Along with China and Russia, United Arab Emirates has also been rated among the top five most attractive apparel retail markets by experts. Many global apparel brands are foraying into the country via retail/franchise route.
The United Arab Emirates (UAE) market is an international gateway into Middle East and North Africa (MENA) for the retailers wanting to launch new products and brands in the region. The Emirati apparel market has been a preferred market for apparel retailers across world. It can be attributed to factors like availability of abundant retail space, substantial domestic consumption and high influx of tourists into the UAE. The UAE apparel market is dominated by large business conglomerates having business interest across several sectors. Further, they have multiple brands in their portfolio. In this way they are able to control large market and have a larger consumer base.
Market scenario
As per studies, UAE is a leading market of the world in terms of highest sales in clothing per capita. For the year 2010, the clothing sales per capita in the country estimated to be $785 and the consumer spending also increased to nine per cent. The Emirati apparel market is continuing growth trend as new luxury retailers are bringing in their brands and also the already established brands (local/global) seeking further expansion in the region. The brands are revamping their market strategies to segment their targeted customers and outlet/store locations along with pricing policies to have a larger market share. Mostly, the major apparel brands enter through franchise partnerships and joint ventures/distribution as well as franchising arrangement.
Demand facts
UAE retail growth can be attributed to factors such as positive long term economic overview, a large consumer base with high levels of disposable income and fashion and brand consciousness and growing retail real estate with currently low rentals. The reasons for variability in the demand of apparel products can be due to seasonality, consumer incomes and changes in fashion and trends. Therefore, many apparel retailers are now also catering to mid segment or budget consumers. As UAE has the reputation of a wealthy nation, the market continues to witness huge influx of luxury brands.
Emerging opportunity
The global apparel and fashion companies having global brand value may seek expansion into the Emirati market via franchise model. They can opt to partner with the large business houses which have the adequate financial and manpower resources to introduce and develop the brands in the UAE and Middle East market. Also, the brands can exploit the local know how and already established business equity, recognition and consumer base of these business houses. As the consumer market in the UAE is getting matured after the economic crisis, these tycoons gauging the market pulse are also welcoming apparel brands catering to mid consumer segment apart from their trademark luxury retail biz.
Established players
There are several prominent retailers and distributors that have introduced well known international apparel brands and have an established presence in the UAE today. Some of these are mentioned here to have an insight of the country’s apparel market. Splash, a chain of fashion stores across the Middle East and the Indian subcontinent; deals in in-house brands like Ms, Nexus, Zync, Scarlet and Retro, as well as international brands such as Lee Cooper and Bossini. Inditex Group is a fashion distributor that operates through different store formats in the UAE under the Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, and Kiddy's Class brands. Al Madani Group of Companies is into design, manufacture and distribution of ready to wear garments. It is also a distributor of Hang Ten garments in 27 countries, for Levi's, Dockers in the UAE, Kuwait and Oman and for Gas from Italy. Al Maya Group runs 18 supermarkets and Daffodils (feminine lingerie stores), Champion (sports wear stores), Carter's (children's wear), Steve Madden (shoes), British Home Stores (garments) etc. Landmark Group has developed four international brands namely New Look, Reiss, Koton and Aftershock across six countries.
Recent entrants
Many international brands have recently forayed into the booming UAE apparel market. Last year, US based Bloomingdale’s launched its first store in Dubai. Victoria’s Secret entered into an agreement with MH Alshaya opened its first store in the region. In 2011, many apparel brands have entered the UAE market via joint ventures/distribution as well as franchising arrangement. Tory Burch, US luxury lifestyle brand will be introduced by Chalhoub Group in United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Kuwait. The company is planning to open brand's first boutique in the UAE at The Dubai Mall in the fall of 2011. Al Tayer Insignia, a luxury retailer has recently opened stores of the Italian fashion brands Prada and Miu Miu in the UAE. US based lingerie brand Baci has plans to launch 10 outlets across the Middle East by 2016. United Fashion House (UFH), the franchise partner of ‘Baci’ will be introducing the brand in the region this year. ASDA, a supermarket chain is all set to explore the franchise model for the first time for its clothing brand ‘George’. It is likely to announce its first partner in the Middle East in the next few months and expects to open its outlets in the first half of 2012. Emirates Associated Business Group (EABG) has partnered Frederick’s of Hollywood Group, a US lingerie retailer. The group has signed an exclusive multi-year licensing agreement to build and operate Frederick's of Hollywood retail stores in the Middle East including UAE.
Conclusion
It is worth noting that the high ranking of UAE apparel market by experts show the immense scope for the regional and international apparel retailers to launch their brands here. The growing consumer confidence and with economy stabilising, the consumer spending on apparel and accessories is growing pushing the demand for such products further. It is important that the apparel retailers and franchisors identify their market and target their consumer wisely to avoid saturation of the market and remain profitable.
