Friday, 19 July 2013
Saudi Retail: Big Boys v The Corner Store
An article I was reading recently in MEED, Middle East Business Intelligence, about the Saudi retail sector made me ponder about the possible demise of the corner store. It wasn't the article itself that caused the ponderance. It was the information gleaned from it in combination with and a piece in the Arab News, read not 15 minutes later, that got me thinking.
Not being a business wiz I have no idea if these two concepts are as connected as I thought (the only reason I was scanning through these articles was because they were on the coffee table of the waiting room I was lounging around in) but here is what sprang to mind...
Basically the MEED article said something along the lines that, currently, Saudi retail is mostly driven by the small corner store operation and there is lots of room for consolidation.
If you're one of the Big Boys I guess there's nothing wrong with that idea. In theory, closing your small operations in preference for bigger 'everything under one roof' shopping barns helps reduce costs and supposedly gives the consumer better prices due to the Big Boys buying power.
However, consolidation also, unfortunately, gets rid of the small, local 'corner store', taking away the shop owners (and highly likely, their families) livelihood and tends to help the rich get richer, leaving the little guy wondering WTF! Let's face it, that is exactly what has happened everywhere else around the world and quite frankly, down in Kiwiland, it hasn't been a good thing. (I wonder how you say WTF! in Arabic?).
The piece I read in the Arab News was about Saudi Arabia's high unemployment and possible strategies for dealing with it. The hierarchy in Saudi have, to paraphrase the article, made the following call to the local masses - 'Start your own business! Don't wait for cushy government jobs or highly competitive private sector employment. Get out there and be independent business owners'. And to help them out the Government is cleaning expats out of the corner stores so that young, motivated, hard working, business savvy yet currently unemployed Saudi's can take their places.
The articles made me wonder who's going to come out on top in Saudi retail. The Big Boys. Or the independent business owner operating the local store.
Given that Saudi seems to be following global patterns in its 'westernisation' and that only a small few hold the reigns to, well, everything (and seem to like it that way), I don't hold out high hopes for any future independent Saudi business owner.
That's what I was pondering that day in the office.
Of course, if I'm way off base, please enlighten me.