Retail in the Middle East and North Africa: A Look into a Polarised Region

March 2013

The Middle East and North Africa is gaining prominence on the retail world map and is increasingly being targeted by global retailers for their international development. The recent political storm of the Arab Spring has given the region new hopes, with a far-reaching impact on businesses and consumers. This briefing analyses the region in terms of regulation and retail environment, and highlights the most attractive markets and channels for future development.

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One region with a fragmented retail landscape

The lack of regional integration and weight of tradition requires a case by case strategy for retailers. Despite the cultural and linguistic similarities in the region there is a two tier retail landscape between Gulf countries and the rest.

Young population both a risk and an asset

The Arab Spring revolutions that shook the region indicated the distrust felt mainly by the young population of their ageing leaders. High unemployment remains a threat and will require significant reforms and strong economic growth.

Traditional grocery retail dominates in most countries

Despite rising disposable incomes, most consumers continue to shop in small neighbourhood stores and small scale traders. This is due to fewer women being involved in the workforce than in developed countries, and also the limited number of households owning a car.

Great success of social media but little penetration of internet retail

The use of social media, such as Twitter and Facebook, by a young and educated urban population played a part in the organising of protests during the Arab Spring and is now an established part of social culture. This is an area that retailers and payment operators should target in order to build a online shopping culture as well.

Modern retailing remains driven by international chains

In the gulf countries as well as in North Africa, modern retail is mainly about Western European and US brands. This is particularly true in apparel and electronics, and there are only a handful of local chains in this area.

Franchising the easiest route to market

Although most big retail brands operating in MENA are foreign, their route to market is mainly through franchising and joint ventures, due to restrictions on FDI and the need for local expertise.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings
     

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Delivery format

PDF/Word
Downloadable from MyPages

Introduction

Scope
Key findings

Regional Overview

MENA region tops global retail growth
Retail growth in 2013: Sustained growth in the Gulf Region
2011: The year of the Arab Spring
Arab Spring's impact on retailing in Egypt and Tunisia
Social time bomb: Youth unemployment
Grocery: Iran performs best … or does it?
Grocery: Traditional channels dominate
Non-grocery: Style and status drive sales
Non-grocery: Spotlight on jewellery and watch specialist retailers
HNWI in the Gulf: Luxury goods in the United Arab Emirates
Non-store retail: Lowest penetration but growing
GCC countries have the most internet users
Biggest non-store retailers in MENA are international companies
Top retailers in MENA in 2012
Savola Group the fastest growing MENA retailer

From Traditional to Modern Grocery

Souks vs malls: Share of modern grocery retail in MENA
Traditional grocery's share on a steady decline since 2007
Traditional and modern coexist in Algeria and Tunisia
Tunisia: Traditional retail dominates despite high urbanisation rate
Beyond urbanisation, car ownership is essential
Informal trade is the biggest challenge to the modernisation of retail
FDI and ease of doing business needed for large scale retailers

Franchising Drives Retail Integration

Franchising is the main route to doing business in MENA
Key retail franchise operators
Majid Al Futtaim (MAF) a key player for the Carrefour brand
Landmark Group: The success of Indian businesses in the Gulf
Foreign trade still skewed towards Western Europe
New trade routes: MENA and its closer neighbours
Monoprix grants Tunisian franchise the rights for North Africa

Case Study: Carrefour Franchises in MENA

Case study: Carrefour modus operandi in the MENA region
Franchise is the route used in all MENA countries
Carrefour in MENA: Many partners and a mixed track record
Where to go next for Carrefour in MENA?

Outlook

Looking into the future: Consumer expenditure and larger cities
Which channels will provide the best prospects by 2017?
Four drivers will shape the region

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