 "Slowdown in West Asia hits Indian retailers' business")
Indian retail firms have seen business slow in West Asia among the main export markets as the region struggles with slowing economy hit by low oil prices.
While luxury goods sales have seen the biggest impact, Malabar Gold & Diamonds, the watches unit of Titan and personal care product firm Dabur have seen sales dip with customers putting off discretionary spending in the wake of economic slowdown.
Malabar Gold & Diamonds put off expansion of new outlets in the region as it saw sales slow by nearly a fourth in specific markets such as Qatar.
“There are some markets that have been affected. For instance, in Qatar, we incurred a shortfall of 20-25 per cent. Some parts of the United Arab Emirates (UAE) such as Abu Dhabi have been affected,” said Abdul Salam, executive director at jewellery retailer Malabar Gold & Diamonds. “Early this year, the situation was not very good and, hence, we did not take up too much expansion.”
The impact has been severe in markets dependent on oil revenue, but overall, the firm expects to see a 10 per cent growth this financial year.
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The International Monetary Fund had in April projected the growth of the West Asia, North Africa, Afghanistan and Pakistan region at three per cent, slightly higher than 2.5 per cent reported in 2015, on the back of increased oil production in Iraq and post-sanction environment in Iran. However, it had added that growth in most other oil exporters would slow further this year as they tighten public spending in response to lower oil prices.
“Interestingly, while the oil prices have impacted Saudi sales, non-oil dependent nations such as UAE and Qatar have also joined the league, thanks to declining business in tourism,” said S Ravi Kant, chief executive officer, Titan Watches and Accessories, and executive vice-president (communications), Titan Company.
Titan had to take the brunt of the West Asian economic slowdown, especially in Saudi Arabia, UAE and Qatar, where it witnessed a dip in sales.
However, as oil prices have begun to revive, industry is hopeful of better growth next year. “As oil prices have started improving, we will see better results in the next year or so,” said Arvind Singhal, chairman and managing director, Technopak.
Lalit Malik, chief financial officer at Dabur India, agreed that its business had been impacted in the region. But, he is hopeful that there will be an overall improvement next year with fuel prices expected to stabilise. “Based on the signals we’re getting, we expect it to revive,” he said, adding that the company would expand to Iran and South Africa while increasing its product portfolio in West Asian markets.
“We waited till June-July and are now taking up all the projects that we were holding back. Hence, we are expecting to double the growth to 20 per cent in 2017,” says Salam of Malabar Gold & Diamonds.
Hopeful of a better 2017
- In April, IMF had projected a 3% growth in West Asia, North Africa, Afghanistan and Pakistan as opposed to last year’s 2.5%
- Reduced public spending among oil exporting countries has tightened discretionary expenditure
- As oil prices are on a revival mode, companies are expecting better growth in 2017
- Companies see new opportunities in Qatar as a lot of new projects are coming up ahead of the FIFA soccer World Cup in 2022, to be hosted there
