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E-commerce set to revolutionise Middle East retail

The Middle East is on the cusp of a major e-commerce growth spurt. Online shopping in the Middle East is rapidly evolving and has grown drastically over the last decade. With a dynamic, young population and one of the highest global per capita internet penetration levels, the online spending potential is quickly emerging as one of the highest in the world, according to the tenth edition of “How Global is the Business of Retail?” by leading global property advisor CBRE. This growth is underpinned by the movement of global retail giant, Amazon into the region with the acquisition of Souq.com, along with the creation of Noon.com.

Commenting on the findings of the report, Nick Maclean, Managing Director, CBRE Middle East, said, “With a rapidly expanding internet audience and strong logistics infrastructure from the ground up offered by companies such as Fetchr, the Middle East has become a fertile soil for e-commerce. Currently the e-commerce market is dominated by a handful of players, however rapid growth in the sector and the upward trajectory of local companies has attracted an influx of investment in recent years. The evolution in consumer behaviour, mobile technology and retail shopping will continue to revolutionise the e-commerce sector in the region in the years to come.”

The growth of e-commerce in the region is complimenting bricks and mortar stores and aiding the physical shopping experience for consumers.

Dubai ranks number three in terms of new market entrants, welcoming 59 new brands in 2016. 32% of these new entrants were specialist retailers, many of which were athletic-leisure brands such as Under Armour, Jordan, New Balance and GapFit. These fashion-infused sportswear retailers are targeting the young working population of the Emirate.

Dubai also retained second position for international retailer representation for the sixth consecutive year, closely behind London which retained the number one position. With high occupancy levels in major retail hubs and many malls approaching full capacity, Dubai’s overall retail sector remained resilient in 2016.

The UAE’s F&B sector has shown an upward trajectory as consumer spending on socialising and eating out continues to grow with UAE nationals and expatriates alike. The food truck industry is one of the best performing segments in the F&B sector in the UAE and is a rising new phenomenon.

“Dubai’s global air connectivity and its stature as a hub for trade between the East and West has clearly given an added impetus to the retail sector. Dubai continues to remain the clear destination of choice for the majority of the brands looking to enter the region, frequently using the emirate as a stepping stone to wider regional expansion programmes,” added Maclean.

H.E. Hamad Buamim, President & CEO, Dubai Chamber of Commerce & Industry, said: “Despite regional economic challenges, Dubai remains a preferred market for leading international and regional retailers that can provide plenty of incentives and growth opportunities. Dubai’s fast-growing population, cosmopolitan nature and thriving tourism market are key factors that support the performance of retailers in the emirate. Dubai Chamber is committed to promoting Dubai’s retail sector on a global level, and launching initiatives that support its growth and development.

“We are delighted that our home base Dubai continues to perform very strongly,” Ahmed Galal Ismail, Chief Executive Officer at Majid Al Futtaim – Ventures, commented. “Moreover, CBRE’s findings are in line with what we’ve noticed across our retail, specifically athleisure and speciality retail, F&B and leisure destinations; growth lies in brands that offer experiential concepts and superior customer experience. We are also delighted to see that the brands we introduced to Doha has contributed to its position as a new retail destination. We foresee the same happening to Cairo, Abu Dhabi, Muscat and Riyadh as we expand our presence in these markets.”

Doha rose six places in the new entrants’ ranking, with 58 new brands establishing themselves in 2016 compared with 29 in 2015. Doha has transformed its retail market in the past few years with the development of many large-scale malls offering more extensive retail and leisure facilities. This has led to widespread demand from retailers for these centers that provide a unique experience and embrace place-making principles.

Globally, the report revealed that Hong Kong retained its position as the top target market for new entrants in 2016 with 87 new entrants, followed by London in second place with 65 new entrants.

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