The Middle East has long been an attractive proposition for retailers – a rapidly growing consumer base and shoppers who aren’t afraid of parting with cash have made sure of that.
But the stereotypes of big spenders and huge Dubai malls mean it’s not a market you’d immediately think of for value retailers. The current offering in the region reflects this. Poundstretcher is one of the first discounters to have entered the market, says Planet Retail analyst Manu Ghai – while there are plenty of traditional value retailers in the region, there is little in the way of modern multiples. This could be about to change, however. Middle East consumers, much like their European counterparts, are cutting back on discretionary spending and now is a good time for value players to consider the market.
But while the region is still high on the list of priorities for any retailer looking to expand internationally, it’s no longer regarded quite so highly as it was. Five years ago, says Deloitte retail partner Jason Gordon, retailers raced to get out there. Now, the market is just one of many to be considered carefully. “It’s still an attractive market but not quite as much as before,” he says. “The Middle East will always be on the list of places to investigate but it’s not the immediate choice it was a few years ago.”
The whole process needs to be thought through carefully, with European or US formats unlikely to suit Middle Eastern shoppers. Ghai also warns against treating the region as a single market. “The market is still growing but don’t try and look at it as one market,” she says. “There are regional disparities – the UAE retail market is doing better than Yemen, for instance.” Consumers across the area respond positively to British brands however, meaning value retailers might want to consider raising their prices. “Consumers think Western brands are better quality,” Ghai says. “So value retailers may want to look at their pricing strategies.”
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