Spotlight on the Middle East

With a population of around 400 million, the Middle East has some of the wealthiest countries in the world. The UAE has a per capita GDP of $67.700 for a population of around 10 million and Saudi Arabia has $54,100 for a population of 35 million. Whilst the UAE includes the vast majority of licensing organisations, here we take a brief look at the Saudi market and how, through gradual opening up, it is becoming an increasingly important territory.

Saudi Arabia is a market that has been tax free but since the introduction of VAT at a rate of 5% this resulted in a shift in consumer behaviour and reduced spending. The outcome of the decline in spending seems to be that Saudi consumers are more priceconscious, switching to similar goods when prices of the original offerings rise. Under reforms that began 2016, an increasing number of economic sectors are being opened up to allow female employment, including retail. Lifting the ban on cinemas in Saudi Arabia has opened doors for investment in the entertainment sector, thus reflecting great potential in demand for the retail sector in Riyadh. In markets such as Saudi Arabia, which havesome of the world’s most affluent consumers, brands are starting to implement multi-channel strategies, and investing heavily in outlet modernisation. In coming years many more brands are expected to implement multi-channel strategies as it become increasingly important for companies to create a user experience that cuts across online shopping, social media, mobile apps and conventional bricks and mortar stores. Despite facing difficulties, the retail environment in Saudi Arabia is expected to maintain an overall positive performance due to a number of reforms that are being executed by the Saudi Arabian Government. The most prominent of these includes the allowance of 100% foreign direct investment in the retail sector, lifting the ban on cinemas, and the implementation of the government’s Saudization policies. The leading retailers in Saudi Arabia are Jarir, Ikea, Centrepoint, Carrefour and Panda, whilst the biggest shopping malls include the Riyadh Gallery, Al Fashid Mall, Mall of Arabia and Al Mamlaka in Riyadh.