In the business world, the retail industry stands firm as a trading activity which is inclined towards the direct sale of goods produced for the ultimate consumers. The retail sector is the bridge between the manufactures and the final consumers dealing with specific products. It is the last point of contact in the supply chain and can get in direct contact with the relevant customers. Over the period the retail outlets have re-defined itself by categorizing itself into numerous types like discount stores, specialty stores which have grabbed the attention of customers at a rapid rate. With the advancement of technology, online retail (e-commerce) business came into existence, intending to target mass audience.
Since the retail business offers a wide variety to satisfy the many wants of consumers, it has penetrated itself in possible business sectors like pharmaceutical, cosmetics, stationery, clothing, and other potential market segments. Understanding the business scenario and the opportunities the retail segment holds, the United Arab Emirates have emphasized in focusing and strengthening the retail sector, which holds immense opportunities to the business owners and investors seeking an opportunity to invest in the UAE.
This guide is meant to provide the relevant business insights to business investors by displaying the global and UAE scenario of the retail market conditions.
Retail Industry Global Scenario
In the past few years, the retail industry has shown a significant growth at a global level, currently holding a value of 25.2 trillion US$. The critical drives contributors to the retail business involve E-retailers, Superstores, Specialty retailers, Discount stores. China, one of the fastest-growing nations of the world, holds a retail market valued at USD$3.8 trillion and is expected to reach US$6.6 trillion by 2024. Here’s the growth projection for the global retail market and the top ten developing countries for the retail investor.
The global giants like Amazon, Walmart, Staples have captured a vast segment of the retail space, which includes extensive mergers and acquisitions gradually. The global retail landscape by market capital is highlighted below.
Retail Market in the UAE
The retail industry holds a significant market in the United Arab Emirates as it has been significantly growing in the last decade. In comparison to the other GCC countries, Saudi Arabia and UAE captures the highest market capitalization.
According to the 2012 study carried out by the Department of Economic Development (DED), the tourists contributed about 20.4 per cent of the total retail sales, which amounted to AED 100 billion. The figure mentioned below highlights the growth of the retail segment in the UAE.
Although there is an infusion of the online market, still the brick and mortar concept is expected to hold an emerging market shortly. The categorization of the market in the GCC market in the food and non-food retail is highlighted below:
The internet has penetrated the retail segment to a great extent, and it can be clearly understood by having a look at the illustration below.
How to Start a Retail Business in the UAE?
The steps to start a retail business in the UAE are highlighted below:
1. Drafting a Business Plan
- Streamline the required business steps that need to be taken in the future
- Needs to be well-structured and cover specific business areas like finance, operations, cash projections etc.
2. Finding the Right Local Sponsor
- According to the rules of the UAE Government, a local sponsor needs to hold 51% of the company shares, and company owner will hold the rest.
- Corporate local sponsors are preferable over individual local sponsors. To know more about the need of a local sponsor, click here.
3. Selecting the Appropriate Location
- Location plays an integral part in grabbing the attention of the customers and also outstands the company in this competitive market.
- The UAE provides different location options like Mainland, Free Zone and Offshore based on the capital available for the investment. To know more about the difference between the three zones, click here.
4. Registering the Business with Relevant Authorities and Obtaining the Relevant License
- To carry out the operations in a proper way, business registration with the government authorities is a mandate.
- Concerned approvals need to be obtained from the relevant authorities in the UAE like Department of Economic Development (DED), Chamber of Commerce etc.
- After the completion of the registration process, the business license gets issued by the governing bodies. To know more about retail license in the UAE, click here.
5. Hire the Right Employees
- Hiring the right kind of people for the right job improves productivity and would generate more revenue.
- The UAE allows the business investors to hire international employees for their business entity, who needs to be provided with employee visa.
Key Points to Remember
Once the business license has been obtained, the following considerations are to be taken care of.
- Promotion of the store through online and offline mode
- Hire friendly staff for the smooth functioning of business
- Maintenance of an inventory to avoid shortage of goods
- Strategies to be built regarding product placement
Future Trends of Retail Market in the UAE
The projections highlight that by 2022, the ground of Abu Dhabi is likely to see the delivery of over 650,000 square metres of the retail space. Simultaneously, Dubai’s retail market is expected to change drastically, holding more than 3.7 million square metres within a span of the next five years.
Benefits of Starting a Retail Industry in the UAE
The driving forces that boost the retail industry in the region of UAE are highlighted below:
1. High Population
One of the most targeted tourist destinations, the area of UAE attracts millions of visitors every year. The increasing number of tourists and residents in the region of UAE has demanded more presence of retail outlets focusing on multiple domains. This turns out to be an excellent opportunity for business investors seeking to invest in the retail market. To get more information on the retail business in the UAE, click here.
2. Highly Competitive Market
The retail industry has reached a fierce competition when it comes to the ground of the UAE. Business investors get to explore the different tactics implemented at an international level to boost the retail industry to the next level.
3. Expo 2020
Targeted to attract a count of more than 25 million visitors, the upcoming event Expo 2020 is described as a preferable option when it comes to setting up a retail market. Looked forward as a business collaboration podium, the event holds numerous opportunities for the small and medium-sized business entities that pave out multiple growth opportunities. To know more about Expo 2020, click here.
4. Infusion of Technology
Technology has become a compulsion in every possible business segment, and the retail industry doesn’t stand out of the box. New initiatives and strategies get implemented every minute to enhance the sector to its best. Recently, the UAE tech-industry has come up with an AI robot, dedicated to improving the quality of the retail business by keeping a record of the available stocks. The core aims to infuse AI into the retail industry was to improve the quality of working, enhance productivity and to make the effective utilization of the available time. To know more about it, click here.
5. Complete Repatriation of Capital Invested and Profits Earned
In the case of company liquidation, the business owners don’t need to worry about any tax payment. The United Arab Emirates provides the complete flexibility to the business owners repatriate the capital invested and profits earned during the business cycle.
6. Complete Tax Exemption
Tax is one of the main concerns for every business owner irrespective of the nature and size of business the individual owns. The United Arab Emirates provides a relaxing environment for business investors to free themselves from the fear of paying taxes by implementing the tax-exemption rule in the nation. Recently, the Emirates have implemented the VAT rule fixed at 5 per cent, aimed to increase the revenue sources in the country.
7. Robust Connectivity
The high-quality network allows a smooth flow of business operations between the supply chain touchpoints. It also plays an important role when it comes to the right product production at the right time. The government has taken the necessary steps to build robust connectivity and help the business entity to move their goods in a smooth-manner.
8. Gateway to International Market
Surrounded by Saudi Arabia, Oman, Qatar etc. the region of UAE provides a secure gateway to the business investors to enter the international market when it comes to business expansion. To provide a more favourable climate, the government of UAE has got numerous Double Tax Treaties Agreement (DTTA) that allows the business professionals to carry out the business activities cross-borders without paying the double taxes during the import and export process.
9. Enhance the Goodwill
The moment a business entity avails international recognition, the goodwill enhances to a great extent. By incorporating a business in the UAE, it becomes easier to grab the global tag that would boost the goodwill of a company to a great extent.
10. Profitable Segment
The retail sector is one of the highly chosen business investment decision by global investors. Investing in the retail segment in the UAE market paves out multiple opportunities as the market itself has got multiple bifurcations to focus on. Be it medical, pharmaceutical, food, clothing, the retail segment turns out to be a profitable business in each of the domain.
How Can Commitbiz Help?
Who are we?
Commitbiz Consultants is holding the position of one of the best business consultants in the UAE. Our professional experts are well-versed with the incorporation procedures and maintain a vision to accelerate your business.
What do we do?
As business experts, our core tasks are highlighted below:
- Provide business license
- Act as a catalyst between clients and the UAE government
How can we benefit you?
Standing as one of the top ten business consultants in the UAE, we assist you in the following processes:
- Strategize to accelerate your business growth
- Streamline your business activities
- Comply with the legal rules and regulations
- Provide tailored business solutions
- Establish the business pillars post-incorporation process like accounting, taxation etc.
If you are planning to step ahead and set up your company in UAE, do contact us today-we’d be glad to assist.