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UAE woos global retailers seeking expansion: Report

DUBAI — The UAE continues to attract global retailers for their expansion as the country ranks seven globally in this year’s Global Retail Development Index (GRDI) by A.T. Kearney.

The country improves its ranking one step compared to last year in the GRDI and also ranks top in the Middle East and North Africa (MENA) region with 86.1 score.

Although the Arab Spring uprisings had a negative impact on the rankings of several MENA countries including Lebanon (-10 versus 2011), Morocco (-7 versus 2011) and Tunisia (-12 versus 2011), several countries from the region are still high on the ranking such as Oman (8), Kuwait (12) and Saudi Arabia (14).

A.T. Kearney’s Global Consumer Institute released the 2012 GRDI, a ranking of the top 30 developing countries for global retail expansion in which Brazil topped for the second year in a row.

Michael Moriarty, A.T. Kearney partner and study co-leader, said: “Given the accelerated growth rates of developing countries compared to the anemic growth in European and North American markets, global retailers must have a strategy for expansion into developing markets.”

In the past five years, US-based Wal-Mart, France-based Carrefour, UK-based Tesco and Germany-based Metro Group saw their revenues in developing countries grow 2.5 times faster than their home markets, according to Moriarty.

Citing increased tourism, population growth, and government stimulus for high ranking in the index, the report termed the UAE as a bright future for retailers. During the Arab Spring, the UAE benefited from its perception as a safe and welcoming nation for tourists and investors. The report said overall retail sales in the UAE increased by more than five per cent and consumer confidence rose last year.

Dubai is a shopping paradise for tourists and the emirate has so many malls, specially big malls. The Dubai Mall is the world’s most-visited shopping and leisure destination, with more than 54 million visitors in 2011 (up 15 per cent from 2010) and a 35 per cent increase in average retail sales. A similar trend is occurring at Majid Al Futtaim Holding, which owns the Mall of the Emirates, the country’s second biggest. Last year, it had its best performance since its founding in 1992.

The Middle East grabbed the headlines in the past year, particularly as the Arab Spring movement spread. But the attention did not stop the growth of international and local retailers.

Retail trends in the Middle East region include the growth of private labels and the spread of e-commerce. Middle East shoppers are also turning to e-commerce and trusting online shopping, as social media becomes more popular and logistics improve. The success of sites such as Groupon and Living Social is a clear example of e-commerce’s potential in the region. Many retailers are still testing their online shops in the UAE, including Carrefour and Nespresso, but their success will likely spread to other countries.

Convenience formats are becoming more popular in the UAE. While big-format is still dominant, convenience formats are a way for retailers to expand their local footprints. Abu Dhabi-based LuLu Hypermarket Group is planning 50 neighbourhood stores across the Gulf region over the next three years, and Carrefour is expanding its express convenience stores across the country.Luxury retailers had another good year. The UAE is a top importer of Swiss watches, with Dubai alone importing between 800,000 to one million premium watches per year. The country is the fourth biggest market for Rolls-Royce.

• abdulbasit@khaleejtimes.com