linked in facebook twitter rss

  • Interbrand
  • Brandchannel

your chance!
your chance!
survey
also of interest...
Books!
 
 

 

  M.H. Alshaya Co.:  Paving the Way in Emerging Markets   M.H. Alshaya Co.:  Paving the Way in Emerging Markets  Mya Frazier  
         
 
M.H. Alshaya Co.:  Paving the Way in Emerging Markets Why is it that some of the West’s biggest brands rely on a company that started in the Arabian Gulf at the end of the 19th century? How does this company—now operating more than 1,400 stores in the Middle East—help Western brands navigate the consumer market there? Additionally, how has it emerged as the go-to company to help those same retail brands expand into other international emerging markets, such as the Czech Republic and Russia?

M.H. Alshaya Co. traces its roots back to the early 1890s, when it began trading with India. When the oil boom began, the company began building its financial empire, making significant inroads and fortunes by branching out beyond simple trade and successfully investing in real estate and hotels. Although known today mostly for retail investments, Alshaya’s role as a brand tour guide for Western companies began in 1965, when it opened a Sheraton in Kuwait City—a significant move, considering it was the first time the hotel company had opened a location outside the US. Today, when it comes to retail in the Middle East, there’s no bigger player than M.H. Alshaya. Just consider that in the small, oil-rich country of Qatar, on a peninsula in the Persian Gulf, you’ll find that staple of the American suburban mall—accessory stores targeting teenage girls looking for US$ 4 hoop earrings and $US 3 belly button rings. In fact, accessory store Claire’s operates six locations in Qatar and 25 in Kuwait.

 
More recently, Payless Shoe Source—yet another staple of the American mall—announced plans to bring its bargain shoe concept to the Middle East, aiming to open as many as 200 stores. Western retail executives have rejected the once prevailing perception of the Middle East as a region beset by instability, terrorism and Islamic fundamentalism. Instead, these executives view the region as an untapped market of voracious and underserved shopaholics.

“The people of the Middle East are young, vibrant and love to shop—frequenting malls and other shopping venues is a significant leisure activity, with customer visits as often as three times a week,” said Matthew Rubel, CEO and chairman of Collective Brands, Inc. (which owns the Payless brand) in a September press release announcing his company’s deal with M.H. Alshaya. “Consumers in the Middle East want the latest fashions. Women, in particular, enjoy expressing themselves through shoes and accessories. We are thrilled to have such a tremendous franchisee in Alshaya, with its significant retail expertise, infrastructure and deep knowledge of the region.”

The reputation of Alshaya is unrivaled. So when Swedish clothing company H&M made its debut in Oman in November 2008, it chose M.H. Alshaya to help bring its fast-fashion to the Middle East (the brand also operates in Bahrain and Saudi Arabia).

So how did this Kuwait-based company turn into the unofficial tour guide of Western brands who wanted to tap into a booming consumer class enriched by petrodollars? Experts on retailing in the Middle East attribute the success of M.H. Alshaya to its executive chairman and fourth-generation leader of the company, Mohammed Alshaya, who is no stranger to American and Western mores. He is a graduate of The Wharton School of Business at the University of Pennsylvania, where he earned a master’s degree in business administration.

“The inspiration and professionalism of Mohammed Alshaya himself [were needed] at a time, almost 20 years ago, when the quality and standards of retailing in the Middle East were quite archaic compared with Western Europe and North America,” according to Simon Thomson, an expert on retail development in the Middle East and owner of the UK-based consulting firm Retail International.

 
Alshaya’s foray into the retailing business began in 1983 when the company struck a deal with UK retailer Mothercare. Since then it has earned a reputation as the go-to franchisee when Western retail brands want to expand into the region.

Today the Kuwait-based company functions as an international franchisee, operating more than 40 of the most iconic retail brands, including Foot Locker, Mothercare, Debenhams, River Island and Boots. In all it has 1,400 stores in 16 countries. M.H. Alshaya Co. is the retail division of the Alshaya Group, which has roots in Kuwait and operates in other sectors, including the hotel and automotive industries.

Convincing Western brands to expand to the Middle East hasn’t always been easy. In a June 2008 interview with the Financial Times, Alshaya talked about the region’s link with conflict and extremism and said he was able to convince brands to open locations in the region by offering to shoulder the risk of expansion. “It’s hard work because this is a small market, and in the Middle East it’s always the [negative] stereotype,” he said.

By working deals with Western brands to franchise in the Gulf Cooperation Council (GCC), which refers to the Arab States of the Gulf—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates—Alshaya bore the development costs and risks. That’s been another key component of the company’s success, according to Thomson. “In the GCC countries, historically it has not been legally possible for a foreign company to operate without a local majority owning partner…Thus franchise has become the readily acceptable format for foreign retail brands to establish a presence in the region. Franchise also suits the franchisor very well in that the downside risk is minimal because the local franchisee provides most of the resources—financial, human and real estate,” he said. “The Middle East is perceived by those who do not know the area as politically high risk and franchise would be the only way of getting foreign brands into the region.”

Indeed, the region has been transformed by a breathtaking expansion of retail space over the last two decades. In the early 1990s, there were only about 5 million square feet of leasable space in shopping centers in the GCC. That figure swelled to 53 million in 2006 and is expected to top 130 million square feet by 2010, according to the 2006 report “The Middle East Real Estate Dynamic” by Retail International.

M.H. Alshaya’s reputation is no longer limited to expertise in Middle East retail. More recently, the firm has started opening franchise locations in emerging markets. When the Body Shop wanted to open up the market in Russia, M.H. Alshaya paved the way there and has also helped Western brands go beyond the oil-rich countries of the Gulf, recently opening retail stores in Turkey, Russia and Eastern Europe.

Alshaya told the Financial Times: “Whenever there is something that makes sense and we understand how we can turn it around or encourage it to take on more aggressive expansion…we will look into it.”

As the bloodletting in US and European retail markets continues unabated, with the scuttling of store openings and the continuing precipitous slide in consumer spending and confidence, it’s not hard to understand why Western brands would continue to expand in the Middle East, especially the Gulf region.

And that’s exactly what is happening.

Just recently, Alshaya told Gulf News, a major newspaper in the region, his firm would forge ahead despite the global financial crisis and open 450 new stores in 2009, mostly in the Middle East. He also said he’d been approached by international brands facing slower growth at home. “Others had not thought of going international and they are dependent on their home markets [but] now they are thinking of an opportunity in an emerging market,” he said.     

[15-Dec-2008]

 
  
  

Mya Frazier is freelance business journalist. She can be reached at www.myafrazier.com.

     
 commenting closed Add Social Bookmark bookmark  print
 suggest topic  recommend ( 47 )  email

M.H. Alshaya Co.: Paving the Way in Emerging Markets
 
 pardon my ignorance, with my own perception of Middle East minus UAE, I have the feeling of a closed market that is relatively untapped.

With such an "expert" and dominant player, it can work considerably to the advantage of companies seeking a presence in Middle East but a major obstacle for a company who actually want a stake in the market instead of just a franchise. 
Raziel, Full time brand junkie - December 15, 2008
 
 The Middle East, and particularly the Gulf Countries, including conservative ones like Saudi Arabia, Kuwait and Qatar might be closed culturally but are very open commercially. High per capita income not much to do for fun = shopping/eating. And as much as Western values might not be welcome here, when it comes to Western brands, it is a different story altogether. Local regulations require that foreign companies operate through local sponsors and though it is limiting, the deal is still very lucrative for Western brands. 
Boryana, Living in the Gulf for 15 years, Lonsdale Communications - December 15, 2008
 
 am wondering why Alshaya couldn't so far with his multi billion wealth establish his own brand rather than importing ready and well established brands and inject it in our Arab world, this is not the case of Alshaya only but all other investors who tend to play it safe when it comes to brands and they woruld rather buy the franchise of existing brands. 
http://www.o2mc.net// Mohammed Johmani, CEO, O2 Marketing communications - December 15, 2008
 
 Good point Mr Johmani - and that's exactly what Alshaya are doing. VaVaVoom and Milano are examples of retail brands created in the Gulf, for the Gulf. Perhaps one day we'll see them in Oxford Street! In addition, several newly developed fast food concepts have already been taken to market in Kuwait. 
Martin Norris, VP - Corporate Communications, M.H. Alshaya Co. - December 17, 2008
 
 Brand management redefined, it makes a whole lot of sense for brands to consult with experts on local markets before making the plunge. Alshaya has perfectly illustrated this norm. 
Ayoola Ajanaku, Marketing Consultant - December 19, 2008
 
view all comments
  brandchannel home archive   2013  |  2012  |  2011  |  2010  |  2009  | 2008  |  2007  |  2006  |  2005  |  2004  |  2003  |  2002  |  2001
 
 
Dec 22, 2008 Brand Darwinism: When & Why Brands Falter & Die
  Where brands go when they die.
   
 
Dec 8, 2008 Branding by the Nose in Brazil -- Ana Paula Palombo Terzi
  Brazilian brands take a nose dive.
   
 
Dec 1, 2008 Wines: Is ''Made in France'' Enough? -- Joe Ray
  French wine brands pour on uniqueness.
   
 
Nov 24, 2008 German Engineering Drives Global Brand Success -- Barry Silverstein
  How German brands deliver discipline and quality.
   
 
Nov 17, 2008 The Squeeze on Ketchup -- Jennifer Gidman
  Will other brands ketchup with Heinz?
   
 
Nov 10, 2008 Abu Dhabi: A City Rich in Branding -- Mya Frazier
  The brand strategy behind the world's richest city.
   
 
Nov 3, 2008 Church Brands See the Light of Branding -- Kimberly Maul
  Church Brands Sing the Praises of Differentiation
   
 
Oct 27, 2008 Brands in a League of Their Own -- Barry Silverstein
  Ivy League Schools Teach Brand Awareness
   
 
Oct 20, 2008 A New Packaged Milk Brand Flows into Pakistan -- Umair Naeem
  Are Pakistani Consumers Milking the Competition?
   
 
Oct 13, 2008 Gay Consumers in the Market for Respect -- Mya Frazier
  Brands that stereotype the gay demographic reap shallow results.
   
 
Oct 6, 2008 Rating Nation Brands: What Really Counts? -- Randall Frost
  Determine the true hierarchy of nation brands.
   
 
Sep 29, 2008 Value Store Brands: High-end Taste for Low Spenders -- Barry Silverstein
  Do consumers like to get dressed up when times are down?
   
 
Sep 22, 2008 Best Global Brands: Lessons Learned -- Jim Thompson
  Meet the top 100 in Interbrand's 2008 Best Global Brands report.
   
 
Sep 15, 2008 Do Hockey and Soccer Mom Brands Share Goals? -- Abram Sauer
  The sport of branding hockey and soccer moms.
   
 
Sep 8, 2008 Coffee Brands: Wake Up and Smell the Morality -- Mya Frazier
  Are green coffee brands saving the planet or themselves?
   
 
Sep 1, 2008 Family-owned Brands: A Sustainable Legacy? -- Randall Frost
  Successful brands' beginnings are all in the family.
   
 
Aug 25, 2008 More Than a Name: Japanese Super-brands Diversify -- Barry Silverstein
  Do Japanese super-brands overextend themselves?
   
 
Aug 18, 2008 2008 brandcameo's Product Placement Awards -- Abram Sauer
  The best and worst of product placement in films this year.
   
 
Aug 11, 2008 Emerging Nations Cultivate Agricultural Brands -- Randall Frost
  Are farm products from emerging nations growing on consumers?
   
 
Aug 4, 2008 India Turns Up the Volume on Sonic Branding -- Preeti Khicha
  Why sonic branding speaks to Indian consumers.
   
 
Jul 28, 2008 Preview to the 2008 brandcameo Product Placement Awards -- Abram Sauer
  Keeping track of brands on the big screen.
   
 
Jul 21, 2008 Why the Climate is Ripe for Chilean Wine Brands -- Joe Ray
  Chilean wines uncork robust branding strategies.
   
 
Jul 14, 2008 Toy Brands Don’t Play Around in Virtual Worlds -- Alycia de Mesa
  Why toy companies want to kid with avatars.
   
 
Jul 7, 2008 Pets: Part of the Brand Family -- Barry Silverstein
  Why upscale pet brands are getting a leg up
   
 
Jun 30, 2008 High Interest in Branding Credit Cards -- Jennifer Gidman
  Do these brands represent your spending values?
   
 
Jun 23, 2008 New England's Thoreau-ly Inspired Brands -- Randall Frost
  New England brands with transcendental roots.
   
 
Jun 16, 2008 Mobile Brands Connect with Pakistan -- Umair Naeem
  Cellular services companies come calling in Pakistan
   
 
Jun 9, 2008 The Deal with Online Travel Brands -- Jennifer Gidman
  Reaching destinations begins with an online journey
   
 
Jun 2, 2008 A Healthy Supply of Green -- Vivian Manning-Schaffel
  How to go green and mean it.
   
 
May 26, 2008 US Beef: Well Done Branding? -- Randall Frost
  The US cattle industry beefs up branding efforts
   
 
May 19, 2008 Will China's Brand Medal in the Olympics? -- Melissa Davis
  Does China's brand have a sporting chance?
   
 
May 12, 2008 Older and Wiser: How Brands Stand the Test of Time -- Barry Silverstein
  On the battlefield of branding, only the bad die young
   
 
May 5, 2008 Celebrity Chefs: Brands that Cook in the Kitchen -- Barry Silverstein
  Chefs bake their own brands.
   
 
Apr 28, 2008 Grading Green: The Watchdogs CMOs Must Appease -- Mya Frazier
  A new sheen to evaluating green.
   
 
Apr 21, 2008 The Caribbean's Rum-Soaked Brand -- Randall Frost
  Branding the Caribbean is no vacation.
   
 
Apr 14, 2008 Bowling for Cricket Brands -- Preeti Chaturvedi
  Branding Cricket a High Stakes Game
   
 
Apr 7, 2008 A Concentrated Dose of the Brandjunkie Results -- Jim Thompson
  The results from our end.
   
 
Mar 31, 2008 Brandjunkies on the Influence of Brands:
The 2008 Brandjunkie Survey Results -- Jim Thompson
  Brandjunkies speak their minds!
   
 
Mar 24, 2008 Brand Progression in a Recession -- Barry Silverstein
  Brands must be themselves to survive.
   
 
Mar 17, 2008 French Luxury Brands, A Modern Day Classic -- Chauncey Zalkin
  Luxury brands in an uncomfortable position.
   
 
Mar 10, 2008 UK Brands Skip Across the Pond -- Kimberly Maul
  British brands cross the pond and cultures.
   
 
Mar 3, 2008 Consumers Go Ga-Ga Over Organic -- Barry Silverstein
  Why organic baby food is a natural fit with parents
   
 
Feb 18, 2008 Brand Wonder Down Under -- Jennifer Gidman
  Why down under is looking up.
   
 
Feb 11, 2008 Customized Branding: Consumers Get Creative Control -- Barry Silverstein
  Branding gets personal with consumer input.
   
 
Feb 4, 2008 Greenwashing: A Dirty Job? -- Wendy Jedlicka
  Will greenwashing ever come clean?
   
 
Jan 28, 2008 Brands Line Up for Super Bowl XLII -- Barry Silverstein
  Brands see themselves in the Super Bowl.
   
 
Jan 21, 2008 The Corn Belt: Farmers All Ears to Branding? -- Randall Frost
  Branding the Corn Belt is a matter of taste
   
 
Jan 14, 2008 Dunkin Donuts: An International Brand for Average Joes -- Vivian Manning-Schaffel
  Dunkin' Donuts wants those on the go to stick around
   
 
Jan 7, 2008 TCIG: The Pride of Brand Ownership -- Renée Alexander
  Can local cultures brand their way to international success?