Welcome to the latest edition of our perspective and thought leadership on retail and FMCG in MENA. Our objective is to help readers switch on growth and develop winning capabilities by:

  • Reviewing, and not merely reporting, latest developments in the region
  • Inspiring new thinking around current and future trends
  • Delivering actionable recommendations around channel, customer, and categories
  • Providing best-practice examples from around the world

2019 promises to be an exciting year for retail in the GCC. Despite the challenging macro conditions, fuelling growth remains topmost on the agenda for leading retailers and suppliers in the region. This was evident during our Future of Retail in the GCC event in Dubai where delegates from over 20 companies overwhelmingly voted growth as their top strategic priority over the next two to three years.

In our opinion, fuelling growth in this slow-paced market will require companies to strategically prioritise insights (shopper, channel, customer, category), capabilities (people, processes, and tools), and agility (innovative thinking and speed of execution). In this edition of Focus on MENA, we share our perspective on how retailers and suppliers in MENA can unlock growth by focusing on:

Delivering real value and not merely promotions: MENA shoppers continue to remain cautious about household budgets and spending. With an increased propensity to save, shoppers are reducing their spending across grocery and nongrocery categories. This behavior is manifesting itself in smaller baskets, lower frequency, promotional hunting, and trading out of nonessential categories. Kantar Worldpanel’s latest KSA data for Q4 2018 highlights a worrisome trend of growing promotional intensity no longer helping businesses drive higher penetration, volume, or loyalty. We believe that while promotions will remain crucial (especially in the short to medium term), businesses will need to look for ways of escaping the promotional spiral to stop category value and profitability from eroding. One such strategy that has worked for several brands is the unrelenting focus on ‘real value’ that looks to engage shoppers on different elements of the value equation.

Shifting from mass to precision retailing: The first step towards delivering real value is to really understand the shoppers and their needs. Businesses must consider the diversity of the MENA shopper beyond demographics, needs, path to purchase, behavior, and expectations from brands. Unfortunately, several businesses consider MENA shoppers a homogenous set and develop cookie-cutter strategies to deploy across markets and consumer segments. In the Focus on MENA section looking at the shift from mass to precision retailing, we analyse the importance of understanding shopper prototypes, their needs, and path to purchase. We also highlight how businesses need to shift focus to precision retailing, which involves developing curated solutions (around route to consumer, product development, sales and marketing, etc.) rather than adopting a one-size-fits-all approach.

Investing ahead of time in growth channels: While hypermarkets and supermarkets will continue to account for the majority share of modern trade sales, businesses need to look at alternate channels, such as eCommerce, wholesale, discounters, and convenience, to fuel incremental growth. We believe that changing consumer dynamics (frugality, time, etc.) will fuel greater affinity for these channels. However, winning in these growth channels will require retailers and suppliers to develop a strategic road map for deployment and channel-specific capabilities. In the section on charting a strategic road map for eCommerce deployment in MENAT, we discuss how businesses in MENAT (Middle East, North Africa, and Turkey) can strategize for one such channel — eCommerce.

Download the full issue of Focus on MENA: Q1 2019.

For more information or queries, please contact:

Himanshu Pal, Principal Consultant

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