x Abu Dhabi, UAEMonday 24 July 2017

Asda to bring budget George brand to Middle East

Asda, the UK retailer owned by Wal-Mart, is set to bring its budget clothing brand George to the Middle East, following a similar move last week by its global rival Tesco.

Asda, the UK retailer owned by Wal-Mart, is set to bring its budget clothing brand George to the Middle East, following a similar move last week by its global rival Tesco.

Experts say the influx of brands from European retailers will continue as growth stalls in their home markets while the Middle East enjoys increasing levels of consumer spending.

"I think a lot of retailers will be looking here because there's economic growth across the region," said Matthew Green, the head of consulting at the property consultancy CBRE in Dubai. "When you are looking at the UK, Europe and the US, these markets are not going to be producing the same type of numbers."

Asda said it had signed a franchise deal to bring George to the Middle East with Azadea, a retailer based in Beirut that operates 300 stores and a host of international brands and franchise agreements, including Zara and Virgin Megastores.

No details were given on proposed store locations for George or the manner of their rollout, but the agreement is the first franchise deal for the brand overseas,

Last week Tesco signed an agreement with Fawaz Abdulaziz Alhokair & Company, Saudi Arabia's biggest mass-market retailer, to roll out of its affordable F&F clothing range.

In a region where luxury spending often steals the headlines, analysts said there was a market for affordable brands after the success of other budget retailers, such as Matalan and Carrefour's clothing range.

"There's definitely a market for both of them," said Sana Toukan, the research manager for the Middle East at Euromonitor. "Carrefour is doing really well targeting the lower segment."

Sales of clothing goods are expected to reach US$11.5 billion (Dh42.24bn) in the UAE and Saudi Arabia this year, according to Euromonitor.

George, which was launched 20 years ago, accounts for about half of Asda's general merchandise sales and the supermarket claims 22.5 million people purchased an item from the brand last year. Tesco announced it would open 19 of its fashion brand stores in Saudi Arabia.

Mr Green said it was likely other lower-end fashion brands, such as Primark, could also be launched in the Middle East.

"Primark has been massively successful in the UK, Ireland and Europe. You will see more and more of these brands," he said. "There's definitely the demand."

Overseas markets are becoming increasingly important to UK retailers that have been struggling with weak sales amid harsh austerity measures.

Even European retail stalwarts, such as H&M, have reported lower profits in the past few months.

M H Alshaya, one of the biggest retailers in the Middle East and based in Kuwait, this month bought 60 of La Senza's UK stores as the lingerie brand went into bankruptcy proceedings.

Analysts added the introduction of both Tesco and Asda brands could lead to the launch of the company's supermarkets in the Middle East.

"The markets are very different to the UK, but I think it's a possibility," Mr Green said.