The UAE and Saudi Arabia have been ranked at the seventh and the eighth positions respectively in A.T.Kearney's Global Retail Development Index 2016, which rounds up top retail markets around the world.
Low oil prices and a change in the usual tourist mix has impacted the retail industry in Dubai, but the UAE is still an attractive and relatively low risk market option for retailers.
Speaking at the fifth edition of the Middle East Retail Forum, Shamail Siddiqi, principal at A.T.Kearney Middle East, noted that the UAE and Saudi Arabia have been ranked at the seventh and the eighth positions respectively in A.T.Kearney's Global Retail Development Index 2016, which rounds up top retail markets around the world.
"Both the countries made it into the top 10, and the UAE's retail industry in particular made it into the top 10 spots eight out of ten times in the last ten years, giving us a good sense of where it stands," he said. "It's pace of growth has slowed a bit, however that is the sign of a maturing market, and the reason we don't see it higher up on the list this year."
According to A.T.Kearney, the UAE's $7,159 sales per capita is the highest in the region, but the market is heavily saturated and annual retail sales growth slowed from eight per cent in 2014 to six per cent in 2015. Disruptive global economic factors, particularly low oil prices and a decline in the value of the euro, have slowed economic growth in Asia and Russia, reducing tourism to Dubai and changing the tourist mix. The number of Russian travellers - known for their demand for luxury goods - declined by 20 per cent, putting a damper on overall retail sales. Meanwhile, Chinese tourists are spending less per traveler, but the number of travelers increased, leaving that country's impact on sales relatively stable.
Another report by research firm Ventures Middle East estimates that retail sales across the GCC are set to grow at a compound annual growth rate of seven per cent until 2018, to reach $285 billion. With the market nearing saturation, only a few new brands have entered or expressed plans to enter the market. The first Apple store in the Middle East, which opened at Mall of the Emirates last October, is Apple's largest in the world, at an estimated 10,000 square feet. Apple is planning to open its second UAE store at Yas Mall. In addition, A.T.Kearney's report also revealed that other emirates still lag, but are showing signs of potential growth. At Abu Dhabi's Yas Mall, the Chalhoub Group opened its latest retail outlet, Tryano, a 20,000 square feet department store offering more than 250 local and international brands. And Qatar's Saudia Group, a supermarkets and hypermarkets conglomerate, entered the emirate of Ajman with the opening of Kenz Hypermarket.
Colin Dixon, strategic accounts director for Oracle Retail in the Middle East, also stressed that digital is essential for retail today. "All the retailers today are recognising that the customer is the king," he said. "Today's customer is empowered with digital technologies, and retailers need to respond with digitally created solutions. Today, it is more than online shopping; you have price comparisons, product availability, location applications, and customer service solutions."