A young population, increasing spend by shoppers and a construction boom are all contributing to make the Gulf a highly attractive region for the retailers of the world. That’s according to consultants A.T. Kearney’s latest report on the retail industry in developing markets.
The United Arab Emirates is now the fourth most attractive market in the world for retail investment, behind Uruguay, China and Chile at number one, the report says. Kuwait, Saudi Arabia, Oman and Jordan are also among the top 25 most attractive retail markets globally, according to A.T. Kearney.
“The GCC retail sector continues to be considered among the leading markets globally,” said Martin Fabel, head of consumer industry and retail practice in the Middle East at A. T. Kearney. Here are some of the key points from the report.
Retail sales grew 5% in the U.A.E. to $66 billion last year. And this year is expected to also be strong, given the buzz around Dubai Expo 2020 and the many recently launched real estate projects, as well as a number of new malls in Dubai and Abu Dhabi in the pipeline.
The report says only a few global retailers entered the U.A.E. in 2013, but existing brands expanded the number of stores they operate. Local distributor Chalhoub Group, which owns the rights to distribute international brands in the U.A.E., opened 50 stores, while Apparel Group opened 40.
Kuwait’s strong GDP growth and high oil prices make it an attractive market for retailers, particularly as a luxury destination, the report says.
Saudi Arabia is a vastly untapped market and the largest economy in the Gulf, making it highly attractive as a potential new venture for retailers. Hypermarkets and shopping centers are currently expanding, while the number of convenience stores is also expected to grow.
In Oman, retail sales have grown at a steady 7% each year for the past three years as the grocery segment leads investment into the overall retail sector.
Retailers such as Abu Dhabi-based LuLu Hypermarket and Dubai-based Majid Al Futtaim have been successfully used their proximity to other markets to launch into new countries, and expand throughout the Middle East.
