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Experts respond to Egypt's retail attractiveness

CAIRO: Management consulting firm A.T. Kearney has listed Egypt, Saudi Arabia, Tunisia, Turkey, Morocco, and the United Arab Emirates among the top emerging markets for retail investment attractiveness in their Global Retail Development Index (GRDI). The Middle East and North Africa region appeared most prominently on the list thanks to “strong retail expansion, GDP growth …


CAIRO: Management consulting firm A.T. Kearney has listed Egypt, Saudi Arabia, Tunisia, Turkey, Morocco, and the United Arab Emirates among the top emerging markets for retail investment attractiveness in their Global Retail Development Index (GRDI).

The Middle East and North Africa region appeared most prominently on the list thanks to “strong retail expansion, GDP growth and consumers’ penchant for a Western lifestyle, says the firm.

Among the 25 variables considered were economic and political risk, retail market attractiveness, retail saturation levels as well as the difference between gross domestic product growth and retail growth.

Ahmed Kamaly, professor of economics at the American University in Cairo, told The Daily Star Egypt that retail expansion benefits consumers, local producers and the economy as a whole. As local industry is stimulated from the increased demand so too are employment opportunities.

Kamaly cites three explanations for Mideast retail attractiveness. First, increases in oil prices led to increased consumerism across the Mideast. Secondly, populations with lower incomes tend to consume more, relatively. Finally, consumption is higher when the level of education is not very high, he says.

Increased consumption and output leads to an increase in GDP.

According to Kamaly, consumers benefit from the increased competition, which does not only bring down prices and increase variety, but also forces local producers to produce at a higher quality by using newer technology, for example.

He says foreign retailers, like Carrefour, promote local industry by purchasing cheaper, local products while requiring a certain standard of quality. While people now have the choice of shopping at major retailers like Carrefour, says Kamaly, they still turn to the local supermarket for many of their groceries and daily needs, namely due to its proximity. Local retailers can compete and survive “if they are big enough, he adds.

The assumption that consumerism simply fuels greater consumerism is not necessarily true and lower prices sometimes translate to savings, he says. “You cannot segregate consumers and investors, he says, explaining that they are one and the same.

For years, critics of globalization have highlighted the negative effects it has on local culture. However, Kamaly says, “I don’t think it has a very big effect on culture. You can’t say because we have McDonald’s that there is no foul and tamaya.

For example, McDonald’s in the Middle East offers kofta sandwiches because, he says, “they have to cater to the preferences of the [local] people and have a “rapport with consumers.

Nada Kassas, Nasserite political activist and member of the Egyptian Committee for Boycotting, strongly disagrees. She says that consumerism itself is a Western capitalistic concept which eats away at a country’s individual culture.

A capitalistic culture, she says, “[divert] people’s attention to what they don’t really need and what is not really local, without “adding any asset.

“You lose your real values as a human being, as a culture, and as a country, she says. Kassas also criticizes the loss of authority in this type of culture, as well as the country’s produce its own needs or plan its own economy.

According to Kassas, the Committee boycotts American and Australian products in particular because “they are using our money to fight us. They are marketing their products and in exchange they are taking [our] money to invest in weapons factories to use in war against us Arabs.

“We don’t want to drop [our culture] down to import another one.

For more information, visit www.atkearney.com.

Topics: FJP

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