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UAE 3rd in Mena, 15th overall in retail expansion index

The UAE has been ranked third in Mena and 15th overall in the Retail International Programme Expansion (Ripe) Index released by EC Harris, a global asset consultancy.

Saudi Arabia topped the list for Mena and held the eight overall position on the index for retailers looking to expand internationally, particularly in the luxury end of the market.

Qatar took the second position in Mena and 11th overall on the index, which rated 40 important consumer markets.

The overall ratings for all the Mena countries were “high” but the only watch-out being project delivery issues.

“What we find is that even the most opaque local bureaucracy can be overcome if the investment into the relationship is made by native speakers with the patience to understand the people, the culture and the procedures,” EC Harris said.

It was the presence of “strong” trading partners and franchise operators such as Majid Al-Futtaim, Al Tayer, Landmark Group, Al Shaya and the Chaloub Group, the report said, meant that market-testing moves can be made with relatively low resource and capital requirements.

Luxury retailers are profiting from the ease of being able to deliver in this market, EC Harris said.

It cited Bloomingdales, as an early mover, whose first store outside of the US opened two years ago, anchoring the Dubai Mall.

The 15,000 square metre, three-level development was undertaken in partnership with Al Tayer and is trading well.

Qatar’s World Cup success presents interesting brand showcasing opportunities, the report said, adding it was anticipated that several major malls will come to market in the lead up to 2022.

John Williams, Regional Leader, Middle East at EC Harris said, in a statement,: “International expansion presents great opportunities for retailers experiencing low growth in their domestic markets.

“Consumer appetite for luxury international brands is strong across the Middle East, and our report suggests that retailers are able to set up much more easily here than in markets such as China or India.

“Successful international expansion is about balancing the desirable with the feasible.

“Success is down to making a careful and committed choice, maintaining realistic expectations, and making plenty of adaptations along the way.”

The Ripe index ranks 40 important consumer markets based on five success factors for large-scale roll-outs, drawing out the nuances property leaders should consider as their own organisation’s expansion plans evolve.

In August, Jones Lang LaSalle’s third quarter global market perspective, said the slowing global economic environment had resulted in European retailers seeking to increase their presence in the Dubai market in recent months, which was fuelling rental growth in popular centres.

The Dubai retail market, however, is also witnessing a widening gap in performance between a limited number of robustly performing centres (such as The Dubai Mall and the Mall of the Emirates) and other centres where average rentals are, at best, stable.

By Parag Deulgaonkar, September 10, 2012

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