The retail industry is well-known in the business world as a trading activity geared toward the direct sale of goods produced for end users. The retail sector serves as a link between manufacturers and the end-users of specific products. It is the supply chain's final point of contact and can make direct contact with the appropriate customers. Over time, retail outlets have redefined themselves by categorizing themselves into a variety of types, such as discount stores and specialty stores, which have quickly captured the attention of customers. With the advancement of technology, online retail (e-commerce) businesses arose, to reach a wide audience. Also, because the retail industry provides a wide range of products to meet the diverse needs of customers, it has expanded into potential business sectors such as pharmaceuticals, cosmetics, stationery, clothing, and other market segments.
Understanding the business environment and the opportunities available in the retail sector, the UAE has placed a strong emphasis on focusing and strengthening the retail sector, which offers tremendous opportunities to business owners and investors looking to invest in the UAE.
GLOBAL SCENARIO
The retail industry has seen significant growth in recent years, with a current global value of 25.2 trillion US dollars. E-retailers, Superstores, Specialty retailers, and Discount stores are among the key contributors to the retail industry. China, one of the world's fastest-growing economies, has a retail market worth $3.8 trillion, which is expected to grow to $6.6 trillion by 2024. For the retail investor, here are the growth projections for the global retail market and the top ten developing countries.
Global behemoths like Amazon, Walmart, and Staples have gradually absorbed a large portion of the retail market through extensive mergers and acquisitions. The global retail landscape is depicted below by market capitalization.
MARKET IN UAE
The retail industry in the United Arab Emirates has grown significantly over the last decade, making it a significant market. Saudi Arabia and the United Arab Emirates have the highest market capitalization among the GCC countries.
Tourists contributed about 20.4 percent of total retail sales, which totalled AED 100 billion, according to a 2012 study conducted by the Department of Economic Development (DED). The graph below depicts the retail sector's growth in the United Arab Emirates.
Despite the infusion of the online market, the brick and mortar concept is expected to hold a growing market shortly. The following is a breakdown of how the GCC market is classified in terms of food and non-food retail:
PROCEDURE
The following are the steps to starting a retail business in the UAE:
1. Drafting a Business Plan:
Streamline the business processes that must be followed in the future.
It should be well-organized and cover specific business areas such as finance, operations, and cash projections, among others.
2. Finding the Most Suitable Location:
The company's location plays an important role in attracting customers and distinguishing itself in this competitive market.
Mainland, Free Zone, and Offshore locations are available in the UAE, depending on the amount of capital available for investment.
3. Registering the Company with the Appropriate Authorities and Obtaining the Appropriate License:
Business registration with the appropriate government authorities is required to carry out operations properly.
Approvals are required from the relevant authorities in the UAE, such as the Department of Economic Development (DED), the Chamber of Commerce, and others.
The governing bodies issue the business license after the registration process is completed.
4. Hire the Right Employees
Hiring the right people for the right jobs boosts productivity and generates more income.
The UAE allows business investors to recruit foreign workers for their company, but they must be given an employee visa.
REMEMBER
After you've received your business license, the following points must be taken into consideration:
The store will be promoted both online and offline.
For a smooth business operation, hire friendly employees.
Inventory management is necessary to prevent shortages of commodities.
Product placement strategies must be developed.
FUTURE TRENDS
According to economic forecasts, over 650,000 square meters of retail space will be delivered on Abu Dhabi's ground floor by 2022. Simultaneously, Dubai's retail market is expected to expand dramatically over the next five years, with over 3.7 million square meters of space.
BENEFITS
The following are the driving forces that are boosting the retail industry in the UAE region:
1. High Population
The UAE region is one of the most popular tourism destinations, attracting millions of tourists each year. The growing number of tourists and residents in the UAE region has necessitated the establishment of more retail outlets that cater to a variety of interests. For business investors looking to invest in the retail market, this turns out to be a fantastic opportunity.
2. Highly Competitive Market
When it gets to the ground in the UAE, the retail industry has reached a point of fierce competition. Business investors should learn about the various strategies used on a global scale to take the retail industry to the next level.
3. Technological Infusion
Technology has become a necessity in almost every business sector, and the retail industry is no exception. Every minute, new programs and strategies are introduced to improve the sector to its full potential. The UAE tech industry recently developed an AI robot that is devoted to improving the quality of retail by keeping track of available stocks. The primary goals of incorporating AI into the retail industry were to improve the quality of work, increase productivity, and make better use of available time.
5. Complete Resettlement of Invested Capital and Profits
Business owners do not have to worry about paying taxes if their company is liquidated. Business owners in the United Arab Emirates have full flexibility in repatriating capital invested and profits earned during the business cycle.
6. Complete Tax Exemption
Tax is one of the most important issues for any business owner, regardless of the type or size of the company. By introducing a tax-exemption rule in the country, the United Arab Emirates creates a relaxing climate for business investors to be free of the fear of paying taxes.
7. Reliable Connectivity
The high-quality network enables smooth business operations between supply chain touchpoints. It's also critical when it comes to producing the right product at the right time. The government has taken the necessary steps to ensure reliable connectivity and to assist businesses in moving their goods in a timely and efficient manner.
8. Ticket to International Market
Surrounded by Saudi Arabia, Oman, Qatar, and other countries, the UAE region provides a haven for business investors looking to expand their operations internationally. To create a more favourable environment, the UAE government has signed several Double Tax Treaties Agreement (DTTA) that allows business professionals to conduct cross-border transactions without paying additional taxes.
9. Increase goodwill
The value of a company's goodwill increases once it achieves international recognition. By forming a company in the UAE, it is much easier to gain a global reputation, which greatly increases a company's goodwill.
10. Profitable Segment
The retail sector is one of the most popular business investment options for international investors. Investing in the retail segment of the UAE market opens up a slew of possibilities, as the market itself is divided into many segments. Whether it's medical, pharmaceutical, food, or clothing, the retail segment is a profitable business in every industry.
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