The retail industry has been one of the fastest growing markets in the Middle East for the last few years. It is the second largest sector in the oil-rich GCC region (UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman), and is considered to be the most preferred means of promoting diversification and sustained economic development in the region. The global financial crisis and the consequent fall in oil prices, has materially slowed down the pace of market growth. However, the sector continues its uptrend supported by fundamental drivers, including growing affluence and disposable income, rise in tourism, and a large expatriate population, favorable demographic factors, and large-scale infrastructure development.
Over the years, the retail landscape in the GCC has transformed from traditional markets and small, independent outlets to large shopping malls, hypermarkets, and organized retail chains. These new retail formats are rapidly gaining market share at the expense of the traditional businesses. Given the vast market potential, many international retail companies and brands such as Carrefour, Debenhams, Marks & Spencer, Bloomingdales, Harvey Nichols, Sachs Fifth Avenue, Waitrose, Prada, and Jimmy Choo have set shop in the region.
In 2011, there were over 30,000 retail units in the GCC and 10.3 million sq m of completed GLA in shopping centres. The region currently has over 200 shopping malls with annual sales of US$ 50 billions. The prime cities of the Persian Gulf – Dubai, Jeddah, and Riyadh – account for the maximum shopping space. In 2011, approximately 5.4 million sq m of area was under development and planning, more than half of which was in the UAE. The UAE is ranked second in the presence of international retailers in its market, and Dubai shares the top position with London for international retailers’ presence.
The UAE retail sector is second largest in the GCC, but structurally the most progressive market. Dubai and Abu Dhabi are the epicenters for retail activity in the country. A steady inflow of tourists into Dubai, which is positioned as one of the major shopping destinations of the world, ensures a thriving end-market for luxury and duty free retailers. Wholesale and retail trade accounted in the UAE accounted for 12.8% of its GDP at current prices in 2012, highest for any country in the GCC.
Scandinavian retail and fashion brands such as H&M, Lindex, Jack & Jones, Face Stockholm and Ordning & Reda have already made their footprint and are among the new successful market entrants in the region. With an average GDP per capita of $ 40.000USD these markets present an opportunity for your expansion plans.
See the following article about the growth of luxury segment products in the UAE:
Written by By Maria S. Diamon Expert UAE