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Innovation Hubs Fuelling Growth in the Gulf Region

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Innovation Hubs Fuelling Growth in the Gulf Region

With Expo 2020 in full force in Dubai, all eyes are on the GCC, as both the host of this spectacular event and the hub of innovation and investment for the wider region.

From robots to electric cars, best-in-class last mile and FinTech solutions, companies in the region are eager to shape the future of the consumer experience. Investment in research and development, and digitalisation are key to fostering a drive for innovation: the United Arab Emirates topped expenditure in terms of research and development in the regions with 1.2% of GDP in 2021, whilst Saudi Arabia’s strong leading position in investment in telecommunications was worth USD4.2 billion.

Infographic 1: Innovation Indicators Across Some GCC States


There are four key platforms for innovation which are driving business in the GCC today.

Innovation adapters: This is the strategy of adapting innovation from elsewhere. Through a series of discussions with companies in the region, Euromonitor International confirms that many companies are inspired by innovative ideas from Western markets, then tailor and adapt them to meet local needs. A common example is the FinTech solution “Buy Now, Pay Later”, which has been popular in the US and has been adapted and customised in Saudi Arabia and the United Arab Emirates through Tabby.

Example: Tabby customised this payment solutions to the region’s regulations by ensuring Shariah compliance and certification as well as collaborating with leading regional retailers such as Chalhoub Group, Al Futtaim Group, Landmark Group, and Apparel Group. They have successfully been integrated on key selling platforms such as Opencart, Salla, and Shopify, and have launched their own cashback loyalty programmes that reward users.

In-house incubators: Some companies have their in-house incubator centres or departments which can be in two formats:

  1. The first format is where they open applications for their own employees to propose a new concept. If deemed successful after testing, the company and its investors allocate budgets to develop the concept, which might later become a standalone business line.
  2. The second format is where the innovation centres partner with start-ups to help fuel creativity, empower human resources, and bring novelty to the market.

Example: Majid Al Futtaim (MAF) is a pioneer in retail in the GCC that has adopted this format. The company is open to investments, acquisitions or partnerships to develop start-up technology and to create synergy between both parties. The partnerships offer value that goes beyond financial support, including access to MAF’s customers, collaborating across solutions and technologies, and promoting services together.


Trend hunters: Companies that have an internal team that constantly monitors the latest industry disruptors that effectively address these trends. It is a smart tool to stay alert of the latest innovations and invest in them to differentiate their portfolios.

Example: Chalhoub Group has such a hub - The Greenhouse, which offers a tech-accelerator programme that invests in start-ups focused on offering tech-driven solutions. It is also identifies early-stage beauty and fashion brands, tests them in online and offline channels, and once proven successful, they can be incubated to become part of the Group.


Technology leaders: These companies develop the latest technology that would offer users a seamless experience. Examples of technologies include using artificial intelligence in road infrastructure, smart traffic light systems, sensors, robots, self-driving vehicles or drones to shorten last mile delivery time, automated distribution centres to speed up delivery time (in the case of retailers of fast-moving consumer goods such as Noon or Sun and Sand Sports), and investing in more sustainable modes of transportation (such as electric vehicles) to deliver products with lower CO2 emissions. These were commonly observed among airlines, telecom providers and tech providers for smart cities, which are keen to explore creative ways to use current technologies and develop new ones.


What’s Next?

Companies are pushing the boundaries to establish creative hubs that will allow them to innovate for the ever-changing needs of consumers. Through the spectrum of approaches described above, they are adopting to deliver products and services to the market both efficiently and at scale, leveraging the advanced and ever-developing infrastructure that enables them to innovate. This also shifts the attention of many new industries to the GCC and the wider region, in anticipation of the next innovation that they can invest in.




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