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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:
http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20140714211489

Trade Arabia
http://www.tradearabia.com/news/IT_261912.html

Technology Market Corporation
http://technews.tmcnet.com/news/2014/07/14/7921871.htm

 

Ministry of Economy Taiwan – Bureau of Foreign Trade
http://www.trade.gov.tw/Pages/Detail.aspx?nodeid=45&pid=480034

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

The Paypers
http://www.thepaypers.com/e-commerce/saudi-arabia-millenials-are-the-most-important-factor-in-ecommerce-adoption/755814-25

Taiwan Trade
http://www.taiwantrade.com.tw/CH/bizsearchdetail/7553024/C

Retail and Loyalty
http://www.retail-loyalty.org/en/news/saudi-arabia-millenials-are-the-most-important-factor-in-ecommerce-adoption/

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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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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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GCC perfume market worth $ 3 bn

WAM Dubai, 17th March 2011 (WAM)

Growth in demand for premium fragrances in the UAE continues unabated, with sales of high-end, signature products growing at a CAGR of 5.4 per cent. This is faster than the sales of mass-produced fragrances, making the region a prime target market for luxury perfume labels from across the world.

Recent research from Euromonitor International, official knowledge partner for Beautyworld Middle East, estimates that the market for premium fragrances will be worth AED 663.5 million by 2014 while sales of mass fragrances are expected to be worth AED 247.9 million in the same period. This is a key indicator that the UAE market has a marked preference for high end perfumes and other luxury goods.

The GCC market for fragrances is estimated at Dh11 billion ($2.99 billion) per annum accounting for approximately 20 per cent of the world market, according to a recent international study.
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Online shopping surges in the UAE – Survey

The number of people using the internet to make purchases in the UAE rose to 42 percent in 2010, up from 29 percent in 2009, according to a MasterCard survey on online shopping. 

It also revealed that online shopping in the UAE is led by the 25-44 age group, though the 35-44s purchased more items, with more frequency, than others.

Women are increasingly turning to the internet to shop, with 40 percent of respondents saying they bought online in 2010, compared to 33 percent in 2011.

However, 45 percent of UAE consumers said they still do not feel secure shopping online.

Conducted in the fall, the survey reached 8,500 consumers from 15 markets across Asia-Pacific, Middle East & Africa.

“We are seeing more UAE consumers go online for lifestyle purchases as well as day-to-day household items,” said Eyad Al-Kourdi, UAE country manager for MasterCard.

“This trend in consumer behavior shows that today’s tech savvy shoppers are diversifying not only what they buy, but how and where.”

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London Fashion Week AW11 – Emilio de la Morena Catwalk Show

By Alexandra Orloff

© SACHA ORLOFF – Alexandra Orloff 2011

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