23rd International Autumn Trade Fair opens today

Notes and media contacts

In the GCC, Saudi Arabia and the UAE, which represent the biggest markets in the region, have seen the highest growth. Factors such as strong tourism development, shopping festivals, and other promotional initiatives, have contributed positively. Illustrative is the joint venture entered into by Carrefour with Majid Al Futtaim Holdings to form MAF Hypermarkets. They operate close to 20 hypermarkets across the GCC (except Bahrain). Casino (Géant) for its part, operates around 7 stores across Saudi Arabia, the UAE and Bahrain. Leading regional players include LuLu, Panda and to a lesser extent, The Sultan Centre (TSC). LuLu, part of the UAE-based EMKE Group, operates more than 50 hyper and supermarkets in the Gulf. They plan to open another 10 stores by the end of 2008. Panda, which is part of the Saudi-based Savola Group, operates around 60 outlets in their home market, and has expanded to the UAE. TSC, which has its solid home-presence in Kuwait, and is found in Oman and Jordan as well, is also planning to expand to Bahrain and Qatar by the end of 2008.

United Arab Emirates:

As for the UAE specifically, its retail sector continues to boom along. The Emirate of Dubai alone is projected to top the Gulf region's total retail spending charts by 2009, and this, despite a population base being only a fraction of that in neighbouring Saudi Arabia. Industry analysts say retail spending (including food) in the Emirate will hit $7.6bn by 2009, compared to Saudi Arabia's $6bn, and Abu Dhabi at $1.9bn. No city on earth, with a population the size of Dubai's, has taken upon itself the challenge of delivering so much mall footage in such a short period of time. By 2010, 1.5 million m2 will have been added to the existing 600 thousand m2 stock. And with a further 900 thousand m2 potentially achievable, the total looks set to achieve the 3 million m2 threshold (i.e., of a projected 4.25 million m2 for the UAE as a whole). Already comprising 17% of the total GCC footage, this massive expected increase would double Dubai's share to 34% within five years.

Research indicates that large stores share of the fast moving consumer goods market (FMCG) will reach 60% over the next three years due to new store openings. Smaller stores, many of which are run independently, have so far managed to retain 50% of the market by offering customers such added services as free home delivery and credit. But their position is under threat from the major retailers who are also keen to open smaller formats which target customers wanting to "top up" their weekly shopping from outlets within their residential neighbourhoods. The emergence and rapid growth in gated-communities in the UAE, especially evident in the greater-Dubai area at this point, will be a particularly fierce battleground in the smaller to mid-sized outlet range, due largely to growing consumer resistence to travelling the longer distances on heavily congested roads to hypermarkets usually located within city malls.

In terms of the mass grocery retail (MGR) sector, experts are forecasting high sales growth for the next four years in the UAE. In this market, the MGR sector includes hypermarkets, supermarkets/co-operatives, convenience stores, and duty free shops. A sales growth of 92% is forecast to 2011, with all formats expected to contribute, although hypermarkets and convenience stores are likely to be the main drivers. Hypermarkets will continue to take the lead in terms of total value (expected to double to $1.44bn by 2011). However, it is convenience stores that will enjoy the highest growth rate at 150%, albeit from a lower starting point. According to the Dubai-based Middle East Council of Shopping Centres, mall growth will increase 190% by 2010. Retail spending during this period is expected to reach 25% of GDP.

In fact, the UAE and Saudi Arabia rank among the top 20 countries in retail investment attractiveness amongst emerging markets. The Global Retail Development Index (GRDI) lists more countries (5) from the MENA region in the top 20, than from either Asia or the Americas. In the most recent survey results released in 2007, Saudi Arabia jumped an impressive 7 places to 10th position, while the UAE slipped by two places to the 18th spot. For the curious, the top 3 are cited as India, Russia and China.

UAE retail food-specific sales are estimated by analysts at $3.5bn. Growth in this segment of the UAE economy likewise continues unabated. In a previous issue of TRENDS, we had commented on how the longer-established but somewhat smaller food retail players should not be expected to roll-over and simply cede market growth to the aggressive.