Mena region to see fastest retail growth in 2013

A new report by Euromonitor International, titled 'Retail in the Middle East and North Africa: A Look into a Polarised Region', predicts that retail growth will exceed 5% in the Mena region this year thanks to demand from high net worth individuals, a continued rise in disposable incomes, organic growth, and the on-going modernisation of the retail landscape.

Leading the way will be the UAE, which is expected to record the best performance in the region by nearly doubling its retail growth compared to 2012. "The country's vibrant economy and ideal position as a trade and financial hub in the region will cushion it from the unrest shaking the rest of the Arab world. It also provides a beacon of stability for retailers who are postponing further development in troubled Egypt and Syria," the report said.

Other oil-exporting nations such as Saudi Arabia and Algeria are also expected to see their retail sectors perform better in 2013 thanks to the historically high price for the commodity. This will help sustain consumer demand and provide more retail opportunities for new brands, especially in Algeria where local consumers have a limited choice at present.

However, while the outlook remains bright for the GCC, retail operators need to be aware of the risks of operating in the region, the report warns.

Noting that a two-tiered retail landscape has emerged in the region, the report predicts that non oil-exporting countries such as Tunisia, Morocco and Egypt will be dragged by their dependency on Western European tourism demand, which has been greatly affected by the downturn.

Retailers should also be aware that Mena consumers are increasingly price conscious and demand a more modern shopping experience as disposable income rises.

A lack of regional integration and weight of tradition also means that there is no one-size-fits-all strategy for retailers, the report noted.
While Mena consumers are increasingly price conscious and demand a more modern shopping experience as income levels rise, most 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 report noted.

The region's young population can also be both a risk and an asset for retailers. The use of social media by a young and educated urban population is now an established part of social culture. This is an area that retailers and payment operators should target in order to build an online shopping culture as well, the report said. But high unemployment remains a threat and will require significant reforms and strong economic growth.