth.

In the UAE only, there is vast e-commerce gap, where online purchase could reinforce a healthy competition between malls and virtual retailers. There is enormous share to gain of the modern consumer; who is e-willing to physically and virtually shop.

Other options are organic and modern convenience stores, cash and carry, discounters, and outlet malls mixed with business areas. For an active and busy professional like myself, I enjoy the buzz of the trendy business concept of ‘Make Business Hub’ on JBR; where I hold regularly my meetings with the who’s is who of the  GCC digital scene from Google to Wamda. However, these options are not developed to the fullest in the region, some UAE retailers also have a great potential for implementing changes and innovation in their core businesses enabling to diversify their vertical business structure. Seizing this potential will require astute strategies; with strong organizational development and management to succeed in implementing a more complex business model.   

©Alexandra de Kerros Boudkov Orloff

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Retail – Surviving the industry shakeout – Imperatives for MENA distributors


By: Gabriel Chahine and Faisal Sheikh

UAE.  The distributors of the Middle East are at a crossroads; after decades of steady growth, incoming competition from third-party logistics companies and moves by multinational corporations (MNCs) are making once-successful business models unravel.

As a result, the distribution business is rapidly becoming less profitable and more risky, necessitating a turnaround in identities and strategies.

To date, distributors have addressed this challenge via operational improvements, such as cost-cutting, and by trying to add new MNCs to their rosters. These manoeuvres are of limited value, however, and will fall short of solving the distributers’ long-term problems.

If they are to continue to enjoy success, they will need to change their identities and business models, via one of two strategic options as identified by Booz & Co experts; they can change their distribution mission, doing things like focusing on specific channels or unbundling services, or they can vertically integrate, adding greater profits that are available upstream in manufacturing, or downstream in retail.

“With profits falling and competitive threats rising, there is an urgent need for distributors to choose a new path and begin making the necessary changes to their strategy and operations,” said Gabriel Chahine, a partner with Booz & Company. “There are approximately 575 distributors operating in the Middle East, making the industry ripe for consolidation. While the incremental improvements that they have shown are useful, they are not sufficient to stay afloat in light of the increasingly crowded competitive landscape and protectionist legislation; distributors must determine whether their business model is at risk in the current environment, and whether it can continue to satisfy shareholders’ expectation in order to decide on the path forward.”

As mentioned above, there are two primary options that Booz & Co recommends to distributors. Option number one is to change and refocus the mission within distribution. By increasing the scope of what they do, distributors should consider six dimensions, which they can pursue either in isolation or in combination, depending on their assessment of their capabilities. These are: Continue reading

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High rents in top Dubai malls may stifle retailers

Experts are calling for turnover rents, where rates are subject to retailers’ revenue

Dubai is known for its iconic and largest shopping malls, with its soaring rents in Dubai’s most popular malls are in danger of stifling the emirate’s retailers, Dubai-based property analysts have said.

Smaller firms and entrepreneurs in particular risk being marginalised by high prices, which could prevent them from debuting in the market or increasing their number of branches, experts have said.

“Dubai remains one of the highest costs to retail within the GCC and indeed the regional market,” said Stuart Gissing, a UAE retail property analyst at Colliers. Continue reading

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