The UAE and Saudi Arabia both ranked top among the top 10 in the Global Retail Development Index (GRDI) published by A T Kearney, an international management consulting firm.

The UAE, placed seventh, remains an attractive and relatively low-risk market for retailers, with highest sales per capita in the region, while Saudi Arabia was placed eighth despite drop in GDP due to low oil prices, said the report titled “Global Retail Expansion at a Crossroads”.

Mall activity remains strong in the UAE

The year 2015 saw Mall of the Emirates open its 36,000-sq-m extension and Majid Al Futtaim’s latest shopping mall City Centre Me’aisem was completed, alongside phase two of City Walk.

Plans for the second half of the year (H2) 2016 remain equally ambitious with numerous additions to the retail landscape expected, such as My City Centre Al Barsha and The Pointe Mall at Palm Jumeirah. Notable investments from international retailers include the opening of the first Apple store in the Middle East in Dubai - and the largest Apple store in the world at an estimated 10,000 sq ft.

While Saudi Arabia’s GDP fell 15 per cent in 2015, retail sales continued to grow. Saudi Arabia is already a popular destination for multinationals and tourists from the region. H&M has the most regional stores in Saudi Arabia, and Majid Al Futtaim will quadruple its store count in Saudi Arabia to 300 in the next five years.

Arabian Centers, the kingdom’s largest owner and operator of malls opened the Yasmin Mall in Jeddah and plans to develop 12 additional malls including Mall of Arabia in Riyadh. Recent policy changes which allow single-brand retailers 100 per cent foreign ownership in retail and wholesale look set to push Saudi’s position as an international hub for distributing, selling and re-exporting products.

The 2016 GRDI marks the 15th annual edition of the report. During the past 15 years, developing markets have seen tremendous growth both in terms of population, which has grown 21 per cent to 6.2 billion, and in terms of retail sales, which have increased 350 percent in developing countries and now represent more than half of total global retail sales.

The GRDI ranks the top 30 developing countries for retail investment worldwide (see chart below). The Index analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies to identify emerging market investment opportunities. The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential.

Shamail Siddiqi, principal at A T Kearney Middle East said: “Despite a challenging year for the region with falling oil prices, and a tourism slowdown, several countries in the Middle East have remained strong retail destinations for retailers and consumers alike, with absolute sales continuing to grow. The UAE and Saudi Arabia are leading the way across the region and it’s promising to see both countries ranked top 10 among leading global players such as China and India who topped this year’s index.”

Mena market

The Mena region retail market has generally fared well in this year’s index, with two of the large Gulf economies ranked among the top 10 most attractive retail markets in the world, and Egypt (#30) opening up as an opportunity for retail investments.

Despite challenges in the United Arab Emirates (#7), where tourism has slowed and the market is reaching maturity, and Saudi Arabia (#8), which is reeling from depressed oil prices, absolute retail sales still grew over the past year.

With the expected stabilization of Egypt in the medium term, the market offers access to a large and still relatively fragmented retail market. Many strong local retail champions have moderate expansion plans in the region, but foreign players are becoming a little more reticent about adding stores. – TradeArabia News Service