Saudi Apparel Market Page 1 of 5 Country: Saudi Arabia Industry: Saudi Apparel Market Maisa Al Tawil Commercial Assistant Over view April 10 Saudi Arabia is a major market for women's, men’s and children's clothing. The market is distinctly segmented between the upper, high-end sector and the lower-priced market. This report focuses on the high-end segment of the apparel market, which is dominated by imports from Europe and the United States. The lower end of the market is characterized by imports from the Far East and Southeast Asia, some of which copy the style of European and American brand names. Women’s custom shops also prevail in this segment of the market, where labor is relatively cheap. Saudi Arabia has a very young population. More than 41% of the population is under 14 years old; another 18% are aged between 15-24 years, making it a strong and influential consumer group. In 2008, U.S. clothing exports reached $450 million. The apparel market tends to follow a seasonal trend in line with Saudi religious holidays and summer breaks when clothes shopping reach its peak. In recent years, U.S. brand names and stand-alone boutiques have edged higher in retail sales and gained a larger foothold from European companies. European brand-name boutiques are also competing in this market, namely from Spain, Italy, France, U.K., and Germany. Almost all of these boutiques cater to the young middle-upper class clientele. Market Demand Changing habits and lifestyles, especially among young Saudis, is fueling demand for Westernstyle clothing. Satellite television, internet, overseas travel, and more women joining the labor force contribute to an evolving and changing life style and dress codes. The upper-end of the market is dominated by imports from Europe and the United States. The partial deterioration of the United States' image in the wake of regional political events temporarily opened many doors for European competitors to gain market share. This trend appears to have ended now and U.S. brand names that had a big share in the market like Guess, GAP and XOXO are seeing an increase in sales. Saudi consumers commonly become attached to brand names and carefully look out for new product lines from these brand names. Saudi buyers usually look for conservative clothing, long sleeved blouses, longer skirts, and less revealing clothes in general. Another buying factor is the assortment of colors and material. The U.S. Commercial Service – Your Global Business Partner. export.gov 800-USA-TRADE Saudi Apparel Market Page 2 of 5 Lightweight and bright colors are more in demand due to the hot and humid climate prevailing in Saudi Arabia. Light wool, light to medium weight cotton or blends fair better than polyester and nylon blend material. Best Prospects Cotton and cotton blends represent the best prospects for U.S. apparel companies in the Saudi market. Hot weather conditions dictate the need for these lightweight fabrics. Long dresses and long skirts are very popular as well as jeans with patching and embroidery. Saudi buyers have become increasingly trendy and tend to require the latest models and designs. Brand-name boutiques have mushroomed in recent years, especially for women's and children's apparel. Men's apparel represents a fraction of the demand for imported clothes in Saudi Arabia. The market is mainly dominated by women and children boutiques. Tailor-made dresses are increasingly relinquishing its share to ready-made dresses. Domestic production is limited to a few factories that produce uniforms and children's clothes from blended, unpopular fabrics. Competition in the high-end segment of the apparel market usually comes from Europe, especially from France, Italy, Spain and the United Kingdom. Cheaper imports flood the market from China, Thailand, Indonesia, and India. European stand-alone branded boutiques competing in the market include Benetton, Next, Mothercare, ZARA, Mango, and Massimo Dutti, among others. All of the mentioned names are doing very well, especially those brands that are moderately priced. Price, word of mouth, and branching have helped many of these franchises to gain and expand their share of the Saudi market. Few companies advertise only to announce a new collection or a sale. The recent recession in Saudi Arabia has lowered Saudi per capita income down, forcing many people to purchase cheap, lower quality fabrics and finishing imported clothes from countries in the Far East, especially for children clothing. Saudi Arabia is an evolving market and Saudi tastes are also changing. With more than half the population below the age of 15, Saudi youth is directing this change. Men in Saudi tend to wear the traditional thobe, (a white dress like garment), especially at work or formal occasions. However, younger Saudi men are opting for western-style clothing, especially on weekends and after hours. Women's eveningwear is also very popular. The concept of custom-made evening dresses at tailor shops is going out of fashion as more Saudi women join the labor force and find little time to have tailor-made clothes made. Evening dresses are more in demand at the beginning of the summer break when wedding ceremonies take place. The following sectors and sub-sectors provide an excellent potential for U.S. companies: -Children’s Apparel -Lingerie -Maternity Apparel The U.S. Commercial Service – Your Global Business Partner. export.gov 800-USA-TRADE Saudi Apparel Market Page 3 of 5 -Men’s Apparel -Sports, Leisure, Casual Apparel - Women’s Apparel Trade Promotion Opportunities Participating in trade shows is an excellent way to establish contacts with potential Saudi importers and dealers of women, children and men's apparel. This promotional method is highly cost effective in introducing new products to the Saudi market. The office of Textile and Apparel (OTEXA) at the U.S. Department of Commerce can be of assistance at Tel: (202) 482-5078, fax: Fax: (202) 482-2331, email: OTEXA@mail.doc.gov Fashion shows are rare in the Kingdom and advertising for women's apparel is uncommon, except for promotional offers or end of season sales by a few designer name boutiques. In addition, Saudi business people often visit shows throughout the Middle East, especially in Dubai, Lebanon and Bahrain, as well as international trade shows in Europe, Asia, and the United States. Usually, the Commercial Section of the American Embassy and the two Consulates in Saudi Arabia promotes the MAGIC show in Las Vegas. U.S. firms may also wish to consider promoting their products through the Business Facilitation Service (BFS) program of the U.S. Embassy or Consulates in Saudi Arabia. These BFSs are good techniques to introduce and familiarize the Saudi business communities with the latest developments in the apparel industry. Another promotional possibility for new-to-market U.S. companies is to organize trade missions supported by their association, state, or local chamber of commerce. CS Saudi Arabia also offers the Gold Key Service for American exporters wanting to come to Saudi Arabia to discuss business opportunities with Saudi companies. Under the program, the Commercial Service in Saudi Arabia will prepare a schedule of appointments for the American company representative before arrival, provide an interpreter during the visit, and provide office space if appointments cannot be made at the Saudi company's premises. The offices of the U.S. Department of Commerce located throughout the United States provide a number of valuable programs to assist U.S. exporters in promoting their products and services in the Saudi market. For more information, please contact your nearest U.S. Department of Commerce Export Assistance Center, which is listed in the government pages of your telephone directory. . 800-USA-TRADE Market Access Few limits are imposed on imports and no import licenses to import apparel. Direct sales are the rule rather that exception. Companies' representatives regularly visit trade shows in Europe, the Far East and in the United States. Import duties are between five to ten percent. Imports should have a certificate of origin, and the Saudi Embassy or Consulates in the United States should attest all documents. Imported apparel The U.S. Commercial Service – Your Global Business Partner. export.gov 800-USA-TRADE Saudi Apparel Market Page 4 of 5 should not contain any printed language that violates prevailing Islamic values and morals. European and Asian apparel manufacturers and representatives have long established business ties to Saudi retailers. These exporters often organize promotional trade visits during which several manufacturers show their collections to Saudi buyers. They also accept payment by either letter of credit or on 90 and 180-day draft terms. Shopping activity increases dramatically at the beginning of the summer and during the holy month of Ramadan and the annual pilgrimage. The dates for these two occasions vary every year. Wholesalers usually travel to the U.S., Europe and Asia to place their orders two months prior to these two occasions. Standards & Labeling: The Saudi Arabian Standards Organization (SASO) regulates product standards within the Kingdom. In 1995, SASO issued new guidelines to control the quality of certain products imported into Saudi Arabia. The International Conformity Certification Program (ICCP) requires that certification be issued by one of SASO's 13 appointed laboratories in the United Sates for compliance with either SASO or internationally recognized standards. In either case, the issuance of certificates must be obtained through Inchcape testing services at: SASO Program Manager Inchcape Testing Services 3741 Red Bluff Road Pasadena, Texas 77503 Tel: 713-475-2082 Fax: 713-475-2083 Email: info@iccp.com www.saso.org / www.iccp.com Labeling and marking requirements are compulsory for any products exported to Saudi Arabia. The Saudi Arabian Standards Organization (SASO) is responsible for establishing labeling and other guidelines in Saudi Arabia. The Ministry of Commerce implements SASO guidelines through its inspection and test laboratories at ports of entry in Saudi Arabia. Companies can request a copy of the labeling requirements by contacting SASO at Tel: (966 1) 452-0000 or Fax: (966 1) 452-0086. Unless it is not feasible to do so because of the size or the nature of the goods, the country of origin must be mentioned on all imported goods. Generally, goods for sale in Saudi Arabia must be in containers labeled in metric measurements. However, goods imported from countries that do not use the metric system may be marked in units of the exporting country provided they are sold locally on the basis of the metric system. Articles not manufactured on the basis of length, weight, volume, or area need not be marked. Foreign companies can either sell directly or through appointed distributors or agents. In recent years, a number of brand-name stores have emerged in Saudi Arabia, such as GAP, Ann Klein, XOXO, Guess and many more. This franchise-concept agreement appears to be a good model for other American manufacturers wishing to establish a presence in the Saudi market. A qualified, The U.S. Commercial Service – Your Global Business Partner. export.gov 800-USA-TRADE Saudi Apparel Market Page 5 of 5 on-site Saudi representative is extremely important in gaining access to the Saudi market. Agency and distributorship relationships should be registered at the local Chamber of Commerce and Industry, as well as with the Saudi Ministry of Commerce and Industry. U.S. firms interested in appointing agents and distributors in Saudi Arabia may contact their nearest U.S. Department of Commerce Export Assistant Center. Saudi Government offices are closed on Thursday and Friday. Most private sector firms do not open on Thursday either. Arabic is the official language in Saudi Arabia and English is the second language and the business language. Dhahran on the East Coast is the industrial capital and more liberal region of Saudi Arabia; Riyadh, is the capital city and has a more conservative environment; while Jeddah, on the West Coast, is the merchant capital and like Dhahran is less conservative. E-business is still in its infancy but catching on, especially among larger institutions and companies such as Aramco, the national oil company. Imports are primarily paid by letter of credit (L/C), which may be drawn at sight or at 30, 60 or 90-day sight from the bill of landing. There are virtually no exchange controls in the Kingdom. In addition, there are no restrictions on receipts for current transactions or on the movement and repatriation of capital and derived profits from local investments. Financing is available from commercial and international banks. Certain exporters' risks can be insured through the Foreign Credit Insurance Association (FCIA). For More Information The U.S. Commercial Service in Dhahran, Saudi Arabia can be contacted via e-mail at: Maisa.altawil@mail.doc.gov; Phone: +966 3 330-3200; Fax: +966 3 330-2190; or visit our website: www.buyusa.gov/saudiarabia The U.S. Commercial Service — Your Global Business Partner With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www.export.gov/. Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice. International Copyright, U.S. Department of Commerce, 2010. All rights reserved outside of the United States. The U.S. Commercial Service – Your Global Business Partner. export.gov 800-USA-TRADE