FJX

In this article we share all the relevant information that will excite international companies in the consumer and retail space about the opportunity in the Middle East and North Africa (MENA) region. Our FJX research and advisory team provides a compact analysis with insightful facts and statistics to illustrate why this region is ripe for business expansion.

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Introduction to MENA

The Middle East and North Africa (MENA) region, covering 21 countries, is home to over 490 million people, or about 6% of the world’s population. Its combined GDP represents around 4% of the global economy, while it is growing at a comparably high pace (2020 to 2030 CAGR around 3.7% vs OECD 2.4%).

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1. Diverse Consumer Base

The socio-economic diversity in MENA leads to varied consumer behaviors. High-income Gulf countries like the UAE (GDP per capita: $53,708) and Qatar (GDP per capita: $87,662) demand luxury and international brands, while middle-income countries like Egypt (GDP per capita: $4,295) and Jordan (GDP per capita: $4,311) favor value-for-money products.

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2. Young Population

‍About 25% of the MENA population is aged between 15 and 29, compared to around 16% in the US and about 16% in the EU. Moreover, over 55% of the MENA population is under the age of 30, significantly higher than the US (22%) and the EU (32%). This young demographic is crucial for digital marketing and e-commerce strategies.

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3. Rising E-commerce

‍The e-commerce market in MENA, valued at $40 billion in 2023, is expected to grow significantly to $57 billion in 2026. E-commerce penetration in MENA of only 5% in 2023 leaves substantial room for growth compared to, for example, the US (15%), and the EU (14%). Local e-commerce players like Noon, Namshi, Wadi and Jumia are key competitors alongside international giants like Amazon, AliExpress, eBay and Trendyol.

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4. Preference for International Brands

International brands enjoy a strong presence in the MENA market. For instance, international brand spending per capita in the UAE is one of the highest globally, and the number of international retail chain outlets in major MENA cities has doubled in the last decade.

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5. Importance of Islamic Values

‍The Islamic economy, which includes halal products, Islamic finance, and modest fashion, is set to grow to $4.9 trillion by 2024, reflecting the region's demand for products adhering to Islamic laws. This influences a wide range of sectors including halal products, Islamic finance, and modest fashion.

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6. Regional Variations

Economic and demographic disparities are marked. Qatar and the UAE have small populations (2.7 million and 9.4 million), but high GDP per capita ($87,662 and $53,708), contrasting with Saudi Arabia’s larger population (36.4 million) and mid-level income (GDP per capita $30,448), and Egypt’s vast population (110.9 million) with a lower GDP per capita ($4,295).

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7. Retail Landscape

‍In a variety of MENA markets, distributors are pivotal, often serving as primary partners for international brands. In certain nations, such as Saudi Arabia, the unstructured retail sector, particularly within the grocery domain, maintains a substantial market presence (e.g. accounting for 55% of KSA's grocery market). This scenario presents significant opportunities to engage in the ongoing consolidation expected to unfold over the next decade.

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8. Growing Health and Wellness Trend

‍The organic food market in the GCC is expected to grow at a CAGR of 14% between 2018 and 2023. Additionally, the fitness market in countries like the UAE is growing at an annual rate of 6-8%, higher than the global average.

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9. High Mobile Penetration and Social Media Usage

The average daily mobile usage in the MENA region is over 4 hours, compared to 3 hours in the US and 2.5 hours in the EU. Additionally, social media penetration in the region is among the highest globally, with countries like the UAE and Saudi Arabia reporting over 90% social media usage among their internet users.

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10. Government Initiatives and FDI Support

Saudi Arabia’s Vision 2030 and the UAE's latest economic vision focus on economic diversification. FDI support is significant, with entities like ADIO in Abu Dhabi and MISA in KSA actively promoting foreign investment.

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Conclusion:

The MENA region, characterised by its diverse consumer base, youthful demographic, and rapidly growing e-commerce market, offers substantial opportunities for international brands. Successful market entry and expansion in this region require a nuanced strategy that accounts for local consumer preferences, cultural nuances, and evolving market dynamics. Understanding and leveraging these regional characteristics enable businesses to tap effectively into the MENA consumer and retail market's potential. The experienced FJX team offers various ways to help with the MENA market access from customized market research to hands-on business or product launch management.

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Sources

₁_{https://data.worldbank.org/indicator/SP.POP.TOTL?locations=ZQ}

₂_{https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?name_desc=false&locations=ZQ}

₃_{https://databank.worldbank.o rg/source/world-development-indicators}

₄_{https://www.oecd.org/economic-outlook}

₅_{https://data.worldbank.org/indicator/SP.POP.TOTL?locations=QA}

₆_{https://data.worldbank.org/indicator/SP.POP.TOTL?locations=AE}

₇_{https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=QA}

₈_{https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=AE}

₉_{https://data.worldbank.org/indicator/SP.POP.TOTL?locations=SA}

₁₀_{https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=SA}