The Apparel Market

of Saudi ArabiaAn Untapped and Growing

Opportunity for US Firms

Global Comparative Analysis

Regional Study

Country-Specific Insights

Business Plan

Anne Chen Jennifer Lee

Jennifer Coppola Samantha Miletti

Global Comparative Analysis

• robust economic growth

• a redefined economy

• opened up to investors

• locational and infrastructural support

• political stability

• rapid population growth

• trend-conscious and young populace

• steady growth in personal disposable income

• large working age population

Macroenvironmental Factors

People-Related Trends

Middle East & North Africa Rest of the WorldCapitalize on Their Growth, Stand Out Against Their Weaknesses

• utilize their rising income citizens

• population decline

• political instability and corruption

• economic downgrades

• aging populace

• continued political instability

• poor infrastructure and limited technology

• high regulation

• underdeveloped

• fragmented governance and ethnic tensions

Europe

Asia

Sub-Saharan Africa

Regional Study: Key Countries

UAE

• most populous country in GCC- urban areas experiencing growth- strong female / youth consumer base

• benefits of oil revenues and government

stimulus- $906.8 billion GDP (rose 6.8% )- rising incomes and education of middle-class- $12.2 billion FDI inflows / most stable country in Gulf

• business-supportive reforms- reductions in minimum capital requirements- opening up of and improvements in banking system

- unified standardizations

• tourism & apparel- most-visited country in region- sight-seeing and rich cultural history

- popularity of modern retail and international brands

Saudi Arabia

• population growth- rise in consumer confidence- high per capita disposable income

• positively perceived by ROW- modern and secure- tourism as a driver of retail growth

• GCC’s most advanced retail market- unregulated rental prices- success enjoyed by various retail formats

Mall of Emirates (Dubai, UAE)

Saudi Arabia’s Apparel MarketLeveraging Industry Synergies

TechnologyApparel Tourism

Park Hyatt Marina Club & Spa (Jeddah, Saudi Arabia)

• 10% increase in tourism

• hospitality sector forecast to reach

$93 billion by 2019

• new tourist visa program

• attracting business, religious, leisure

travelers

• generating jobs

• rise in government spending on

airline improvements

• young citizens, expatriates, influx of

tourists

• increasing number of internet users proliferation of e-commerce

• high supply of quality mall and

store locations

• availability of experienced

franchise partners

Al-Hyatt Mall, Ridyadh

• investments to catalyze and

support research, science, and

innovation

• ME’s largest IT market

• networked society: widespread

Internet and Smartphone usage

Business Approach

Where

When

Who / What

How

Floating Mosque, Jeddah Kingdom Tower, Riyadh

Why

Customer: The Modern Saudi Woman• fluctuating tastes• trend- and price-conscious• joining labor force

Product: Style for Hot Climates• lightweight fabrics• bright color• accessories, shoes, beauty, etc.

• malls: vacancies, rents

• investments in areas besides Jeddah and Riyadh

• success of one-stop leisure hubs: food, shopping, entertainment

Market Access• Licenscing

- 2003: Saks Fifth Avenue opened a store in Riyadh trough licensing agreement with well-established ME businesses (10-year agreement expired in 2012)- technology benefits but limited control

• Joint Partnership- SA’s consumer market and business openness has since changed- Saks Off Fifth is more affordable- more control / access to local knowledge to bridge cultural gaps

Promotions• Social Media

• Travel Packages

• Advertising

Risk Management

• political concerns - corruption, dishonesty

- effects of conflict-torn Yemen

- Islamic extremism, terrorism

• government control- national products / firms given priority

- “negatives” list

- uncertain leadership due to ailing King

• trade regulations- no duties/tariffs on exports, but imposed on

many imported goods

• inexperienced institutions and infrastructure - lack of transparency and reliable data

- intellectual property protection / counterfeiting concerns

- poor administrative standards

- mercurial legal system

- inefficient delivery systems

• environmental issues- flooding and earthquakes

- food prices

• lack of education and employment- difficult to attract and retain talented workers

- religious-based curricula and intolerance

• continued gender inequality- travel restrictions

- workplace segregation

• cultural differences- conservative society

- effect of religious holidays on business activities Dealing with People

Handling Operations

Hofstede’s Cultural Dimensions

Questions?