Page 154 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

138 Dubai & Co.

offerings. The distributor bears the local market risk while the inter-
national firm sees its profile rise and may even decide at some point
(even if after a long-term contract ends) to enter the market directly
if doing so subsequently becomes attractive. At the same time, the
global firm enjoys steady income streams from goods sold in the
region. There can also be additional income in the form of franchise
fees, training fees, and revenue-sharing arrangements. One can eas-
ily see the attraction of the shallow-engagement model from a
multinational’s perspective.
Many of the leading business families in GCC countries have,
not surprisingly, built a large part of their fortunes acting as distrib-
2
utors for multinational firms. The Al-Hokair Group of Saudi
Arabia, is the creation of one such family; it is the distributor for
some 50 international brands having both mass-market and luxury-
market appeal. In Saudi Arabia, Al-Hokair distributes Ann Harvey,
Zara, Monsoon, Massimo Dutti, Nine West, and a host of other
3
prominent brands. Though it began only around 1990, the Group
has enjoyed phenomenal growth by pursuing a strategy of “offer-
ing a world-class doorway through which [international brands]
can take advantage of [Saudi Arabia’s] retail opportunity.”
Al-Hokair has succeeded by convincing international brands that
its platform is the most effective one for tapping into the Saudi
market, and the booming Saudi economy of recent years has
undoubtedly helped bolster Al-Hokair’s standing. Al-Hokair posi-
tions itself as grasping the Saudi consumer’s buy-now-wear-now
lifestyle attitude better than its competitors do and, therefore, is a
superior distribution agent for global firms seeking to benefit from
Saudi consumerism. As of spring 2006, the Al-Hokair Group was
operating 617 stores in Saudi Arabia, with plans to open 90 more. 4
It is easy to see why multinational firms, after learning of the
Group’s strong market presence in the country, its deep market
experience, and its strong track record of representing other global
firms, might choose Al-Hokair as their distributor. 5
The UAE’s Al Tayer Group has likewise built a substantial
portfolio as a distributor for international brands, with a concentra-
tion on luxury goods. The Group represents, among others, Gucci,
Giorgio Armani, Dolce & Gabbana, and Yves Saint Laurent.
Al-Tayer has also opened the largest Harvey Nichols (UK luxury
retailer) store outside Britain. The Group’s leadership of the luxury