Routes to Market in the Middle East
20/07/2023 by The Red Tree
If the Middle East is not already in your expansion plans, it likely will be very soon.
The region’s beauty market is very distinctive and has seen rapid growth since 2020 representing around 6% of the global industry.
Sephora has long led the field in beauty retailers and further put Middle East beauty on the global map when they originally launched Huda Beauty in the Dubai Mall store in 2011 and helped launch the brand and the woman to the global beauty icons they are now.
But when it comes to the best entry strategy and routes to market there are various key aspects to consider, and it’s very possible you will need to re-think and regionalise a lot of what is currently in place as the region has many nuances to navigate for success.
It’s important to recognise when you consider the Middle East whether you are referring to the entire region of 19 countries, the 7 GCC countries or a more local approach of Dubai.
Every country has a very different consumer mix and buying habits, different retailer positioning and presents its own specific compliance and operational needs. It’s these elements that will often impact and determine your entry strategy and therefore potential routes to market based on feasibility, timelines, and profitability.
Depending on your planned regions the Middle East offers routes to market that hit various touch points for a brands overall awareness, positioning and success.
E-commerce is growing with rapid demand post-covid but with much of the region operating purely offline pre-2020 and general SLA for customers lacking some sophistication, for now the dominant cross-border pure-players hold the market share in this sector.
Treatment with Retail
Where the Middle East does, however, offer a stronghold is with the abundance of salons, aesthetic clinics, and luxury spas.. ‘Treatment with Retail’ can be a brands’ winning formula, it’s estimated around 40% of the 14.3M tourists visiting Dubai each year come for cosmetic treatments, that’s in addition to the almost $1Bn in spa revenue of which 58% is spent by domestic visitors!
Middle East Beauty Hub
Explore our series of articles uncovering the intersection of tradition, innovation, and regulation within the nuanced Middle Eastern beauty markets.
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The Beauty Accelerator™
Read our series of articles focusing on The Beauty Accelerator™, which sees one emerging independent beauty brand receive equity investment plus the knowledge and expertise of The Red Tree.
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Is RaceFit™ right for my brand?
RaceFit™ assessment is beneficial to any brand at any stage of their journey. If you are: - A start up looking for direction and guidance - An established brand seeking an overall ‘health check’ - A brand in crisis urgently seeking direction on priorities - An international brand looking to expand into the UK market - A brand ready to take their ‘next step’ looking for guidance in preparation for growth, international expansion or expanding distribution then RaceFit™ is for you!
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I am based outside of the UK, can I complete RaceFit™?
Yes, the RaceFit™ self-assessment programme is entirely virtual so you can get started straight away, no matter where in the world you are.
Any company entering The Beauty Accelerator™ competition must be based and registered in the UK.
The scheme by which investment into the winning brand will be made is the Seed Enterprise Investment Scheme (SEIS). You must be eligible for SEIS to enter The Beauty Accelerator but you do not need to be registered for SEIS. You can be in the process of applying for SEIS and receiving Advanced Assurance from HMRC, which is free of charge to obtain and certifies to investors that the criteria necessary to qualify for SEIS have been met by the company at the time of the application. You do however need to be SEIS registered at the point of investment.Click here For further information about SEIS
As is the case with all equity investments, the winning brand must be willing to provide equity stakes for both SFC Capital and The Red Tree. In addition, the winning brand might be required to pay a monthly fee for the duration of the 12 month period of assistance from The Red Tree. The size of the equity stakes for both SFC Capital and The Red Tree are unknown at this stage and will be based on the valuation of the business at the time of investment. The value of the monthly fee to The Red Tree will be determined by the scope of work required by The Red Tree and will be agreed in consultation with the winning brand. The equity stake, monthly fee and scope of work will be discussed in further detail with short listed brands during the interview stage.
Brands that applied for The Beauty Accelerator™ 2022 can apply for The Beauty Accelerator™ 2024.
Applicant brands should ideally have proof of concept – the business should ideally be in operation with at least one product currently retailing on the market, an existing website in operation and a number of months of trading.
Under exceptional circumstances, brands that are at concept stage will be considered.
There should be a team in place or a willingness to take on a co-founder at an early stage.
A business plan must be in place and submitted as part of your application to demonstrate the revenue that can be delivered.
The business should not be valued at more than £1,000,000.
All R&D should be completed as funds invested will only be used for marketing and commercial activity.
If you are short listed, you must be available to attend the virtual shortlist interview. It is likely that short listed brands will be required to attend more than one virtual interview.
If you are a Finalist, you must be able to attend The Beauty Accelerator™ Final, either virtually or in-person.
You cannot apply for or already be in the process of applying for another accelerator or incubator during the period December 2023 to December 2024.
If you are selected as a finalist, and if you go on to win The Beauty Accelerator™, you must agree to exposure of you and your brand through The Red Tree’s, SFC Capital’s and Freeths online and social channels and a possible marketing campaign.
Confirmation of the winning brand is subject to SEIS eligibility confirmation, agreement on equity stake and The Red Tree fee, and completion of due diligence.
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