(MENAFN - Arab News) Saudi Arabia has cemented its position as a major retail market in the world as it becomes one of the most attractive countries for retailers to expand into, says EC Harris in its second annual global retail study, the Retail International Programme Expansion Index.
The annual Index by the leading global built asset consultancy ranks 48 major international retail markets according to five factors that have a major impact on successful retail expansion, including quality of infrastructure, capability of the construction supply chain, legal framework, quality of project delivery and business environment.
With high end retail developments in Saudi Arabia and across the Middle East becoming increasingly more attractive for both residents and visitors from around the world, the industry is now one of the most important sources of economic growth in the region.
The index sees Saudi Arabia, as well as Qatar and the UAE all achieve high placement in this year's rankings. Saudi Arabia is currently placed in 13th place while Qatar is seeing great success in 7th place, building on the success of its 2012 ranking in 11th place. The UAE has also moved up the rankings from 15th in 2012 to 11th.
Due to a reputation for efficient project delivery and ease of transition, Middle Eastern markets are proving increasingly attractive to international retailers. This is set to continue and the future will no doubt see the market become a strong contender to the Western markets, which currently remain the most desirable according to the index, with the UK, Germany and the Netherlands topping the list.
Terry Tommason, head of property, Middle East, at EC Harris, commented: "Retailers are increasingly seeing the benefits of expanding their businesses into Saudi Arabia and other Middle Eastern markets with their strong consumer base, high levels of wealth and established construction market."
"Successful retail expansion in the Middle East as a whole relies heavily on the pace of delivery of major programs and a high quality store end product. The region's ability to access and retain the best program capabilities both in terms of supply chain and project delivery is a source of competitive advantage for the Middle East as it will allow retailers to mitigate risk and reputational damage. Each of these factors will enable the Middle East to cement its position as a global retail hub," he added.
While many of the top ranking countries, including those in the Middle East, are those with established markets and a well-developed consumer base, those that rank lower include developing BRIC nations who pose greater risk and reputational damage to retailers.
This is despite China's emergence as one of the world's largest consumer markets. The country remains around the midpoint of the index in 23rd place, though above the other BRIC countries - Brazil, India and Russia.
With renewed focus on compliance, ethics and business governance arising from the Bangladesh factory incident, retailers are increasingly putting proactive measures in place to protect the brand from direct and indirect damage and to minimize reputational risks. The likelihood of risk and reputational damage to a retailer is much greater in emerging and developing markets, and the report highlights the need to maintain brand protection while retaining quality and speed when entering new markets.
Tommason added: "No matter where retailers are looking to expand, property development programs must be streamlined to ensure efficiency. In today's volatile market, the competitive advantage will come to those retailers, which implement practical solutions throughout the supply chain to expand faster and save money, while protecting the brand."