The following research report contains market research, analysis, statistics and business intelligence relating to research on Intimate Apparel & Lingerie In Saudi Arabia.

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ABSTRACT
Saudi Arabia's economy slowed down in 1998 and 1999. With a population of 19 million, the slow growth in the economy dragged down per capita GDP to an estimated $6,500 in 1998. The Saudi market is already feeling the pinch as Saudi and expatriate consumers adjust their buying priorities and spending needs.

For the first time in years, the Saudi market for apparel slowed down, recording a two percent fall in 1998. Nevertheless, Saudi Arabia is the largest market in the Gulf Cooperation Council (GCC) for apparel. In that same year, lingerie and women=s ™dessousš wear sales plummeted reaching $38.6 million in 1998, down by more than three percent from 1997.
Industry sources predict that the market might bounce back in 2000 provided the price of oil remains at the $13/barrel level or higher. Equally important for this sector is the size of the Kingdom=s population that is growing at the rate of 3.4 percent annually. That growth rate will significantly impact the Saudi apparel market in general, and the lingerie market in particular which is expected to bounce back to $41 million by 2000.

Over the last three years, China has been the largest supplier of women=s lingerie and underwear to the Saudi market accounting for more than 12 percent of the import market. American companies account for the lion share of a segment of the lingerie market, namely women=s singlets, undershirts, slips, panties, pajamas, and negligees. Moreover, American brands have a well-defined market segment catering to the mid-to high-end of the market. The United States was the second largest country supplier of women=s underwear and lingerie to Saudi Arabia representing an average 11 percent of the import market.
A. MARKET ASSESSMENT

o Market Profile

Lingerie is a good business in Saudi Arabia. The general economic conditions in Saudi Arabia, however, have had a negative impact on retail sales in general; notwithstanding, industry experts maintain that the market outlook will improve within a year provided higher oil prices.

In the long run, a higher population figure and per capita income will enhance the Saudi lingerie market. Consumer preferences and buying habits are changing; the stereotype of the Saudi woman as being a shopper with lots of money and time on her hands does not hold true, especially in leaner times. Saudi women are more discerning and more conscious of quality, comfort, and price.

The Saudi market was estimated at $38.6 million in 1998 and expected to increase an average of three percent annually, and topping $41 million in the year 2000. The market can be split equally between daytime lingerie and evening nightwear. The former is characterized by light-weight fabric, pastel and white colors; while the latter opt for dark colors and a combination of man-made, silk, and/or cotton fabrics.
Bearing in mind that 60 percent of Saudi population are in their teens and that most of them have traveled abroad, the Saudi market for lingerie and ™dessousš has become increasingly sophisticated and trendy. One example was the rush for push-up bras (wonderbra) and bras with underwires. Moreover, Saudi teenagers like everywhere else in the world, rushed for bustiers, and for bustier-shaped dresses. On top of that, field research has revealed that many teenagers opt for smaller bra sizes in order to have a more appealing Alook@. The Triangle-shaped bras and sporty-look lingerie remain hot sellers among juniors.
A new softer, ultra-light fabric that comes in opaque colors, perfectly suitable for the Saudi climate, is gaining ground. The new collection is appealing to the younger Saudi women. Another segment of the market, women aged 20-40, have different perceptions and are looking toward comfortable but more shaping lingerie. New fabrics that provide the desired body shape and also prove to be comfortable and functional. Brand loyalty is high, especially among women aged 20-40, but tend to be less so among teenagers.

The market for lingerie is very competitive. There are specialty shops, but also supermarkets and department stores carry various brands, and Awomen-only@ stores. Some culturally-sensitive, decorated and flashy nightwear lingerie is being imported by many individuals and sold under the table at private residences.

o Statistical Data

(Millions U.S. Dollars) Avg. Annual Growth Rate
1997 1998(E) 1999(E) Next Two Years

Import Market 39.8 38.6
39.7 3%

Local Production 0.0 0.0 0.0

Exports 0.0 0.0 0.0

Total Market 39.8 38.6
39.7 3%

Imports from the U.S. 4.4 4.2 4.4 4-5%

Exchange Rates: $1 = Sr. 3.75

Future Inflation Rate: 2.5% - 3.5%

Import Market Share for 1998:
China: 16%; U.S.A: 11%; Syria: 10%; Indonesia: 8%; Italy: 4.6%; France: 4.3%.
Receptivity Score: 4 Sources: Riyadh Chamber of Commerce and Industry; Industry sources; Central Department of Statistics.
o Best Sales Prospects

Because of Saudi Arabia=s hot weather, women opt for comfort first, and then go for trends, colors, and attractive lingerie. Basically, cotton and cotton blends fabrics such as lycra and cotton are most suitable for the country=s hot climate. Nonetheless, nightwear lingerie tends to come in silk, lace and printed knits with heavy and pastel colors. Items that could prove to be popular include:

Bustiers and corsets
Push up bras
Panties, low cut Wonder bras
Slimming panties
Ensembles and coordinates
B. COMPETITIVE ANALYSIS

Soft pastel colors and comfortable fabrics are the unflagging trends for the Saudi market. In recent years, major lingerie manufacturers are experimenting with manmade fibers that look and feel better than cotton and also enhances a woman=s shape.
o Domestic Production

There are no local manufacturers of lingerie and women=s underwear.
o Third-Country Imports

In recent years, Syrian manufacturers have taken the lead in supplying all kinds of underwear, for both male and female, to the Saudi market. Unsurprisingly, major importers and wholesalers are Syrian nationals who reside in Saudi Arabia and who, more or less, control this trade. Three years ago, Syrian manufacturers represented 13 percent of the import market, especially for pajamas, slips, and nightdresses. In 1999, industry sources project that Syria will lead representing more than 14 percent of the $39 million import market. Some sources disclosed that many Syrian imports are perfect Acopy-cats
@ of European brand names such as Triumph and La Perla, and that a number of importers are malevolently changing labels and Acountry of origin@ tags.
Syrian brand names mainly cater to the mass low-income market, and as such there is no brand loyalty. The same applies to Chinese and Indonesian imports which came in second and third places respectively in the value of exports to Saudi Arabia. Many Chinese manufacturers, some licensees of renowned brand names, are highly competitive in the Saudi market; although, quality remains an issue. Likewise, imports from Indonesia only accommodate the low-income mass market.

Noteworthy are that imports are also coming from countries in North Africa and Eastern Europe where French, American, and Italian companies have installed manufacturing facilities. In a nutshell, import figures do not specifically reflect any country=s market share. For example, some French brands are coming in from Morocco and Portugal.
Depending on currency rates as opposed to the Saudi riyal, some lingerie and women ™dessousš are imported from France and Italy. France exported about $1.5 million worth of lingerie to Saudi Arabia in 1998, close to three percent of the Saudi import market. Again, that percentage does not reflect French brands= share of the Saudi market. By the same token, Italy lingerie exports reached $1.2 million or almost three percent of the import market.

French companies that are prominent on the Saudi market include: Lejaby, Lou, Cacharel, Chantelle, and Lily. Leading Italians brands include La Perla, Selene, Lacienza, and Malizia.
Lately, Triumph appointed a new agent who expects to re-establish the name in the Saudi market and re-capture a significant market share. In addition to Triumph, there are a number of German brands that are in demand including Felina and Speidel.
o U.S. Market Position

U.S. companies have, over the past four years, maintained an average 11 percent share of the Saudi import market. Industry sources expect U.S. lingerie manufacturers to excel in the high-priced, fashionable, and branded ™boutiqueš type market.
Many Saudi companies have been trying, over the years, to acquire the franchise for a well-known American lingerie store, but to no avail. Most of those companies, however, are already buying the Victoria Secret product line from different U.S. suppliers/export houses, but at high mark-ups. Eventually, this will prove to be harmful in the long run. Even though Saudi women are somehow obsessed with the brand name, the higher price will probably overwhelm their desire to acquire that brand and could create an adverse reaction.

Before the end of 1999, a new American label will make its debut in the Saudi market. Parisa lingerie will be opening ™stand-aloneš boutiques in each of Jeddah, Riyadh, and Al-Khobar. Other brands that are already competing with European labels include Carina, Calvin Klein, Dim, Variance, and Playtex, among others.
C. END-USER ANALYSIS

The latest census revealed that the Kingdom=s population crossed 20 million and has one of the world=s highest birth rates. The three major urban centers of Saudi Arabia account for 80 percent of the population and that 14 million are Saudis and the rest are expatriates. The census= findings also indicated that more than 60 percent of the Saudi population are in their teens, and as a group is a formidable buying power. Another one million Saudi youths are between the age of 20-24 years old.

As with any other society, Saudi youths prefer sporty and comfortable lingerie. This is especially true among Saudi teenagers. There is no impulse buying and brand loyalty is existent, especially among women over 20 years of age. Even though the number of working women is increasing, Saudi society is still conservative and Saudi women=s lifestyles basically do not differ between a working and a non-working woman.

Of paramount importance is the quality of the fabric and body-shaping trends. Daytime lingerie of cotton or cotton blends is dominant due to the climatic conditions prevailing in the Arabian Peninsula. Pastel and soft colors prevail. Nighttime lingerie comes in different fabrics, colors, forms and shapes.
D. MARKET ACCESS

o Import Climate

Trade Regulations: There are no significant trade regulations or other market impediments on the import of lingerie into Saudi Arabia. Saudi Arabia is the largest market for American products and services in the Near East. The country=s economic readiness to welcome international business gives it an advantage for marketing and exporting to other neighboring countries. Nonetheless, lingerie items are usually displayed on hangers throughout stores in Saudi Arabia, unless the original package does not display women bodies or shapes that are deemed inappropriate and culturally sensitive. Generally, any dealer with financial resources imports lingerie. Some brands, however, maintain local representation, distributing and selling through their specific territories.

Duty Rates: There are no quotas on the importation of lingerie. The Saudi government applies a 12 percent Ad Valorem tariff on imported lingerie products. There are no VATS or any other duties applied on these products.

Standards: The Saudi Arabian Standards Organization (SASO) regulates product standards within Saudi Arabia. In October 1995, SASO, in cooperation with the Ministry of Commerce, issued new guidelines to control the quality of certain products imported into Saudi Arabia. The new program, the International Conformity Certification Program (ICCP), currently applies to 66 regulated products. The new ICCP program requires that certification be issued by one of SASO=s 13 appointed laboratories in the United States for compliance with either SASO or other internationally recognized standards.

In either case, the issuance of certificates must be obtained through Intertek Testing Services at:

Nabil (Bill) Bekdash, Regional Licensing Center Manager
SASO - ICCP
Intertek Testing Services
70 Codman Hill Road
Boxborough, MA 01719
Phone: (978) 635-8651/8652/8653, Fax: (978) 635-1620
E-mail: nbekdash@itsqs.com
For clarification on regulated product guidelines and procedures, contact SASO's Program Manager Regional Office (PMRO) at the following address:

Mr. Craig Bryant or Mr. Yusef Soutari
3741 Red Bluff Road
Pasadena
Houston, TX 77503
Phone: (713) 475-9184, Fax: (713) 475-2083

o Distribution/Marketing Practices

The commercial agency regulations of Saudi Arabia govern agency and distribution relationships, and such agency agreements should be registered at the local Chamber of Commerce and Industry, as well as with the Saudi Ministry of Commerce.

Lingerie advertising is considered to be unethical. A good approach will be to hold women-only sale seminars to either launch a new product line or to inform the public about new trends. U.S. firms wishing to set up an agency contract in Saudi Arabia are encouraged to contact the offices of the Commercial Service in Riyadh, Jeddah, or Dhahran or any of the Export Assistance Centers in the U.S. to get a first-hand appraisal. Moreover, U.S. companies are strongly encouraged to seek competent local legal counsel when drawing up their agency/distributorship agreements.

The Saudi market is characterized by seasonal buying, especially during the only two Islamic holidays, the Eid Al-Fitr and Eid Al-Adha. As mentioned earlier, the lingerie business is mainly controlled by expatriates who invariably have difficulty obtaining U.S. visas to travel to the United States to either attend apparel and lingerie shows and/or make business arrangements with U.S. suppliers.

U.S. companies need to consider the following when dealing with a local company:

U.S. minimum orders could be too large for most Saudi companies.

U.S. sizing should be metric and adapted to Saudi proportions.
Government offices are closed on Thursday and Friday. Most private sector firms do not open on Thursday afternoon and on Friday. Arabic is the official language in Saudi Arabia. English is the official business language.

o Financing

In general, most Saudi imports are contracted on an irrevocable letter of credit basis, although other financial arrangements are sometimes used. Payment terms vary from 60 days, 90 days to 120 days. U.S. firms should consider different but flexible payment terms when supplying dealers they trust.

Saudi importers are relatively small and like many businesses in the Middle East, routinely delay payment beyond the agreed payment terms, and the use of flexible credit terms can be important to winning sale contracts in Saudi Arabia.

Financing is available from commercial and international banks and from the export-import Bank of the United States. Certainexporters= risks can be insured through the Foreign Credit Insurance Association (FCIA).

Supplier financing is becoming the rule rather than the exception. American exporters are encouraged to consult with their banker or the Export Import Bank of the United States and the Small Business Administration (Export Working Capital), concerning lines of credit finance, loans, insurance, and guarantees.

There are virtually no exchange restrictions in Saudi Arabia, and no controls on receipts or payments for current transactions by either residents or nonresidents. In addition, there are no restrictions on the movement and repatriation of capital, or on derived profits from local investments.

o Key Contacts

Cycas Trading Est.
P.O. Box 6581 Riyadh 11452
Tel: (966 1) 456-2148, Fax: (966 1) 455-0148
Contact: Amel M. Zahid, General Manager

Al-Faiz Est. for Trading
P.O. Box 16333 Riyadh 11464
Tel: (966 1) 426-1250, Fax: (966 1) 425-8713
Contact: Mawia G. Al-Wakeel, General Manager

Danah Trading & Contracting Est.
P.O. Box 58409 Riyadh 11594
Tel: (966 1) 401-4650/4662, Fax: (966 1) 405-2873
Contact: Ghassan F. Farhat, Business Development Manager

Fantail
P.O. Box Riyadh
Tel & Fax: (966 1) 461-5922
Contact: Maha Al-Malek, General Manager

Al-Nahdi Fashion Center
P.O. Box 2192 Riyadh 11451
Tel: (966 1) 472-5516, Fax: (966 1) 472-5517
Contact: Maher S. Al-Nahdi, General Manager

Wessam World of Fashion
P.O. Box 61560 Riyadh 11575
Tel: (966 1) 488-1592, Fax: (966 1) 465-1396
Contact: Adnan Hassan Taha, General Manager

Yasmin Boutique
P.O. Box 527 Riyadh 11421
Tel: (966 1) 465-2810/405-8729/2974, Fax: (966 1) 463-1182
Contact: Samir Khalifa, Sales Manager

Hassan Al-Rayess Trading Est.
P.O. Box 5788 Riyadh 11432
Tel: (966 1) 460-2553/411-2730/401-3974, Fax: (966 1) 411-5470
Contact: Hassan Al-Rayess, General Manager
Kamal Jamjoom Est.
P.O. Box 10603 Riyadh 11443
Tel: (966 1) 462-6495/480-3461, Fax: (966 1) 462-6495
Contact: Hamdi Al-Bialy, Branch Manager

Saudi House
P.O. Box 5992 Riyadh 11432
Tel: (966 1) 465-3515, Fax: (966 1) 465-3519
Contact: Muqbil Al-Khalaf, General Manager

o Trade Promotion Opportunities

Even though trade shows are the most rewarding methods of sales promotion in Saudi Arabia, the business of lingerie is culturally very sensitive and there really are no specialized trade shows for that sector. Moreover, fashion shows are non-existent except in a women-only environment.

Saudi business people often visit shows throughout the Arabian Gulf, especially in Dubai and Bahrain. In addition, Saudi business people join the Commercial Service=s International Buyer Programs (IBP) to various shows in the United States. One such show is the MAGIC show held in August in Las Vegas.
Another promotional possibility for new-to-market U.S. companies is to organize a trade mission to Saudi Arabia, supported by their trade association, state or local chamber of commerce, or the state export council.

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

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For the 2008 Edition

Published: 2006 August
Market: Womens
Region: Saudi Arabia
Industry: Apparel
Pages: 45
Delivery: 7-12 Business Days
SKU: infre0000320