Tag Archives: MENA

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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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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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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Mobile shopping on the rise – smartphones to stir $689b retail store sales by ’16

© Saudi Gazette

 

JEDDAH – Smartphones currently influence 5.1 percent of annual retail store sales, translating into $159 billion in forecasted sales for 2012, according to new Deloitte research. For the first time in the industry, the in-depth study measures the “mobile influence factor,” or impact of smartphones on in-stores sales.

The research anticipates mobile’s influence, based on consumers’ smartphone use, will grow to represent 19 percent of total store sales by 2016, amounting to $689 billion in mobile-influenced sales. By comparison, direct mobile commerce sales will pass the $30 billion mark by that time, according to industry estimates.

“Mobile devices’ influence on retail store sales has passed the rate at which consumers purchase through their devices today,” said Santino Saguto, partner in charge for the Telecommunications, Media and Technology (TMT) industry, Deloitte Middle East. “Consumers’ store-related mobile activities are contributing to – not taking away from – in-store sales, and the research indicates that smartphone shoppers are 14 percent more likely to convert and make a purchase in the store than non-smartphone users. This means that mobile is an important tool for retailers to incrementally drive traditional in-store sales, strengthening the relationship between retailer and consumer to increase engagement and loyalty.”

In the Middle East, while e-commerce adoption remains low, online sales have increased rapidly in the past two years and are expected to continue to grow fast due to the region’s demographics. According to the fourth Arab Media Outlook Report (AMO), issued by the group and the Dubai Press Club, in most Arab markets in the region, except the UAE, ecommerce adoption remains below 5 percent of the population with transactions mostly focused on ticketing (flights, concerts etc.). However the digital platform has a strong potential for growth given the favorable demographics of the Middle East region (i.e. more than 50 percent of the population is below the age of 25). In addition, due to the strong regional uptake of smartphones and mobile broadband an increased activity in m-commerce and mobile social networking is forecasted.

With close to half of the population using smartphones in countries such as the UAE, there is a strong propensity to download and use mobile apps. According to the AMO report, on average, smartphone users in the region have up to 32 apps on their phone and over 50 percent of the smartphone users regularly download applications on their phones.

“We are finding many payment solution providers, marketplaces, local recommendation sites and commerce platforms sprouting up across the MENA region, to develop a suitable ecosystem around e-commerce and m-commerce,” said Emmanuel Durou, Telecommunications, Media and Technology (TMT) director at Deloitte in the Middle East. “Jointly with smartphone adoption these changes are expected to boost the impact of mobile on the retail sector and improve the in-store shopping experience,” he added.
To better understand the growing impact of mobile devices on the retail sector, Deloitte’s retail & distribution practice and Digital conducted an in-depth survey of US consumers about how they use their smartphones to shop today and their likelihood of using them in future buying decisions.
Nearly half (48 percent) of US smartphone owners surveyed say their phones have influenced their decision to purchase an item in a store, and the study shows that consumers’ smartphone use tends to be highest at or near the point of purchase. Based on the survey, more than 6 out of 10 (61 percent) of smartphone owners who use their devices to shop have done so while shopping at the store, and more than half (52 percent) reach for their phones on the way to the store.

Smartphone-toting consumers appear more likely to make a purchase than those who do not own one or do not use it to assist in-store shopping. When asked about their most recent shopping trip, nearly three quarters (72 percent) of smartphone owners surveyed indicated they made a purchase on that day, compared with 63 percent of respondents who did not use a phone. Smartphone users were also more likely to eventually make a purchase: among those who did not buy anything on their last trip, 59 percent of those who used a smartphone eventually made a purchase, compared to only 22 percent of those who did not use one.

Mobile applications appear to be the inroads to consumer engagement. Nearly four out of 10 (37 percent) smartphone owners surveyed who used a smartphone on their last shopping trip utilized a third-party mobile shopping application, and more than one-third (34 percent) used a retailer’s mobile application.

Smartphone adoption coupled with consumers’ propensity to use their devices for shopping also contributes to the growing mobile influence factor. As consumers buy smartphones, they are quick to tap their devices for shopping assistance, with smartphone use for store-related shopping increasing 40 percent after the first six months of ownership, according to the survey. Once these consumers are on board, they consistently use their phones for 50 to 60 percent of their store shopping trips, depending on the store category.

The mobile influence factor is strongest among younger shoppers, suggesting that as this segment ages, a retailer’s core customers will increasingly be armed with smartphones. In Deloitte’s survey, nearly 7 out of 10 smartphone owners (67 percent) between 14 and 34 years old have used their devices to shop, and 55 percent indicate their smartphones have influenced their decision to make a purchase. – SG

Published in Saudi Gazette: http://bit.ly/NljdUq

Recommended reading: E-Commerce in Saudi Arabia: Driving the evolution, adaption and growth of e-commerce in the retail industry  http://bit.ly/P25O8C

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Middle East Retail Expansion – A Portfolio of Opportunities – Study

 

 

Middle East and North Africa (MENA) includes eight of the top 20 countries in the Global Retail Development Index (GRDI)™ – and, despite the region’s political turmoil that has gripped the world since December 2010, including government overthrows in Tunisia and Egypt, civil war in Libya and protests in numerous other countries, it remains a promising retail growth opportunity.

The study reveals that its economy is recovering from the recession, with a growing consumer confidence, most countries are expecting 3 to 5 percent GDP growth over the next year, disposable incomes are high, with an ever rising young and middle class population; the consumer base is ever more connected and engaged.

Prior to the events that haven taken place in the middle east during this year, many barriers already were in existence including :foreign ownership regulations that differ from country to country, the high share of family-owned businesses, the comparatively fragmented retail landscape, and limited foreign ownership outside free zones in most countries. These challenges need careful attention by any retailers considering expanding their businesses, however with a positive outlook for the future.

Kuwait: Small but highly attractive.

Kuwait, 5th in the GRDI, remains MENA’s highest-ranked country. While it has only 3.1 million inhabitants, 96 percent live in cities and 65 percent are between the ages of 15 and 39. These demographic trends have led to retail sector growth of 8 percent annually over the past five years. Overall, retail sales are expected to grow from $8.41 billion in 2011 to $11.92 billion in 2015.

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Will family businesses still dominate the retail landscape in the GCC

This article is published in the June Edition of Luxuryfacts www.luxuryfacts.com

By Alexandra Orloff

©Sacha Orloff - Jeddah | 2011

Presently, the GCC retail industry is on a renewal pathway, with the market and industry expanding and growing outstandingly. With a shifting political environment, an extremely high per capita income, and top-of-the-line infrastructure makes the GCC region all the more attractive for retail investors, as evidenced by the dramatic increase in the number of international and regional retails and brands in the region.

This growth has lead to amplified rivalry, and retailers must constantly apply themselves to guarantee that they stay ahead of the game and keep up with the latest economical and market trends that could potentially affect their businesses, as well as the latest practices and technologies that could improve their operations and competitiveness.

While the financial crisis has had an impact globally, manufacturers of luxury goods and high-end service providers did not face problem in finding clients, especially in the UAE and the gulf region. The Middle East is a home of nearly 400,000 millionaires that indicate towards the immense growth potential. Consumers in the Middle East command huge amount of wealth, with some regions like, Abu Dhabi and Qatar having the highest per capita income. As a result, people spent lavishly on luxury brands and up-market offerings.

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