Why foreign investors want GCC retail JVs

Author: | Published: 24 Feb 2014

Hogan Lovells’ Imtiaz Shah and Erin Kiem on why foreign investors are choosing joint ventures with local partners over the traditional franchise arrangement

Retail has been one of the Gulf Cooperation Council (GCC) economy's fastest growing sectors in recent years. This is in stark contrast to the more developed retail markets in Europe and the US, which are experiencing declining activity. Against this backdrop, there is a growing tendency among international manufacturers to look for greater opportunities to sell their goods within the lucrative GCC markets.

This has inspired a move away from the independent agent model which has traditionally been used for investment in GCC retail business. Now, many international manufacturers are looking to acquire a direct stake in local retail operations for their products. Recent examples of this shift include the joint venture (JV) arrangements of Gucci, Saint Laurent and Prada with Al Tayer Insignia for each of...