www.datamonitor.com Datamonitor USA 245 Fifth Avenue 4th Floor New York, NY 10016 USA t: +1 212 686 7400 f: +1 212 686 2626 e: [email protected]
Datamonitor Europe 119 Farringdon Road London EC1R 3DA United Kingdom t: +44 20 7551 9000 f: +44 20 7675 7500 e: [email protected]
Datamonitor Middle East and North America Datamonitor PO Box 24893 Dubai, UAE t: +49 69 9754 4517 f: +49 69 9754 4900 e: datamonitormena@ datamonitor.com
Datamonitor Asia Pacific Level 46, 2 Park Street Sydney, NSW 2000 Australia t: +61 2 8705 6900 f: +61 2 8705 6901 e: [email protected]
The Saudi Arabian apparel retail industry grew by 5.8% in 2009 to reach a value of $8.3 billion.
Market value forecast
In 2014, the Saudi Arabian apparel retail industry is forecast to have a value of $11.1 billion, an increase of 33.7% since 2009.
Market segmentation I
Womenswear is the largest segment of the apparel retail industry in Saudi Arabia, accounting for 44.8% of the industry's total value.
Market rivalry
With an industry performance showing quite a healthy growth rate despite the crisis and virtually no switching costs for the customers together with huge product differentiation the apparel industry is characterized by no more than moderate rivalry level.
The apparel retail industry consists of the sale of all menswear, womenswear and childrenswear. The menswear market includes men’s activewear, casual wear, essentials, formalwear, formalwear-occasion and outerwear. The womenswear market includes women's activewear, casual wear, essentials, formalwear, formalwear-occasion and outerwear. The childrenswear market includes baby clothing, boys activewear, boys casual wear, boys essentials, boys formalwear, boys formalwear-occasion, boys outerwear, girls activewear, girls casual wear, girls essentials, girls formalwear-occasion, girls outerwear and toddler clothing. The industry value is calculated at retail selling price (RSP), and includes all taxes and levies. All currency conversions used in this report have been calculated at constant 2009 annual average exchange rates.
For the purposes of this report, the global market consists of North America, South America, Western Europe, Eastern Europe, and Asia-Pacific.
North America consists of Canada, Mexico, and the United States.
South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.
Western Europe comprises Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.
Eastern Europe comprises the Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine.
Asia-Pacific comprises Australia, China, India, Japan, Singapore, South Korea, and Taiwan.
The Saudi Arabian apparel retail industry had a total revenue of $8.3 billion in 2009, representing a compound annual growth rate (CAGR) of 6.8% for the period spanning 2005-2009.
The womenswear segment was the industry's most lucrative in 2009, with a total revenue of $3.7 billion, equivalent to 44.8% of the industry's overall value.
The performance of the industry is forecast to decelerate, with an anticipated CAGR of 6.1% for the five-year period 2009-2014, which is expected to drive the industry to a value of $11.1 billion by the end of 2014.
The Saudi Arabian apparel retail industry has posted decelerating rates of growth over recent years. Mildly accelerated growth is expected in 2010 and will continue until 2012, after which decelerated rates of growth are forecast.
The Saudi Arabian apparel retail industry had a total revenue of $8.3 billion in 2009, representing a compound annual growth rate (CAGR) of 6.8% for the period spanning 2005-2009. In comparison, the Egyptian and Israeli industries grew with CAGRs of 6.7% and 1.4% respectively, over the same period, to reach respective values of $8.7 billion and $1.8 billion in 2009.
The womenswear segment was the industry's most lucrative in 2009, with a total revenue of $3.7 billion, equivalent to 44.8% of the industry's overall value. The menswear segment contributed revenues of $2.7 billion in 2009, equating to 32.3% of the industry's aggregate value.
The performance of the industry is forecast to decelerate, with an anticipated CAGR of 6.1% for the five-year period 2009-2014, which is expected to drive the industry to a value of $11.1 billion by the end of 2014. Comparatively, the Egyptian and Israeli industries will grow with CAGRs of 6.1% and 3.6% respectively, over the same period, to reach respective values of $11.6 billion and $2.1billion in 2014.
The apparel retail market will be analyzed taking retailers as players. The key buyers will be taken as individual consumers, and clothing manufacturers and wholesalers as the key suppliers.
Summary
Figure 3: Forces driving competition in the apparel retail industry in Saudi Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
With an industry performance showing quite a healthy growth rate despite the crisis and virtually no switching costs for the customers together with huge product differentiation the apparel industry is characterized by no more than moderate rivalry level.
The apparel industry in Saudi Arabia is of great importance to the economy in terms of trade, employment, investment and revenue. This particular industry has short product life cycles, vast product differentiation and is characterized by great pace of demand change coupled with rather long and inflexible supply processes. The retail clothing is essential to consumers who are in great majority individuals. Where brand loyalty exists, it is more likely to be to the designer than the retailer, although this is usually towards the top end of the industry. There is a growing demand for discount apparel retail with such stores providing low cost prolific-output fashion. Fashion, by its very nature, is unpredictable. The products are determined by designers, sub-cultures and creative industries and are subject to sharp and unpredictable changes. Key suppliers in this industry are clothing manufacturers and wholesalers, with retailers able to source from both.
Although clothing manufacturing remains a significant part of total manufacturing in certain developed economies the ability of retailers in a given country to source from foreign manufacturers means that the effective supplier fragmentation is made greater. The apparel retail industry is still fragmented, in spite of the ongoing consolidation process and there is room for large numbers of smaller players.
Figure 4: Drivers of buyer power in the apparel retail industry in Saudi Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
Virtually all buyers are individual consumers and this fact weakens buyer negotiation power. Retailers can differentiate themselves quite strongly through the styles of clothing that they offer. This fragments consumers as style is an abstract concept that defines individuals, to an extent, and may be used as an expression of personality and therefore it is highly individualized, which further weakens buyer power. Although there are other possible sources of apparel, such as home-made clothing, generally the demographic and psychological significance of retail garments is highly important to consumers, further weakening buyer power. However, buyers have negligible switching costs and, where brand loyalty exists, it is more likely to be the designer than the retailer, although this is usually towards the top end of the industry. However, increasingly there is growing demand for discount apparel retail with stores providing, low-cost mass consumer apparel. Here, the retailers’ strategy is to recognize the price sensitivity of their target customer segment, and compete intensely on price, selling clothes as cheaply as possible from their own suppliers. Here brand loyalty is associated with the retailer, and switching costs are low, strengthening buyer power to an extant. The position of retailers at the end of the value chain, making it impossible for them to integrate forwards, means that they are obliged to offer buyers what they want, further strengthening buyer power. As products in this industry are determined by designers or sub-cultures are subject to sharp and unpredictable changes. This can offer a competitive advantage to those retailers that can source fashionable merchandise quickly, thereby differentiating themselves and weakening buyer power. Overall buyer power is assessed as moderate.
Figure 5: Drivers of supplier power in the apparel retail industry in Saudi Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
Key suppliers in this industry are clothing manufacturers and wholesalers, with retailers able to source from both. The wholesale and clothing manufacturing sectors are fairly fragmented. Although clothing manufacturing remains a significant part of total manufacturing economies the ability of retailers to source from foreign manufacturers means that the effective supplier fragmentation is made greater. As international trade liberalizes, supplier power in the Saudi industry is decreased through competition from manufacturers in low-wage regions, most notably China. (Apparel manufacturing is almost always labor intensive, due to the difficulty of automating processes such as the sewing of garments.) Switching costs for retailers are not very high: they include the risk that choosing a low-cost supplier involves a more extended supply chain that may not be able to cope with sudden changes in demand in an industry susceptible to changes in fashion. Suppliers are further weakened by their lack of diversity, which makes the apparel retail industry highly important to their business. Overall, there is moderate supplier power in this industry.
Figure 6: Factors influencing the likelihood of new entrants in the apparel retail industry in Saudi
Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
The Saudi apparel retail industry is rated as one of the high-growth markets in the Arab region. Apparel retail within the Kingdom is dominated by the womenswear and menswear segments with business growing rapidly year on year as the Kingdom’s people became more fashion-oriented. The growth in the sector is attributed to high young population and increasing purchasing power in the backdrop of recent economic boom. Growth of this sector is evidenced by the growth of fashion retailers. Saudi Arabian apparel industry is heavily reliant on imports especially when it comes to fabric, cloth, accessories and ready-made Western style clothes. These imports come from all over the world depending on price range and quality. Overall there is a strong likelihood of significant new entrants into the Saudi apparel retail market.
Figure 7: Factors influencing the threat of substitutes in the apparel retail industry in Saudi
Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
Clothing has more functions than just keeping the wearer warm: for example, it also acts as a signifier of socio-economic class and a way of displaying individual identity. Most consumers obtain clothes from apparel retailers and they are typically offered a diverse range of products that allows them to fulfill these various needs. This makes some alternatives less beneficial from the buyers’ perspective. Substitutes for apparel retail include buying directly from manufacturers, which is facilitated by the growth of online sales. Home-made and custom-made (couture) clothing are also niche alternatives to retail of ready-made clothes. Counterfeit clothing can be a significant threat to revenues in some countries. Overall the threat of substitutes to the apparel retail industry is assessed as weak
Figure 8: Drivers of degree of rivalry in the apparel retail industry in Saudi Arabia, 2009
Source: Datamonitor D A T A M O N I T O R
The Saudi apparel retail industry is segmented into womenswear, childrenswear and menswear. The womenswear segment alongside menswear is more developed whereas childrenswear segment represents the smallest segment of the apparel retail market. The market is segmented between the high-end branded sector, the mid-market branded sector and the lower-priced market. The high-end and mid-market sectors of the apparel market are dominated by imports from Europe and the United States. The lower end of the market is characterized by imports from the Far East and South East Asia, some of which are styles copied from European and American brand names. Cultural norms dictate that traditional dress which is still commonplace differentiate market players more so than in the Western world and allows for smaller domestic players to have a fair share in the market. The industry growth over last years eases the rivalry further, and the degree is accessed as moderate overall.
Table 3: Fawaz Alhokair Group: key facts Head office: P.O. Box 359 Riyadh, 11411 Saudi Arabia Telephone: 966 1 435 0000 Fax: 966 1 435 7268 Website: www.fawazalhokair.com Financial year-end: March Ticker: ALHOKAIR Stock exchange: Saudi Arabia Source: company website D A T A M O N I T O R
Fawaz Alhokair group is a large, diversified company with significant interests in retail and real estate.
The company currently owns and operates 11 malls across the Kingdom of Saudi Arabia, which equates to five million square feet of real estate.
In addition to this, the company also operates 750 fashion stores across the Kingdom of Saudi Arabia and is the market leader in women’s and kids wear.
The company also operates 150 food outlets throughout the kingdom.
The company was founded in 1989 and is headquartered in Riyadh, Saudi Arabia.
Key Metrics
Full financial information is unavailable but the company reported turnover of SAR 1,899 million (about US$505.9 million) and net income of SAR 202 million (approximately US$53.8 million) for the financial year ending March 2009.
Table 4: Anwal United Trading Co.: key facts Head office: Almass Center, 9th Floor, P.O. Box 29303 Kingdom of Saudi Arabia -
Riyadh 11457 Telephone: 966 1 2013000 Fax: 966 1 2012855 Website: www.anwal.biz Source: company website D A T A M O N I T O R
Anwal United Trading Co. was established in the late eighties and was converted to a limited company in 2001. Today, it is a major player in Saudi Arabia’s apparel retail market.
The company specializes in women’s’ and kids’ clothing, but is also commanding a share of the cosmetics, shoes and accessories markets.
The company has secured the franchise of several renowned brands such as Etam, Jacadi and Migaino and Bottega Verde.
The company operates 125 stores across the Kingdom of Saudi Arabia, as well as seven abroad and is looking to expand further.
The company employs around 550 staff and is headquartered in Riyadh.
Table 5: Al-Sawani Group: key facts Head office: PO Box 9411, Jeddah 21413, Kingdom of Saudi Arabia Telephone: 966 2 691 2612 Fax: 966 2 691 1320 Website: www.al-sawani.com Source: company website D A T A M O N I T O R
Al-Sawani group was founded in 1977 and began to open department stores across the Kingdom of Saudi Arabia. The company specializes in the retail of fashion, accessories and home wares.
Al-Sawani Group is currently present in 13 countries across the Middle East and in Africa, operating more than 500 stores. To cope with such a geographical spread, the distribution network is supported by three regional warehouses.
Key Metrics
As a privately owned company, Al Sawani Group is not required to publish its financial results.
Table 7: Saudi Arabia size of population (million), 2005–09 Year Population (million) % Growth2005 26.4 2.4%2006 27.0 2.3%2007 27.6 2.2%2008 28.1 2.0%2009(e) 28.7 1.9%
Source: Datamonitor D A T A M O N I T O R
Table 8: Saudi Arabia GDP (constant 2000 prices, $ billion), 2005–09 Year Constant 2000 Prices, $ billion % Growth2005 227.6 5.8%2006 235.4 3.4%2007 243.3 3.4%2008 253.6 4.2%2009(e) 254.0 0.1%
Source: Datamonitor D A T A M O N I T O R
Table 9: Saudi Arabia GDP (current prices, $ billion), 2005–09 Year Current Prices, $ billion % Growth2005 315.6 26.0%2006 356.6 13.0%2007 383.9 7.6%2008 468.2 22.0%2009(e) 492.1 5.1%
Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style.
Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by analysis from industry experts using highly complex modeling & forecasting tools, Datamonitor’s in-house databases provide the foundation for all related industry profiles
Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview
Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients
Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and trends
Datamonitor aggregates and analyzes a number of secondary information sources, including: - National/Governmental statistics - International data (official international sources) - National and International trade associations - Broker and analyst reports - Company Annual Reports - Business information libraries and databases
Modeling & forecasting tools – Datamonitor has developed powerful tools that allow quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors
Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.
The Datamonitor Group is a world-leading provider of premium global business information, delivering independent data, analysis and opinion across the Automotive, Consumer Markets, Energy & Utilities, Financial Services, Logistics & Express, Pharmaceutical & Healthcare, Retail, Technology and Telecoms industries.
Combining our industry knowledge and experience, we assist over 6,000 of the world’s leading companies in making better strategic and operational decisions.
Delivered online via our user-friendly web platforms, our market intelligence products and services ensure that you will achieve your desired commercial goals by giving you the insight you need to best respond to your competitive environment.
Premium Reports
Datamonitor's premium reports are based on primary research with industry panels and consumers. We gather information on market segmentation, market growth and pricing, competitors and products. Our experts then interpret this data to produce detailed forecasts and actionable recommendations, helping you create new business opportunities and ideas.
Summary Reports
Our series of company, industry and country profiles complements our premium products, providing top-level information on 30,000 companies, 3,000 industries and 100 countries. While they do not contain the highly detailed breakdowns found in premium reports, profiles give you the most important qualitative and quantitative summary information you need - including predictions and forecasts.
Datamonitor consulting
We hope that the data and analysis in this profile will help you make informed and imaginative business decisions. If you have further requirements, Datamonitor’s consulting team may be able to help you. For more information about Datamonitor’s consulting capabilities, please contact us directly at [email protected].
