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.
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.
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.
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.
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.
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.
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.
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