Seen for a decade as cosmopolitan, smooth, and exclusive, Lebanese retail—even in Beirut's upmarket shopping districts—is showing signs of being affected by regional political instabilities; but many retailers remain optimistic for the future.

Lebanon is known throughout the region for its retail strengths, particularly at the luxury end of the market. Along with banking and tourism, a vibrant retail sector recalls Lebanon's history as a connecting point between different civilizations and cultural traditions. This openness to the surrounding region and beyond has benefited Lebanon over time, but it has also left it exposed to regional instabilities. Recent insecurities caused by the Syrian conflict, as well as other clashes in neighboring countries, have negatively affected both investor and consumer confidence. While the Lebanese real estate and banking sectors have proven to be resilient, retail has experienced some turbulence since 2012. Whether the situation for retail will improve or deteriorate in the near future is difficult to assess. Unfortunately, the key determining factors—regional instability and local political stasis—remain beyond the scope of even the most successful retail concerns.

The Beirut Traders Association (BTA)-Fransabank Retail Index (2014) is a market index that was jointly established in September 2012, with the support of the Central Administration of Statistics of Lebanon (CAS). It monitors the business sectors in the local retail market, and is released on a quarterly basis. Based on the most recent available figures, the activity of the retail sector during 1Q2014 witnessed a drop of 7.2% in comparison to the previous year. Beyond this one must bear in mind that this same level of activity had already declined 4.86% in 1Q2013 in comparison to the same period in 2012. This does reflect a notable contraction in Lebanese retail activity. The report goes on to further explain that when adjusted for inflation, retail sales figures have been falling since 3Q2012. According to Nicolas Chammas, the BTA chairman, the luxury sector has been particularly hard hit. “Between the end of 2011 and the end of 2013, the retail sector has dropped by 35%," a situation which has been especially noticeable given its comparative importance in Beirut.

Lebanon has, for many years, sought to replicate the successes of Dubai in becoming a retail hub, an aspiration that, while possible, has been hampered by consistent regional insecurities. Izzat Traboulsi, the Managing Director of Hugo Boss and the Fashion Trading Company (FTC) in Lebanon told TBY: “You need to compare the stores here in Lebanon and outside Lebanon, and when you do you see that our stores are much smaller and the turnover is less." The challenge for upmarket retailers in Beirut is to overcome local factors beyond their immediate control and design strategies to play to their own local advantages.


Lebanon's retail activity has traditionally been buoyed by the large numbers of Arab tourists and Lebanese expatriates who come to visit the country every year. There has been a dramatic slump in tourist arrivals to Lebanon in the past two years; tourism normally accounts for 22% of GDP, but has dropped as low as 10%. Syria's armed conflict has affected Lebanon's interlinked tourism and retail industries, particularly since 2H2012. Additionally, Gulf states such as Saudi Arabia and Qatar have issued official travel bans against Lebanon, which is hampering tourist arrivals, especially during the popular Eid holidays. According to recent figures released by the Ministry of Tourism, the number of tourists visiting Lebanon has decreased by 16.5% to reach 229,252 in 1Q2014, as compared to 274,663 in 1Q2013. As for the distribution of tourists by region, it shows that the greater part of visitors were from Arab countries with 34.8% of visitors, followed by visitors from Europe on 32.7%.

However, the current local political stalemate and security instability, when coupled with the effects from the neighboring Syrian crisis, have weighed heavily on the tourism sector, and are thus affecting the retail sector in Lebanon. The drop in tourist arrivals and the consequent decline of tourist spending has, for example, negatively affected the growth of Lebanon's apparel market, which was already facing lower local demand due to diminished consumer confidence and purchasing power. According to a 2014 market analysis carried out by BankMed, the size of Lebanon's apparel market contracted by 4.3% in 2013—a noticeable loss that was felt across the sector.


Despite some uncertainty in recent years, Lebanese retail is still regarded as generally stable. According to the 2014 Global Retail Development Index (GRDI), Lebanon remains a steady retail market, ranked 24th in the world, and although it did drop two spots in the GRDI, its per-capita consumer spending actually rose by 5%. This has led market analysts to report that the retail environment in Lebanon is still in the game, even as the civil war in neighboring Syria has raised anxieties.

On balance, many retailers continue to profit. Jeethendra Babu, the General Manager of the fashion retailer Landmark Group, reports his company has actually had its best year yet in 2014. “We are a $40 million company within only our fourth year of operations. We are looking at reaching $100 million in the next three years. In spite of the turbulence and many challenges in the market, the past three or four months have been great for us, and we are positive that 2014 will be fabulous as well." There are some mitigating factors at work here. Although there are dramatically fewer Gulf Arab tourists, the main visitors are the Lebanese who live outside of Lebanon. There are approximately 8 million Lebanese outside of Lebanon, while only 4.5 million actually live in the country. And while the situation in Syria has created a huge refugee issue, which has affected spending, it has also ironically led to an influx of higher spending Syrian expatriates and an exodus of upper class Syrians to cities like Beirut. So the retail picture is mixed.

Much of the success that Lebanese retailers have had in recent years has come down to their own drive and ability to adapt to uncertain times. Romen Mathieu, the Chairman of Khoury Home, explains his strategy for maintaining profitability in 2014: “By providing a superior customer experience across all showrooms while controlling our operating expenses, we will maintain our market leadership during this temporary downturn in the consumer electronics industry as well. And this is what we are doing during 2014—the best year for the company since 2011." It is often said of the Lebanese that they are a flexible and resilient people, natural entrepreneurs who are used to adjusting to difficult circumstances in a rapidly changing region. In the final analysis, it is this will to flourish that can best propel Lebanese retailers into a prosperous future—and that will seems as solid and consistent as ever.