As retail sector picks up due to increasing consumption and rising sales in Sultanate of Oman, the market offers numerous business avenues for foreign retailers. Read on to know more.
Lately, the Sultanate of Oman has been garnering huge interest of international retailers considering the expansion of their brand’s presence and operations in the country. Although, Oman is relatively small in comparison to markets like the UAE and Saudi Arabia, still the market abounds with promising retail business opportunities for international retailers. According to A.T. Kearney’s 2012 index for emerging markets for global expansion in the retail sector, Oman debuts in the world’s top emerging retail markets. In its 12th Global Retail Development Index (GRDI), Oman features in top 20 countries, along with other Gulf countries namely UAE, Kuwait and Saudi Arabia, and it has been ranked eighth.
Booming retail scenario
In the past few years, Oman has been en route to economic progress and boom. Both the federal income and the personal wealth of the Omani nationals have substantially risen. Thus, the growing purchasing power is fuelling the local consumption, resulting in increased demand for products and services. The most thriving retail segments comprise mass grocery, electronic, specialty and luxury goods markets. Also, the demand for smaller retail spaces, particularly for the food and beverage business is growing. According to an expert from Cluttons Oman, as Oman’s logistics and supply chain sector continues to grow and benefit from momentous investment in infrastructure, warehousing and transportation, the country has the potential to become the key entry and exit point for goods for the Gulf region. Thus, being strategically located, Oman can become an important logistic centre for international retailers.
Franchising on rise
Further, like many other Middle Eastern countries, there is growing awareness and understanding of the benefits of the franchise business model among the Omani business community. Quick to lap up the opportunity to enter the country’s market via franchising, many globally recognised brands are seeking to grow their presence in this market. However, it is important to note that franchising is not a new phenomenon in Oman, it is just that the business model is notably being utilised now. In fact, several international franchises like Starbucks, Subway, H&M, Zara, McDonald’s and many others have been present in the country for quite a long time. Therefore, the country’s franchise sector has players from across diverse sectors like F&B, Textiles, Consumers and Electronics Goods etc.
Legal overview
The country’s regulatory framework does not have any specific laws pertaining to franchise business model. Here franchise agreements fall under the purview of Commercial Agency Laws. The franchise contracts are simply treated as agency contracts except in cases when agreement is expressly administered by the laws of a foreign country and includes arbitration clauses. Moreover, to lawfully enter into a franchise agreement, both the contracting parties i.e. the franchisor and franchisee are required to register in the Commercial Agents Registry at the Ministry of Commerce & Industry.
Latest headways
Oman’s thriving retail scenario is also alluring big players like Azadea Group and Al Meera who are set to bring in international retailers in Oman via franchising.
Beirut - based Azadea Group Holding (AGH) and Muscat Grand Mall (Oman), have signed a franchise agreement. Azadea G, the fashion arm of AGH will introduce, Gymboree in Oman. Gymboree is a US based chain of children’s clothing stores. Muscat Grand Mall will franchise Azadea’s branded stores in the country. Muscat Grand Mall has recently opened in Muscat and is touted as the country’s upbeat retail destination. This will also mark the group’s first foray into Oman. Casino, the French retailer has inked a franchise deal with Al Meera Consumer Goods Co for Qatar and Oman markets. Al Meera will launch five Geant hypermarkets in these countries over the next three years. The company will open and operate two hypermarkets in Oman. The stores will be launched under the Geant and Geant Easy brands. The ‘GIB Villa’, a luxury furniture and interior designer store launches in Oman. German Interior Brands (GIB), a new company under Hashimani Group has opened a store. Hashimani Group with an established presence in the furniture business since the 1960s has franchises of more than 20 well known German and European furniture brands.
Market for regional brands
UAE’s café concept More Café has signed an agreement with Asha Enterprises to enter into Oman and is looking to launch its operations in Muscat in the early 2012. It is brand’s first foray outside of the Emirates. Dubai-based falafel chain Just Falafel has opened its outlet in Oman via franchising. Initiating expansion of its trademarks in the Gulf and other regions, UAE’s Emirates General Petroleum Corporation or Emirate has granted investor franchise of its trademarks namely Freshplus, Bakeria and Café Arabicca to investors in Oman. Freshplus stores are a take on the concept of modern shopping; Café Arabicca is a beverages brand, while Bakeria is food concept.
Franchising gaining ground
In Oman, various stakeholders like government, local business community and even the education fraternity are making an effort to popularize the franchise business model to help prepare future entrepreneurs of Oman and drive growth in Small and Medium Enterprise (SME) sector. Recently, Muscat American Business Council (MABC) and McDonald’s Oman hosted a panel discussion to motivate young minds to take up franchises as a practical business option and take to self-entrepreneurship. The forum also highlighted franchising as an exciting business model for first time entrepreneurs.The programme was attended by the students of Sultan Qaboos University’s (SQU) College of Commerce and Economics. Several well-established Omani franchisees shared their learning and expertise to inspire graduating students to consider franchising as a serious self-employment option after graduation. They also were given an overview of the government’s procedures for establishing SMEs. Internationally, franchising is a well accepted way to self-employment and also a preferred route for starting own ventures without much risk. Besides this, franchising sector is also creating employment and jobs and thus, contributing to national GDPs across the world. Now, Oman is also gearing to leverage from this globally proven business model.
