Asda, the UK retailer owned by Wal-Mart, plans to bring its budget clothing brand George to the Middle East, following a similar move last week by its global rival Tesco.
Experts say the influx of brands from European retailers will continue as growth stalls in their home markets while the Middle East enjoys increasing levels of consumer spending.
"I think a lot of retailers will be looking here because there's economic growth across the region," said Matthew Green, the head of consulting at the property consultancy CBRE in Dubai.
"When you are looking at the UK, Europe and the US, these markets are not going to be producing the same type of numbers."
Asda said it had signed a franchise deal to bring George to the Middle East with Azadea, a retailer based in Beirut that operates 300 stores and a host of international brands and franchise agreements, including Zara and Virgin Megastores.
No details were given on proposed store locations for George or the manner of their rollout, but the agreement is the first franchise deal for the brand overseas,
Last week Tesco signed an agreement with Fawaz Abdulaziz Alhokair & Company, Saudi Arabia's biggest mass-market retailer, to roll out of its affordable F&F clothing range.
In a region where luxury spending often steals the headlines, analysts said there was a market for affordable brands after the success of other budget retailers, such as Matalan and Carrefour's clothing range.
"There's definitely a market for both of them," said Sana Toukan, the research manager for the Middle East at Euromonitor. "Carrefour is doing really well targeting the lower segment."
Sales of clothing goods are expected to reach US$11.5 billion (Dh42.24bn) in the UAE and Saudi Arabia this year, according to Euromonitor.
George, which was launched 20 years ago, accounts for about half of Asda's general merchandise sales and the supermarket claims 22.5 million people purchased an item from the brand last year. Tesco announced it would open 19 of its fashion brand stores in Saudi Arabia.
Mr Green said it was likely other lower-end fashion brands, such as Primark, could also be launched in the Middle East.
"Primark has been massively successful in the UK, Ireland and Europe. You will see more and more of these brands," he said. "There's definitely the demand."
Overseas markets are becoming increasingly important to UK retailers that have been struggling with weak sales amid harsh austerity measures.
Even European retail stalwarts, such as H&M, have reported lower profits in the past few months.
M H Alshaya, one of the biggest retailers in the Middle East and based in Kuwait, this month bought 60 of La Senza's UK stores as the lingerie brand went into bankruptcy proceedings.
Analysts added the introduction of both Tesco and Asda brands could lead to the launch of the company's supermarkets in the Middle East.
"The markets are very different to the UK, but I think it's a possibility," Mr Green said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The bio
Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
TRAINING FOR TOKYO
A typical week's training for Sebastian, who is competing at the ITU Abu Dhabi World Triathlon on March 8-9:
- Four swim sessions (14km)
- Three bike sessions (200km)
- Four run sessions (45km)
- Two strength and conditioning session (two hours)
- One session therapy session at DISC Dubai
- Two-three hours of stretching and self-maintenance of the body
ITU Abu Dhabi World Triathlon
For more information go to www.abudhabi.triathlon.org.
LAST 16
SEEDS
Liverpool, Manchester City, Barcelona, Paris St-Germain, Bayern Munich, RB Leipzig, Valencia, Juventus
PLUS
Real Madrid, Tottenham, Atalanta, Atletico Madrid, Napoli, Borussia Dortmund, Lyon, Chelsea
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
More coverage from the Future Forum
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