Quote for Alpen Capital’s GCC Retail Report
We are very optimistic on the GCC Retail Industry and despite some slowdown presently, we remain very positive for the future. As a matter of fact, we are investing huge in the infrastructure, acquiring new brands, building our digital platform, transforming our supply chain and so on.
Overall, the retail sector seems to be going through a metamorphosis. E-commerce remains the number one area of opportunity for the retailers in the GCC. Prestigious projects by reputed landlords and efforts from the Government to attract tourists will continue to fuel growth in the industry. Rentals will need to be corrected to justify the business case and keep the cost of doing business under check as margins continue to be under pressure due to e-commerce and globalization.
Given the global scenario and the fluctuation in oil prices, the retail industry’s biggest challenge is luring the customer into the store and command the same margin. Over a period of time, cost of doing business has become exorbitant which has negatively impacted the profitability of the business. Also, most of the GCC countries being pegged to the dollar is hurting the business vis-à-vis the European and UK major hubs like London, Paris, Milan, Rome etc. making Dubai more expensive in terms of pricing. This is a time when all stakeholders right from brand owners to landlords and retailers need to come together and find a way to address this challenge and modify/amend the business model to reflect the new paradigm shift.
Simultaneously, we will see a great deal of consolidation amongst the organized retail industry and as a matter of fact, Apparel Group acquired seven brands locally from other operators in the year 2016. We will also see that with ever increasing supply of the retail space coming in, the rents will be normalized and will make more meaningful and economic viability for the retailers.
We expect the sector to remain strong and expand in the year ahead across the GCC, particularly in UAE, KSA and Qatar.In addition, many companies are navigating the new digital divide and facing an increasingly competitive landscape; thus it is vital for retailers to keep up with evolving technologies and consumer behavior. Omni channel is perhaps the best way to move forward. Retailers now need to map the customer’s journey and ensure a seamless and consistent experience at every touch point.Lastly, we believe that data analytics and personalized customer experience will be the way to go for every retailers in the days to come.