Greater opportunities for women to learn and earn are making several Arab economies increasingly attractive markets for fashion retailers.
This story first appeared in the June 13, 2011 issue of WWD. Subscribe Today.
That’s among the conclusions of A.T. Kearney’s 2011 Retail Apparel Index, which included three Arab nations — the United Arab Emirates, Kuwait and Saudi Arabia — among the five markets offering the best prospects for growth in fashion retailing.
China topped the list, with an index rating of 61.4, followed closely by the UAE at 58.9. Kuwait was third at 48.6, followed by Russia (46.4), Saudi Arabia (43.9) and India (42). Index readings are based predominantly on “clothing market attractiveness” followed by retail development and country risk.
Brazil and Turkey took the seventh and eight spots, with grades of 40.1 and 37.4, respectively, with the top 10 rounded out by Vietnam (37.3) and Chile (36.9).
Michael Moriarty, partner and co-leader of the study, told WWD that while the UAE and Kuwait are relatively small markets, “what’s driving their attractiveness is the number of women who are becoming financially independent. When women’s and girls’ education improves, per-capita retail spending goes up faster. The women aren’t only buying for themselves, but in some cases they are second incomes.”
Both markets benefit from high disposable income and considerable fashion awareness. Expatriates and tourists make the UAE especially attractive and Kuwait has seen leasable retail space more than triple in four years to about 12.4 million square feet.
Brazil, Uruguay and Chile were the top three countries in A.T. Kearney’s Global Retail Development Index, released last week and reflecting all sectors of retailing.
Moriarty believes that one of the themes of the 2011 apparel study is diversity. “It’s a portfolio game,” he said. “There are obvious big markets for growth, like China, India and Russia, but you have to be on the lookout as some markets get overcompetitive or engage in discretionary regulation. A retailer can’t afford to overlook any market or put all its bets on a single country.”
With economies expanding, consumer markets “vibrant” and political conditions stable, the UAE and Kuwait present what Moriarty termed a “virtuous spiral.” Opportunities could expand throughout the Middle East and North Africa.
“There’s heightened risk in the area,” he noted. “But as long as the Arab Spring isn’t followed by a nuclear winter, these markets will be very exciting and dynamic for a long time to come.”