Bahrain retail distribution staves off gloom

Channel players have been looking to major Middle East markets over recent months to assess how deep the wounds of the financial crisis run.It is important though not to overlook the impact on secondary markets in the region. John Joseph, group general manager at Manama-based retail IT distributor Business International, says that the downturn has yet to draw too much blood in the Bahraini market.

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By  Julian Pletts Published  April 2, 2009

Channel players have been looking to major Middle East markets over recent months to assess how deep the wounds of the financial crisis run.It is important though not to overlook the impact on secondary markets in the region. John Joseph, group general manager at Manama-based retail IT distributor Business International, says that the downturn has yet to draw too much blood in the Bahraini market.

In general, how has the Bahrain market been faring in the current climate?

In the Bahrain market, from the beginning of the year until now, we have not really seen a big slowdown. But the next couple of months will tell. We have obviously seen some retrenchment in retail and banking, but that is pretty much standard across the region.

Does that mean that, when larger markets such as the UAE are suffering, countries such as Bahrain are a good prospect for vendors?

Absolutely. I think the reason the UAE is suffering is a lot of business is dependent on export rather than internal consumption. Here there is limited opportunity for re-export. It is a good time for vendors to look into these markets if they have no distribution in place. If they have, it is not going to exponentially increase, but these are safe markets.

So what can the Bahrain market offer these vendors?

Additional opportunity. There are a few lifestyle products not yet available in Bahrain and there is certainly a market for these. As the markets of the GCC are maturing there is demand for a techie fashion accessory instead of a simple USB stick, as one example.

Is Bahrain experiencing a credit deadlock and how are distributors working with retailers?

As a distributor, we have always had to look almost forensically at the business of our channel. This is because we have never had the luxury of large business. New power retailers and hyper markets are opening up in Bahrain and that has obviously driven the volume up, which is good for us. That happened towards the end of the last year and the effects are kicking in this year.

Bahrain may not yet have felt the full brunt of the crisis. But what measures have you taken to offset the downturn on your business?

One of the most important things for us is to fastidiously look at our stock against our orders. We are trying not to stock too much and watching our cash rotation cycles very closely. If you get cash locked up in stock and can't get it out the door it's the death knell.

How about credit insurance? Have you been able to get credit insurance in Bahrain, prior to and after the financial crisis?

Not really. That has been a relatively new thing in Bahrain and it is not something that we have been really looking at. We have to have a pretty stringent credit policy with the people that we work with.

What level of value is currently being created in the retail market in Bahrain at the moment?

The retail chain has grown in value since the days of the souk shops. With power retailers entering Bahrain the quality of service available to the end-user is critically improving and there is a high level of skilled staff now to go through the product with the end-user. There is a much higher sense of responsibility in terms of what is being sold.

What sort of targets are vendors putting in place and is it really a time when vendors should be instilling product targets?

We will not accept any hard and fast targets from vendors. We will bring them into the market and see what support we can give them. Vendors don't always know Bahrain very well.

They know of the market, but, on the whole, they have not really understood the size of the population or the country, so there are some unreasonable expectations. Bahrain is probably the smallest of the GCC states so in that sense it can be quite competitive. Unlike Dubai where there are huge volumes to justify that competitiveness, we have to justify it with low volumes. Margins are thin and have had to be cut down. We now find, in some cases, some prices available in Bahrain are even better than what you see in Dubai.

There is a high GDP but also a huge gulf between high income earners and low wage earners. These are all things that we have to cope with and vendors looking at Bahrain must understand.

How long do you think it will be before you can lay strong strategies for growth in Bahrain?

By the middle of the year we should have a pretty fair understanding of what is going to be happening in the market place until the end of the year. Without a doubt we will be putting in every effort to look into areas of business we might not have in the past. The retail market is looked after so we will look at channel growth with new products and even new channels in Bahrain. There is traditionally the IT channel and retail channel, but we are looking at exploring other ways, such as the education channel.

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