China leads index, but Middle East region remains an attractive retail apparel market
The UAE has been ranked second on the A. T. Kearney Retail Apparel Index, which identifies the top 10 developing countries ranked in terms of market attractiveness, retail development, and country risk for their clothing retail industries.
“From the overall point of view, the UAE has all the components to be a very successful market for apparel,” said Emanuele Savona, A.T. Kearney principal. Reasons for this include that the country is growing in terms of GDP and consumption per capita and also has a vast young population attracted by big brands, Savona said.
China leads the index, which also features other Middle Eastern countries, namely Kuwait and Saudi Arabia ranking at fourth and sixth respectively. The region and the UAE in particular remains a lucrative retail apparel market. According to consulting firm A.T. Kearney, many retailers are testing their operations in the UAE before expanding to other countries in the Middle East due to the UAE’s ease of doing business, sizeable retail segment, large expatriate community, and tourism.
Tourism provides a major boost to the apparel market, particularly in the high-end luxury goods sector, according to Colin Beaton, retail analyst and managing director of Limelight Creative Services.
Additionally, apart from the high number of expatriates residing in the country, another key factor behind the lucrative nature of the apparel market here is the weather because summer months mean more people turn to the malls to the beat the heat, Beaton added.
Lifestyle and cultural factors also drive more numbers of visitors to malls. “The shopping mall is a social venue,” Beaton told Gulf News, adding that the combination of a high disposable income as well as people spending more time in malls would translate into greater apparel sales.
Several notable apparel store openings have occurred in the UAE since 2012, including Level Shoe District, Prada, Muji, COS, Gap, Calvin Klein, Juicy Couture, and Destination Maternity. Bulgari and Bloomingdale’s plan new stores in 2013 in Abu Dhabi.
Apparel is a highly competitive sector in the UAE, with residents and visitors alike spoilt for choice in Dubai’s malls. “Apparel is very competitive. The abundance of choice creates higher pressure on retailers to create attraction,” Beaton said. “The abundance of variety creates more competition.”
E-commerce is also projected to grow in the near future, but it is uncertain whether the luxury goods sector will see the same rate of growth in online shopping, Beaton said, as the shopping experience was more important where luxury goods are concerned. “People are willing to spend an extra 5 or 10 per cent on the experience,” he said.
“Apparel is not an easy market for e-commerce,” Savona said, adding that this could be due to people wanting to try out clothes for the right fit and size — a feature not available online. However, as one moves to shoes and accessories like bags, the apparel market becomes attractive for e-commerce, Savona added. “The development of the right retail capabilities to offer a perfect in-store brand experience to the shoppers will be critical to differentiate from competition and ensure a long-lasting success, especially in the most competitive markets,” Savona said.