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HOME FEATURES › Middle East Channel Development - What You Need to Know

Middle East Channel Development - What You Need to Know

by Stuart Wilson, Tuesday 10 March 2015

Launching, building and managing channels for volume technology and consumer electronics (CE) products in the Middle East is not without its challenges. The Middle East Retail Academy (MERA*) is an organisation comprising senior executives from vendors, distributors and retailers operating in the region. Read their top tips on developing Middle East channels in this exclusive feature.

Dubai bubble

1) There is more to the Middle East than just Dubai

Some vendors get stuck in a ‘Dubai bubble’ and think they have achieved a decent Middle East strategy by getting their products listed in some retail outlets in Dubai. It is important to build up your knowledge of the regional retail channel landscape, so you start to understand just how strategic retailers such as Alghanim in Kuwait, Extra in Saudi Arabia, SmartBuy in Jordan and Khoury Home in Lebanon can actually be in terms of your overall regional success.

2) Be careful when structuring your distribution channel

Exclusivity is not the best option, but in some countries it can be the way to go. Understand the flow of products between countries. Dubai can act as a trade gateway into Iran and it is even possible to appoint a Dubai-based distributor for this very purpose. Some distributors have reach across the GCC, but it is always wise to pay special attention to Saudi Arabia. The local partner in Saudi Arabia will be very important in determining if your products are picked up by major retailers.

Special events

3) Seasonality

Make sure you engage with local distributors and retailers in the Middle East to fully understand the impact of seasonality on buying patterns. When putting together an annual plan in the region you will need to consider multiple factors including special sales events around trade shows like Gitex as well as the impact of Eid, Ramadan, back-to-school season, summer slowdown, tourist flows and festive season. MERA’s monthly report is a great way to really understand the impact of all these factors on sales.

4) Specialists or generalists?

Decide which retailers best suit your brand and product characteristics in the Middle East. Are you selling a premium product with a high price tag? Do you need a retailer that is capable of pushing high-end SKUs in a specialist ICT retail environment? If that’s the case you might be best focusing on working with retailers like Sharaf DG. Alternatively, you might be looking at aggressive price points, high volumes but low margins. In that case the hypermarkets like Carrefour and Lulu might be a more suitable channel.

Parallel imports

5) Pricing policy and grey stock

There’s a myth that the entire Middle East comprises cash rich consumers that don’t even look at the price of a product - they just buy that they want. Yes, there are pockets of consumers that fit into that stereotype, but the vast majority of consumers in the Middle East are price-conscious. Just like any other region, vendors need to come up with a clear pricing policy covering specialists, generalists and e-tailers. This market is also susceptible to price erosion through parallel imports and grey stock. Vendors must pay special attention to this to ensure their authorised channel partners do not become disillusioned.

6) Retail as an experience

The act of shopping is a leisure pastime in much of the Middle East. The act of driving to the mall and visiting shops can be a family outing. When putting together a retail strategy in the Middle East, pay special attention to merchandising, POS displays and in-store experience. This type of activity pays off. Promotions, competitions, special offers, bundling – you need to be active to stand out. Keep your retail branding fresh and keep innovating.

DISTREE Middle East

7) Face time

Get to know your distribution partners. More importantly, get to know the retailers they are selling to. Face-to-face meetings are incredibly important in the Middle East, especially for brands looking to make an impact and grab some shelf space. Vendor fortunes rise and fall rapidly in the Middle East, so you need to become part of the retail channel community. Attending DISTREE Middle East is one way to develop and maintain links with all the key retailers in the region.

8) Listen and learn

Take your channel development step-by-step in the Middle East. Do not rush in and try to do everything all at once. Maintain a clear and open dialogue with your distributors, but also talk to third parties to get a completely unbiased opinion of market conditions.

*The Middle East Retail Academy (MERA) is an association of senior executives from the region’s leading technology and consumer electronics e-tailers, retailers, distributors and vendors. MERA produces a detailed monthly report on retail channel conditions across the region, examining sales, confidence levels, pricing pressure and foot traffic, based on feedback forms from more than 50 companies. MERA is affiliated to DISTREE Events.

Media Partnership

We are pleased to confirm that Channel EMEA is an official Media Partner for all DISTREE events in 2015, including DISTREE Middle East. Readers requiring more information about DISTREE events in 2015 should contact events@channelemea.com.

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