Mena retailers adapting to new consumer preferences

Dubai: Companies across Mena are developing their business models and product offerings in a response to the changing trends in consumer preferences in the region, according to a recent report by arqaam capital.

Companies are diversifying their product range, according to Mohammad Kamal, director-equity research of arqaam capital. “There is a move toward fresh products,” he said.

Take Almarai for example. The dairy supplier capitalised on consumers’ preferences for fresh products by expanding their offerings to include fresh poultry (over frozen alternatives) and juice. Other companies are on a similar path, Kamal said.

Not only food retailers are diversifying their product lines. Saudi based Jarir Bookstore, which has outlets across the GCC, has adapted to the increasing demand for electronics, which now are sold in its stores. The move toward adapting to consumer preferences by retailers comes as a response to the growth accelerating in up and coming product niches.

The consumer base in the Mena region is growing at five million consumers per year. It indicated that spending is highest in the UAE at over 50 per cent, followed by Saudi Arabia at 40 per cent, and Qatar at 45 per cent.

Additionally, retailers in the region are “moving away from disorganised neighbourhood vendors toward organised retail outlets, such as hypermarkets,” said Kamal.

For instance, organised retailers in Saudi Arabia are taking advantage of the country’s developed logistics infrastructure, high access to retail outlets by an increasingly mobile affluent population, said Kamal. One example is Saudi Arabia's Savola Group , which owns Panda Hypermarkets.

In the UAE, however, the scene is starting to look different. Hypermarkets themselves have been expanding their reach via small neighbourhood stores, according to a report by AT Kearney.

Lulu Hypermarket is planning to open 50 neighbourhood stores across the GCC, while Carrefour is setting up its express stores across the UAE.

— Sarah Algethami is a trainee at Gulf News