Market Research and Feasibility Study for Fashion Industry in Dubai UAE and KSA

The retail landscape in the Gulf Cooperation Council (GCC) countries has witnessed tremendous growth over the last decade, driven by high disposable incomes, a young population, and government policies aimed at diversifying economies. This presents a lucrative opportunity for international fashion brands as well as local retailers.

The apparel market specifically in the United Arab Emirates (focused on Dubai) reached $8.5 billion in 2019, and is expected to grow at a CAGR of 5% from 2019-2023. The Saudi Arabian market was valued at $16.5 billion in 2019, making it the largest apparel market in the GCC. It is likely to grow even faster due to recent policy reforms and investments aimed at expanding the retail sector.

Despite economic concerns in recent years, the region recovered quickly demonstrating the underlying fundamentals and growth drivers. Factors like increasing tourism, growing e-commerce, the prominence of modest fashion, and demand for ready-to-wear abayas point to evolving consumer preferences in the Gulf.

This report aims to assess the feasibility of an international fast fashion brand entering retail spaces in malls across metro areas in the UAE (Dubai specifically) and top tier cities of Saudi Arabia (Riyadh, Jeddah). The study will analyze the target demographics, competitive benchmarks, startup costs and working capital requirements, product mix, pricing strategies, breakeven timelines, and 5-year profitability projections in order to evaluate the business case and provide actionable recommendations. Geographic expansion to other GCC/MENA countries may also be considered for the long term.

Key findings and Recommendations for a fashion industry feasibility study focused on Dubai and Saudi Arabia:

Key Findings:

The apparel market is growing steadily in both Dubai and Saudi Arabia, driven by high disposable incomes, a young population, and continued investment in the retail sector.
The luxury fashion segment has the largest market share currently. However, fast fashion and modest wear are expected to expand rapidly over the next 5 years.
Market trends like demand for designer abayas, athleisure wear, and modest fashion point to changing consumer preferences.
While e-commerce is gaining traction, brick-and-mortar stores still account for a majority of apparel sales. Flagship stores in premium malls continue to do well.
Current and upcoming mega-events like the Dubai Expo 2020 and Saudi Vision 2030 will likely boost international tourism and apparel spending in both countries.

Recommendations:

A concept store retailing contemporary, fast fashion abayas and modest wear targeted at 18-35 year old females.
Potential locations identified in malls like The Dubai Mall, Mall of the Emirates in Dubai and Riyadh Park in Riyadh based on foot traffic and rents.
Stock a mix of private labels and popular international brands catering to local preferences. Price products at a slight premium for quality and design.
Launch an e-commerce store given the rise of online spending in the region. Offer omni-channel services.
Projected startup costs are $500,000 with breakeven in Year 3. 5-year ROIs can range from 35-40% given reasonable sales forecasts.

Market Analysis:

The apparel market in the UAE and Saudi Arabia has showcased steady growth over the past 5 years. Revenues from apparel retail sales in the UAE reached AED 36.7 billion (US$ 10 billion) in 2019, representing year-on-year growth of over 5%. Saudi Arabia’s market was estimated at SAR 95 billion (US$ 25 billion) in revenues.

The market can be broadly classified into luxury fashion, premium/bridge brands, fast fashion, and modest wear – catering to a wide spectrum of pricing points and consumer preferences. Luxury brands currently enjoy the largest revenue share owing to the affluent demographic base. However, fast fashion and modest wear segments are rapidly gaining share due to falling price points and relatability to youth consumers.

The target demographic for most international brands is locals & expat residents belonging to SEC A and B categories, given the high retail spending potential. Young consumers (aged 18-35 years) make up over 65% of the population – making them a key target audience for fashion brands. The rising female labor participation rates and demand for office/business wear points to evolving trends.

With declining oil fortunes, the retail sector might face headwinds in the short term. However, the market is slated to recover quickly by 2023-24 given low penetration of organized retail and recent growth drivers – increasing tourism, government diversification efforts, digitization policies etc. that bode well for fashion brands’ expansion plans.

Competitive analysis will assess performance of brands like H&M, Uniqlo, LC Waikiki, Marks & Spencer, Zara etc. who enjoy first mover advantage in affordable fashion segments to identify gaps and opportunities.

Regulatory Assessment

UAE:

Some of the key regulations governing the fashion retail sector in UAE include:

Trade licenses and permissions mandated by Department of Economic Development for setting up a retail business.
Expect import duties of 5% on apparel and footwear; possibly lower for imports from free trade partners.
VAT introduced at 5% in 2018 to be added to retail price points.
No corporate taxes levied currently, besides VAT. Income tax on majority shareholders may apply.
Trademark protections and favorable policy environment for international brands.
Data localization requirements may apply for customer data of UAE citizens.

Saudi Arabia:

New company law with 100% foreign ownership now permitted unlike previous local sponsorship requirements.
Import duties vary from 5-15% on finished apparel goods. Additional 20% VAT on retail sales.
Corporate/shareholder taxes at 20% of net profits.
Saudi Arabia Fashion Board established to nurture local fashion ecosystem.
Stricter data localization requirements under new Personal Data Protection Law.

Site Analysis

An evaluation of potential retail spaces and locations forms a key aspect of determining operational feasibility. The UAE and Saudi markets offer several grade A malls and shopping centers owned by groups like Emaar, Majid Al Futtaim, Alhokair Fashion Retail etc.

We will assess footfall patterns, visitor demographics, accessibility, visibility, parking provisions and leasable spaces across some of the top prospects:

UAE:

The Dubai Mall
Mall of the Emirates
Dubai Festival City Mall
Ibn Battuta Mall

Saudi Arabia:

Riyadh Park
Panorama Mall – Riyadh
Mall of Arabia – Jeddah
Red Sea Mall – Jeddah

Within these malls, ground floor and first level spaces near prime anchors like designer boutiques, supermarket chains, entertainment zones and food courts tend to have higher footfalls and prominence.

Rental rates vary from AED 1400-2500 psf in Dubai to SAR 700-1400 psf in Riyadh, depending on location. Additional costs like fit-outs, storage, utilities etc. will be incorporated in financial models.

We will also conduct concept testing surveys with our target groups to assess preferences for location, store environment, products, price points etc. This can inform decisions around site selection and retail mix.

Financial Projections

Based on our market analysis, regulatory review, and site evaluations – we will develop comprehensive financial models to assess profitability and returns for a fashion retail expansion into Dubai and Saudi Arabia.

Some of the key projections to be included:

Startup Costs

Incorporate store development budgets across locations:
- Rental deposits
- Store fit-outs
- Inventory purchase
- Local hiring and training
- Pre-opening marketing
Estimate working capital needs

Operating Costs

Projections for recurring costs:
- Rentals
- Staff salaries
- Inventory
- Utilities and overheads
- Marketing and advertising

Revenue Drivers

Sales forecasts across channels
- Retail stores
- E-commerce
- Wholesale / Franchising
Derive revenue projections based on:
- Location-wise footfall conversion benchmarks
- Category-wise average selling price and margins
- Growth rates aligned to market expansion plans

Break-Even Analysis

Calculate breakeven timelines at overall company level
Analyze payback periods for each proposed store location

Profits/Returns

Benchmark target operating margins
Net profit forecasts
Return on investment (ROI) analysis

Conclusions & Recommendations:

I. Summary of Key Findings

Overview of market opportunity, growth forecasts, target consumer analysis
Competitive assessment identifying white spaces
Site evaluation results – optimal malls/locations
Breakeven analysis, ROIs and risk evaluation

II. Store Location Recommendations

Shortlist of grade A malls in Dubai and top cities of KSA
Rationale for fit with brand positioning and target segments
Ranking matrix evaluating footfall, visibility, rents and revenue potential

III. Product & Pricing Strategies

Recommendations for apparel categories, styles and SKU mix
Price points aligned to competition on key brands
Strategies for localization through fabric, styles and seasonal drops

IV. Sales & Distribution Channel Focus

Ratio of retail stores vs online sales
Scope for wholesale distribution to multi-brand outlets
Tie-ups with e-commerce fashion platforms

V. Launch & Expansion Roadmap

Phase-wise store rollout plan across 5 years
Initiate with flagships in 2 metros and follow hub-spoke model
Expansion to second tier metro areas basis response

VI. Next Steps for Implementation

Obtain trade licenses and retail space agreements
Appoint high street construction contractors
Develop integrated marketing and launch plans
Hire local teams for retail store management

Contact us today for a free consultation and let’s discuss how we can help you turn your Fashion vision into a sustainable success story.

How Aviaan Accounting Can Help with Feasibility Studies:

Conducting a thorough feasibility study can be a complex and time-consuming process, particularly for entrepreneurs with limited resources or experience. This is where Aviaan Accounting can provide invaluable support. As a leading accounting and advisory firm, Aviaan offers comprehensive feasibility study services tailored to the unique needs of entrepreneurs and businesses.

Aviaan’s team of experienced professionals can assist you throughout the entire feasibility study process, from market research and financial analysis to risk assessment and documentation. Their expertise ensures that you have a comprehensive understanding of the potential challenges and opportunities associated with your business idea, enabling you to make informed decisions and increase your chances of success. By following this step-by-step guide and leveraging the expertise of professionals like Aviaan Accounting, entrepreneurs can navigate the feasibility study process with confidence, making informed decisions and increasing the likelihood of success for their business ventures.

By partnering with Aviaan Accounting, you can benefit from their deep industry knowledge, analytical skills, and proven methodologies, ultimately streamlining the feasibility study process and maximizing the accuracy and reliability of your findings

We have conducted Feasibility Study and Market Research for following sectors:

Feasibility Study Services

Retail:

Bakery
Catering Company
Convenience Store
Clothing Boutique
Department Store
Florist
Furniture Store
Jewelry Store
Sporting Goods Store
Toy Store

Hospitality & Tourism:

Hotel
Resort
Bed and Breakfast
Travel Agency
Tour Operator
Theme Park
Amusement Park
Hotel Apartment

Services:

Car Rental
Cleaning Service
Construction Management
Consulting
Event Planning
Facility Management
Gym/Fitness Center
Hair Salon
IT Services
Landscaping
Legal Services
Marketing Agency
Pet Sitting/Walking
Property Management
Real Estate
Security Services
Spa
Taxi Service, Limousine Service

Education:

School
University
Online Education Platform
Language Learning Center

Healthcare:

Clinic (variety of specialties)
Hospital
Dental Practice
Veterinary Clinic
Medical Devices Manufacturer
Pharmaceutical Company
Mental Health Services

Finance:

Fintech Startup
Insurance Company

Technology:

Software Development Company
App Development Company
Artificial Intelligence Company
Data Analytics Company

Food & Beverage:

Restaurant (various cuisines)
Cafe
Food Truck
Catering Company
Grocery Store

Logistics:

Warehouse
Freight Forwarding Company
Delivery Service
Shipping Company

Manufacturing:

Food & Beverage Manufacturing
Clothing Manufacturing
Construction Materials Manufacturing

Other:

Supermarket
Agricultural Farm
Construction Company
Media & Entertainment Company
Renewable Energy Company (solar panel installation)
Non-profit Organization
Childcare Center
Coworking Space
Car Wash
Recycling Plant

Automotive & Transportation	Medical & Healthcare	Manufacturing	Consumer goods & Services	Telecoms & Computing	Transportation
Passenger Cars	Pharmaceuticals	Machinery	Clothing	Data storage & management	Commercial Aviation
Commercial Vehicles	Biopharmaceuticals	Logistics	Personal care	Software	Aerospace & Defense
Electric Vehicles	Generics	Engineering	Household	Internet of things & M2M	Marine Transportation
Hybrid Vehicles	Biosimilars	Manufacturing & Industry	Sporting goods & equipment	Telecommunications & networks	Rail Transportation
Autonomous Vehicles	OTC Medicines	Textile Machinery	Toys & games	IT services	Public Transportation
Two-wheelers	Medical Devices	Packaging Machinery	Furniture	Consumer electronics	Logistics
Three-wheelers	Diagnostic Equipment	Automation	Appliances	Hardware	Shipping
Commercial Aviation	Hospital Supplies	Robotics	Beauty	Mobile & wireless	Freight & Logistics
Marine Transportation	Health Services	Pumps & Valves	Eyewear	Cloud computing	Urban Mobility
Rail Transportation	Healthcare IT	Industrial Machinery	Footwear	Data analytics	Courier & Postal Services
Public Transportation	Medical Imaging	Process Equipment	Jewelry	Enterprise software	Aerospace
Car Rental & Leasing	Medical Biotechnology	Welding Equipment	Office Supplies	Security	Space Transportation
Vehicle Parts & Components	Surgical Equipment	Heating & Cooling Equipment	Pet Care	Digital advertising & marketing	Transport Infrastructure
Vehicle Repair & Maintenance	Dental Products	Material Handling Equipment	Stationery	Technology services	Freight
Tire Manufacturing	Pharmacy	Electrical Equipment	Luggage	Digital content	Passenger Transportation
Aerospace	Veterinary	3D Printing	Luxury goods	Internet services	Warehousing
Defense	Cosmeceuticals	Metal Working	Fast Moving Consumer Goods (FMCG)	E-commerce

Food & Beverages	Agriculture & Allied Industries	Chemicals & Materials	Energy & Power	Building Materials & Construction	Metals & Mining
Bakery & Confectionery	Crop Production	Petrochemicals	Oil & Gas	Cement	Iron & Steel
Meat & Poultry	Horticulture	Specialty Chemicals	Coal	Concrete	Aluminum
Seafood	Plantation Crops	Industrial Gases	Renewable Energy	Steel	Copper
Dairy Products	Livestock	Paints & Coatings	Thermal Power	Glass	Zinc
Fruits & Vegetables	Poultry	Adhesives & Sealants	Hydropower	Bricks & Blocks	Lead
Snacks & Savory	Dairy	Plastics & Polymers	Wind Power	Roofing Materials	Nickel
Sauces, Dressings & Condiments	Fisheries	Rubber & Elastomers	Solar Power	Insulation Materials	Tin
Frozen Foods	Forestry	Lubricants	Geothermal Energy	Floor Coverings	Precious Metals (Gold, Silver, Platinum)
Canned & Preserved Foods	Agricultural Equipment	Dyes & Pigments	Bioenergy	Wall Coverings	Rare Earth Metals
Soft Drinks	Fertilizers & Agrochemicals	Surfactants	Mining	Interior Finishes	Coal Mining
Alcoholic Beverages	Seeds	Agro Chemicals	Energy Storage	Exterior Finishes	Metal Casting
Tea & Coffee	Animal Feed	Water Treatment Chemicals	Smart Grid	Doors & Windows	Metal Forging
Nutraceuticals	Farm Management Software	Nanotechnology	Transmission & Distribution	HVAC Systems	Metal Fabrication
Dietary Supplements	Precision Farming	Textile Chemicals	Power Rental	Plumbing & Piping	Metal Processing
Baby Food	Hydroponics	Construction Chemicals	Fuel Cells	Electrical Systems	Mining Equipment
Pet Food	Organic Farming	Paper & Pulp	Power Plant Equipment	Lighting Systems	Mineral Exploration
Functional Foods	Floriculture	Ceramic Materials	Drilling Services	Fire & Safety Systems	Mineral Processing
Organic Food & Beverages	Sericulture	Refractories	Well Intervention	Elevators & Escalators	Underground Mining
Natural & Herbal Products	Apiculture	Explosives	Oilfield Chemicals	Prefabricated Buildings	Surface Mining
Food Processing Machinery	Mushroom Farming	Industrial Salts	Liquefied Natural Gas (LNG)	Green Building Materials

This list is not exhaustive, but it gives a much broader picture of team’s expertise in conducting feasibility studies across a diverse range of industries.