Page 88 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

72 Dubai & Co.

underlying demographics of the region suggest that there will be a
reasonably large number of economically productive people to sup-
port the needs of the unemployable. This demographic picture is
much more favorable than that of some developed nations, in
which baby boom generations are aging and being replaced by a
smaller number of working people with taxable incomes to fund
social benefits to retirees.
The rise of a middle class in the GCC states, while difficult to
measure precisely, is apparent in the marketplace. One sign already
mentioned is the increase in consumer credit—often a near neces-
sity for middle-class consumers. Another sign is the rise of moder-
ately priced “lifestyle” retailers such as IKEA and H&M—both of
which are enjoying remarkable success in the region. These compa-
nies offer average consumers a taste of elegance and flair at more
modest prices than those of high-end designers. Their appeal has
been to both expatriates and locals who, based on their income,
could be categorized as belonging to the middle class. This growing
middle class has, in fact, recently become the subject of more
detailed examination by outside observers—and the outlook is pos-
itive. James Zogby, for example, in conjunction with McKinsey &
Co., in 2007 published an initial study on middle-class attitudes in
the Gulf in which most respondents reported a sense of job security
and a feeling that life had improved in recent years. 18
Improvements in the Gulf’s education system, media availability,
and connectivity with the broader world have made consumers
from GCC countries more sophisticated and more demanding. In
the technology sector, for example, savvy media users are aware of
the latest innovations and expect them to be made available in the
local market. Fashions from around the world are visible through
satellite channels, the entertainment media, and online. This trend
of increasing sophistication can be useful to savvy multinational
firms who can leverage best practices and insights from other mar-
kets and apply them intelligently to the GCC. The businesses that
may suffer most as a result of increased consumer savvy are local
firms that once enjoyed less competitive, relatively closed economic
regimes and now are subject to more intense market pressures.
At the high end of the market, the number of wealthy individ-
uals is increasing. According to Cap Gemini and Merrill Lynch, the
number of “very rich” people (owning over $1 million in financial
assets) in the Middle East has been growing significantly and is