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metre development in the heart of Festival City, featuring over 350 shops and 95 restaurants, a hypermarket, two department stores, a 17-screen Cineplex and a Family Entertainment Centre.
E-commerce E-commerce remains high on the agenda for retailers and online retail spend is on the rise globally with 82% of surveyed major international retailers possessing an online catalogue that can be browsed, CBRE’s annual global examination of retailer presence has found. Despite this trend, internet retailing in emerging markets including the Middle East has yet to take hold because here, “shopping is still primarily viewed as a social activity, often tied to eating and or other entertainment such as cinema-going,” CBRE said. In the UAE in 2010, about 33 per cent of consumers who responded to an online survey said they had never shopped online, far more than the 16 per cent global average, according to the research firm Nielsen. Gissing explains that visiting shopping malls is one of the main forms of
entertainment in the region. “Te physical feel of location, of a product, of meeting friends and family is a key component in the lives of people and their entertainment. So losing that sense of connection and physical personality would take away a significant part of people’s lifestyle in this part of the world,” he said. Another reason why e-commerce in the Middle East is still in its early
stages when compared to the rest of the world lies in the lack of region- wide laws for the sector, according to global investing firm Tomas White. “With internet usage increasing rapidly, there is growing fear about the security of users’ financial data. Further, political unrest has heightened the risk of operating an online business across countries,” the firm said. In addition to this, the lack of a coherent address system in many countries of the region also hinders the development of online retail as it poses
difficulties with regards to the delivery of purchased goods. However, e-commerce and online retail are getting bigger by the day
across the Middle East. Between 2000 and 2011, the region recorded impressive growth in internet penetration and is now home to over 75 million internet users (Internet World Stats), making it a huge potential market for online transactions. “Moreover, a relatively large percentage of the region’s population is young and fashion-conscious, buyers are tech- savvy and possess considerable spending potential,” Tomas White said. Te launch and great success of online retail platforms in recent years such as the UAE-based sites
toujourschic.com,
nahel.com and
souq.com are just a few examples that support this claim.
Challenges remain Overall, the economic downturn is still felt in all regions with consumer
confidence remaining low. In most countries of the Middle East, prime retail space remains scarce, driving rents upwards and creating difficulties for retailers seeking to enter the market. Constraints of government regulations as well as limited foreign ownership outside free zones in most countries are also factors which retailers must bear in mind when expanding into the Middle East, A.T. Kearney said. “Some countries need additional infrastructure investment to support growth, and political instability is also a factor to be considered when entering emerging markets.” Lastly, as population grows so do people’s choices and preferences, Gissing said. “Te ability of retail houses or franchisees in this part of the world to keep developing their portfolios will be determined on the ability of the developers to provide the right environment to place a particular product. Not all brands work in every development and there is a need for parity between developers and retailers to work together to build retail formats that allow new exciting product to be increased, replenished, and flourish,” he said l
Te Dubai Mall Aquarium
12 I CITYSCAPE I MAY 2012
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