Saudi retail market thrives despite fierce competition

Competition in the retail industry in Saudi Arabia is very high. Though to most Saudi businessmen, the retail industry is the safest, it is different with Raza Beig, CEO of Splash. Super brand Splash, Middle East’s largest fashion retailer and part of the Landmark Group, has been climbing ladders over the years. Headquartered in Dubai, Splash has grown to over 140 stores and 50 brand outlets across 11 countries. Beig highlighted in an exclusive interview with Fadia Jiffry of Arab News that despite the great deals and choices customers are granted, the Saudi market is still to be organized. Following is the text of the interview: You have discovered lucrative markets abroad especially in the Middle East. Which country would you say tops in terms of sales and why? We are a value fashion retailer and therefore finding ground is easy, each market has been very good. But it's Saudi, followed by the UAE, Qatar and Kuwait. We have been in Saudi Arabia for over 16 years now and understand their needs fairly well. We are aware of the customer's needs and with fashion constantly changing; our prices help them to indulge in shopping, which is a significant part of their recreational activities. Therefore, they spend a lot of time in stores compared to other GCC states, which benefits brands like us. Your views on the retail ecosystem in the Gulf and what is the growth of retail profit in the region? The market is buoyant and there is a lot of investment in new projects and infrastructure, which brings money into the market. Retail is an industry and there is a lot of investment in good quality malls. All this finally benefits the industry. I do believe it's better than the best. Costs are going up and therefore profit growth comes into question, especially when one compares organic growth. The benefits of economy of scales are not met because of increase in costs. How would you identify the Saudi retail market's real potential? The Saudi retail market is fiercely competitive. The customer has choices and gets great deals. But the market is still not organized. Also, I do believe for Saudi Arabia the best is yet to come and thus I'm very optimistic about the growth and opportunities in the region. Splash has expanded its international business through franchising, licensing, joint ventures and technology transfer. How would you experience the exportation and importation barriers in the Middle East in general and GCC in particular? GCC on the whole is very practical and business friendly, from import laws to customs and indirect taxes, as all are dealt with by keeping the customer in mind. We can think creatively, because there are almost no barriers. How does Splash contribute in supporting the country's unemployment problem? What is the rate of Saudization in the Splash branches within the Kingdom? We would love to employ as many Saudis. In Rome, one has to be a Roman. I have always personally encouraged localization, who can service the Saudi people better than a Saudi himself. But retail is a tedious job and therefore we lose our best talents to banks and airlines, who are as glam as fashion. But I would like to state that retail has great opportunities for people who enjoy the service industry. We have examples of junior sales executives who have grown to become general managers. On Saudization, we have approximately 35 percent Saudi staff, some of whom have been with us for over 5 years. It is also great to see some young Saudi boys who joined us some time ago and are now taking on management roles. What is the impact of e-shopping, social media and online shopping websites on the amount of sales in Saudi Arabia and elsewhere in the GCC? And how do such fast technologies facilitate or increase the sales rate? I don't think e-commerce is a very big industry presently but it is definitely growing, especially in books, technology and services. Fashion is still at a nascent stage, but I do believe in 5 years it will catch on. In these 5 years I see 15 percent to 20 percent of our sales coming from e-commerce. Retail sectors are growing rapidly where most Saudi traders believe that this sector is the safest trade in the Kingdom. What are the toughest challenges that are faced in this sector and how would you describe the competition in the Kingdom compared to other countries in the GCC? Retail is a science and once understood, it is easy to manage and function. But saying it is the safest, is probably not right. It needs to be understood well. If not, all small- and medium-size retails will easily lose money. Aspects like customer knowledge, product knowledge, design, price, overall marketing, pilferage, inventory management, merchandizing, logistics and seasonality have to work, in synch, just as a machine does and each one of them are the cogs and wheels of this big machine. If any of the above doesn't perform, the machine stops, chokes and eventually fails. As a leading business company, what type of encouragement would Splash give young individuals to become entrepreneurs (male and female) of their own? It's always about the customer in every field, be it fashion or any other industry. If a young industry is focused, cares for the customer and works toward carefully addressing the needs of his/her client, it will stand the test in business. From arabnews