THE RETAIL BULLETIN - The home of retail news
Department Stores
Shopping Centres & Retail Parks
Home & DIY
Health & Beauty
General Merchandise
Sports & Leisure
The Papers
Retail Solutions
Food & Drink
Comment:Expanding a Retail Business into the Middle East

The Middle East has for some years been the port of first call for many UK retailers looking to internationalise their business. By Dr Mark Abell


Comment:Expanding a Retail Business into the Middle East

The Middle East has for some years been the port of first call for many UK retailers looking to internationalise their business. By Dr Mark Abell

Historically this has been because of the desire of Dubai's ruling Maktoum family to build a modern regional hub that attracts both investment  and tourism, the  similar ambitions of the Kuwaiti government and the wealth, size  and lack of infra structure of Saudi Arabia.  However over the last few years  the oil fuelled ambitions of Abu Dhabi, ( which together with Dubai and five lesser known Emirates comprise the United Arab Emirates) and  the World Cup charged energy of Qatar have also become very evident.   The region therefore offers great opportunities for foreign retailers.
However,  successfully establishing a retail brand in the region is not straight forward. There are restrictions on direct investment in all of the Gulf countries ,  with limits placed upon the percentage shareholding that foreign nationals  and corporations can hold.  It is therefore usual for foreign retailers to establish a presence in the region  through  a relationship with a local developer.  The challenges  are therefore choosing the most appropriate partner and structuring the relationship in the most effective manner.  Neither are as straight forward as they may sound.
Local partners need to have the right blend of capital to invest in the brand's expansion in the region , operational experience in whatever markets are to be targeted and a real hunger for making the brand a success.  Capital is rarely an issue, although due diligence beyond the fact that the partner is related to the local royal family is essential.  Appropriate operational experience in the relevant markets often is an issue though.  The restrictions on direct foreign investment apply not only to non-Arabs, but to other GCC  member state nationals too.  So if, for example, a Kuwaiti national is to operate a brand in , say, Dubai, he will need to link up with a Dubai partner in some way. This proposed relationship needs to be carefully investigated by the brand owner and a track record  for the partner in each target market is preferable. One rarely expects that a partner who  is investing substantial capital in a brand will need to be pushed to make that investment produce appropriate results.  However, that is far from unknown in the Middle East . Wealthy dilettantes can  take on  brands as hobbies , of which they eventually become bored and either  abandon , or worst of all, badly neglect and under invest in.
Structuring and documenting the relationship with the local partner in an appropriate manner is therefore essential.  This is made even more important by various legal "elephant traps " that await unwary brand owners, such as the mandatory application of Shariah law in Saudi Arabia and the potential application of agency laws in other jurisdictions that can make termination, even for good cause, a difficult and expensive matter.   These  challenges  and those that that can face brand owners seeking to litigate or enforce foreign judgements in the Middle East mean that it is essential to take advice from lawyers who are expert in structuring these types of relationships and experienced in doing deals in the Middle East.

Dr Mark Abell, Partner at Field Fisher Waterhouse will be speaking at the Retail Bulletin’s International Expansion Conference, 27th March 2012. His topic will be ‘Internationalising Retail Businesses - The Legal Perspective’. The overall theme of the conference, which is sponsored by GfK, is  'Driving sales and market share, mitigating risk and strengthening your business through international multichannel growth strategies'. To register and for more information, click here.

Email this article to a friend

You need to be logged in to use this feature.

Please log in here

Subscribe For Retail News


Customer Engagement Conference 2019
Customer Engagement Conference 2019
5 June 2019
Cavendish Conference Centre, London W1
The 10th Annual Retail Customer Engagement Conference
The HR Summit 2019
The HR Summit 2019
8 October 2019
Hallam Conference Centre, London W1W 6JJ
The 11th HR Summit 2019, Hallam Conference Centre, 44 Hallam St, Marylebone, London W1W 6JJ
AI in Retail Conference 2019
AI in Retail Conference 2019
16 October 2019
Cavendish Conference Center, London W1G 9DT
Digitally native competitors and demanding customers are forcing a new perspective in retail. AI and machine learning can help you step up to the challenges; and some ‘small and beautiful’ solutions can increase your conversion rates within just a few weeks.
Omnichannel Futures Conference 2020
Omnichannel Futures Conference 2020
5 February 2020
Cavendish Conference Centre, London WG1 9DT
A truly omnichannel offering requires an understanding of customer behaviour across all shopping channels and how this should impact your overall business strategy