store displays, and store level staff interaction. The only products that seem to be immunefrom price competition were high-end luxury products, which often, as a part of strategy,starve the market to keep prices firm. An over-emphasis on price in the marketing mix isdictated by the regional selling structures. All distributors and retailers are franchisees,and are required to assume inventory risks of distribution. In an age of hyper-competitionin retail, with low barriers to entry into retail, where new products are launched in everycategory with shorter and shorter product life cycles, and where even hard goods becomelike fashion goods, price becomes a competitive weapon of choice to guard againstproduct obsolescence. The repetitive and dull advertising is also dictated by the fact thatmerchandising and promotional decisions are conditioned by the display and advertisingallowances retailers (and distributors) negotiate with the franchisors, a process in whichthe retailers and distributors often abdicate much of their stores (and brands) marketingand positioning responsibilities to the franchisors. In pursuit of sales growth, bothfranchisors and franchisees seem to be running out of ways to differentiate their brandsfrom competition reflected in focus shifting to price in advertising (for the franchisee) ortrivial issues like features and image (for the franchisor). We as customers, are oftenconcurrently bombarded with image and price-based communications, are unable toperceive a clear positioning of brands or retail stores in our minds.It needs to be emphasized that the current state of affairs is neither good nor bad, and is aproduct of our historical past. Retail evolves over time, the rate of evolution being drivenby competitive conditions in the market-place. Retailers in the region have been fortunatein having very high growth rates (nearly 30% compounded) over the past few years,growth rates which skew managerial attention towards issues external to the organization(e.g. managing growth by opening new outlets and ensuring product availability, etc.),and away from the internal issues of business (e.g. operational efficiencies, productivityof space, marketing expenditures and staff productivity etc.). This trend is not expected tocontinue forever and retailers need to gear up for the inevitable slow-down. A slowdownthat may be triggered by sudden availability of retail space (e.g. nearly 7-8 million sq ftof lease-able space in the Dubai Mall in a single year) reducing the barrier to entry of new brands into the local markets, and the rush of new retail investors and foreign brandsattracted by the dramatic growth of the past.So what should be the defining characteristics of successful retail in an over-retailedenvironment? It is my belief that the shoppers of today (and tomorrow), in this era of globalization of brands and commoditization of products, are smart shoppers. They arereasonably well informed about products they want to buy, and are able to compare andchoose products independent of brand, advertising, store, and salespersonrecommendations. Their shopping behaviors are difficult to classify using the traditionalsocio-economic behavioral criteria. They save money where they can (e.g. shopping inCarrefour), and concurrently spend on high priced brands for different needs (e.g. eatingout in a fancy restaurant or taking an expensive vacation or buying a Hermes handbagetc.). Retailers need to realize that in the future it will not be brands competing againstbrands but merchandise will compete against merchandise. Retailers will need to aim forstore differentiation, giving customers a reason to consistently choose one store overanother.