The Middle East has emerged as a key market for retailers across the world. The region is witnessing rapid transformation in retail industry, driven by changing market dynamics and rapid economic transformation. According to new research by real estate consultancy CB Richard Ellis (CBRE), over a period of time, the retail culture across the Middle East has evolved from traditional outlets to large shopping malls, hypermarkets, supermarkets and organized chains. The changing consumer demographics in countries like Saudi Arabia and UAE, presence of large expatriate population, rising purchasing power and high liquidity have attracted various premium and luxury brands to the region, the report noted. The report “Middle East Retail Sector Forecast to 2013” identifies Saudi Arabia and UAE as the most potential and dynamic retail market across the region, continuously dominating the retail industry landscape for more than a decade and will continue to do the same in the coming years, the report said. CBRE study said Saudi Arabia saw more new retailers arrive in the past year than any other country in the world, noting that the Kingdom attracted 37 new international retailers over the last year, 12 of them were in the luxury segment. The study mapped the global footprint of 280 of the world's top retailers across 67 countries. “What makes the retail market in the region so appealing is that over recent years has been the overall growth in the KSA, which has allowed for some strong sales figures and that has underpinned the introduction of new brands and the rapid expansion of outlets,” said Mark Morris-Jones, director of retail at CBRE Middle East. In 2003, the Middle East retail industry was valued at around $200 billion and by the end of 2008, this value swelled more than $400 billion. We anticipate that there will be a marginal effect of the 2008 financial crisis on the retail market in the Middle East, and it will see a growth of around 14 percent during 2009-2013. Strong economic fundamentals and well-protected banking system will shield the region from the aftermath of the financial crisis. Although the declining oil prices may be a cause for concern for most of the oil exporting countries, it will be short-lived as improving economic conditions and increasing fuel consumption will drive the oil prices upwards. The CBRE's survey of 280 retailers across 67 countries examined their footprint at national and city levels, highlighting differences between sectors and regions and identifying trends in global retail expansion. Almost half of all retailers in the survey (46 percent) had some presence in each of the three main global regions. However, the globalization of retail is still in relatively early stages. The United Kingdom remains the country which attracts the most international retailers, with 58 percent of non-UK retailers in the survey present in the country. In general, Europe is the most international retail market. All five of the largest European economies are ranked within the top eight international retailer destinations. Luxury retailers and those from the clothing/footwear sectors are significantly more international than retailers from other sectors. Luxury retailers are typically present in over 27 countries, compared with an average of just over 14 countries for the other retailers in the sample. London is the dominant retail city, attracting almost 60 percent of all retailers in the survey. Paris and New York rank second and third respectively, with Dubai in fourth place. This is largely due to their attractiveness to the luxury and clothing/footwear sectors. Retailers from all sectors continued to expand their global footprint during 2008 despite a rapid weakening in business sentiment and increased risk aversion in response to the global economic downturn. Retailers in the survey were on average present in 16.5 international countries at the end of 2008 compared with 14.7 countries in late 2007 - an average increase of 1.8 countries per retailer, or 12 percent. There were some variations between different types of retailers domiciled in different parts of the world. Growth was primarily driven by luxury and clothing/footwear retailers from Europe (mainly Italy, France, UK and Spain) and, to a lesser extent, the US. On average, luxury retailers opened in 3.4 new countries in 2008, while clothing/footwear retailers entered 1.9 new markets. Retailers have continued not just to internationalize, but to globalize. Over 40 percent of all new openings during 2008 were outside the home region of the retailer concerned. Geographically, the primary beneficiaries of this global expansion process were the emerging markets, with Middle Eastern, Asian and Eastern European countries dominating the list of new openings. __
