Innovation needed for GCC retail sector

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The retail sector in the six GCC countries is still developing despite experiencing a boom since 2010 and businesses will need fresh ideas if they are to maintain growth, according to a new consultancy report.

Bain & Company, a leading global business consultancy headquartered in Boston, said strong growth in the GCC retail sector should not mask certain factors that may negate sustained progress.

Jean-Marie Péan, Chairman of Bain & Company Middle East and Cyrille Fabre, a company partner who leads the Retail & Consumer Products practice for the Middle East, said that as the existing retail concepts mature, retailers will need to innovate to achieve a sustainable profitable growth.

The report said: “Winning retailers will innovate in their existing formats. To do so effectively, retailers will need to invest in understanding their shoppers and in adopting a more segmented approach.

“The next step will be to tailor their offerings and promotions to the needs of the customer mix living in the catchment area of each store. This segmented approach is still in infancy in the region.”

The GCC experienced strong retail growth in 2011, mainly from a set of one-off factors, according to the report, such as the Saudi government’s move to pay out about SR53 billion of exceptional bonuses to its employees in 2011 and raise the minimum wages in the public sector by 37 per cent.

Bain & Company said major retailers such as Jarir, Landmark and MAF Carrefour have responded positively to the needs of their customers by launching loyalty programmes t better understand their shoppers.

The report said the scope of new stores in the region is decreasing although opportunities exist in new districts and smaller cities. The company warns of the danger of new stores cannibalising existing ones as retailers struggle to balance their sales per square metre with profit.

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Reading Time: 2 minutes

The retail sector in the six GCC countries is still developing despite experiencing a boom since 2010 and businesses will need fresh ideas if they are to maintain growth, according to a new consultancy report.

Reading Time: 2 minutes

The retail sector in the six GCC countries is still developing despite experiencing a boom since 2010 and businesses will need fresh ideas if they are to maintain growth, according to a new consultancy report.

Bain & Company, a leading global business consultancy headquartered in Boston, said strong growth in the GCC retail sector should not mask certain factors that may negate sustained progress.

Jean-Marie Péan, Chairman of Bain & Company Middle East and Cyrille Fabre, a company partner who leads the Retail & Consumer Products practice for the Middle East, said that as the existing retail concepts mature, retailers will need to innovate to achieve a sustainable profitable growth.

The report said: “Winning retailers will innovate in their existing formats. To do so effectively, retailers will need to invest in understanding their shoppers and in adopting a more segmented approach.

“The next step will be to tailor their offerings and promotions to the needs of the customer mix living in the catchment area of each store. This segmented approach is still in infancy in the region.”

The GCC experienced strong retail growth in 2011, mainly from a set of one-off factors, according to the report, such as the Saudi government’s move to pay out about SR53 billion of exceptional bonuses to its employees in 2011 and raise the minimum wages in the public sector by 37 per cent.

Bain & Company said major retailers such as Jarir, Landmark and MAF Carrefour have responded positively to the needs of their customers by launching loyalty programmes t better understand their shoppers.

The report said the scope of new stores in the region is decreasing although opportunities exist in new districts and smaller cities. The company warns of the danger of new stores cannibalising existing ones as retailers struggle to balance their sales per square metre with profit.

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