Human RightsWomen's rights

Another year of elusive equality

by Matt Nash
written by Matt Nash

Despite a constitutional guarantee of “equality of rights and duties among all citizens without discrimination,” Lebanese laws treat men and women differently. The most famous imbalance is a 1925 law decreeing that only children born in Lebanon to Lebanese men are entitled to Lebanese nationality. Activist campaigns to amend the law have been unsuccessful and prospects for change any time soon remain remote.

In 2017, Parliament amended the penal code to abolish an article that allowed a rapist to avoid criminal charges if he married his victim, however, the legislature chose to keep in place articles of the code allowing girls as young as nine to legally marry. Parliament also established a new cabinet portfolio—Minister of State for Women’s Affairs—although the choice of a man to lead this sparked mockery among Lebanese social media users. As of early December 2017, the minister had not offered any detailed reporting on his accomplishments during the year, and how permanent and effective the portfolio will be are open questions.

In addition to discrimination enshrined in law, Lebanese women are frequently subjected to harassment in public spaces and the workplace. Little was done legislatively on that front, but the local NGO KAFA succeeded in July in getting the Ministry of Justice to back amendments to a 2014 domestic violence law strengthening the protection of women abused in their homes—though the proposed changes require cabinet approval, which had not arrived at time of writing.

Poor marks

As per the World Economic Forum’s Global Gender Gap Report, which ranks countries based on proximity to gender parity, Lebanon is in the bottom 10 percent (137 of 144). Weak political empowerment (142) for women in Lebanon drags down the country’s overall ranking, but Lebanon’s score for economic participation and opportunity are also below its overall rank (133).

It is unacceptable for Lebanese women to be treated so poorly, and few signs point to state institutions leading the charge toward empowerment any time soon. In the interim, NGOs and civil movements will continue to push for greater equality.

On the economic front, the League of Lebanese Women in Business (LLWB) is continuing a campaign launched in 2016 to persuade local privately-held companies to appoint more female board members. Individual LLWB members have also pooled resources into an angel investor fund to take equity in female-founded startups.  Banks, interviewed earlier this year, insisted on the need for and desire to have more female representation in mid- and top-level management positions.

Evidence compiled by the United Nations as part of its “Progress of the World’s Women 2015-2016” report suggests Lebanon can achieve increased GDP growth by increasing gender parity in access to education (where Lebanon scores quite well) and labor force participation (where men still dominate with 76 percent participation, according to the World Economic Forum’s Global Gender Gap report findings for Lebanon). The economic benefits of increasing the numbers of well-educated women in the workforce are medium and long-term, the UN report says. Increased female participation in education and the labor force boosts growth in the medium-term and leads to healthier, better educated children, which then pushes these economic benefits forward to a second generation.

Both the moral and economic arguments for equal rights in Lebanon are clear. If there is hope for advances toward gender parity in Lebanon in 2018, incremental change in the private sector is far more likely than than grand shifts at the policy level, however short-sighted and disappointing that may be.

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Human RightsOverview

The rock and the magic beanstalk

by Thomas Schellen
written by Thomas Schellen

Human rights are the rock from which modern civilization mines its values, its social contracts, and its entire portfolio of identities. Human rights are the very justification for our system of social coexistence and stratification. They are key to understanding humanity’s (mostly unsuccessful) attempts of balancing the logic of solidarity against the logic of economic greed, the logic of universal equality and dignity against the logic of discrimination and political power, and the logic of preserving planet Earth against the logic of exploitation.   

The idea of rights as inherent to the human being and as the foundation for social contracts is, in historic terms of development of thought, quite recent. Today’s stupendous and still-accelerating development of inalienable human rights can be traced to roots of formulations in the 17th and 18th centuries in England (Bill of Rights of 1689), France during the French Revolution (Declaration of the Rights of Man and the Citizen), and the United States of America (Declaration of Independence).

It took quite some time for the concept of human rights to emerge out of the seedbed of natural rights as an idea of Western religion. In the 19th century, an encyclopedia published in Germany claimed that human rights inherent to man were an indeterminate concept that “has to lead to different interpretations in different circumstances and can only be valid in a Christian context.”

Not long after formation of the concept, human rights were thus often seen as vague and tied to an ideological view of man as created being endowed with spirit, and through the will of God superior to, and existentially different from, animals. In the early 20th century, another popular encyclopedia defined human rights as “the totality of the ideal requirements that man directs at the state and whose provision he demands from the state.” The “scientific” perspective on human rights of the time was declared to include the right to emigration, the choice of belonging to a state, and also rights to procreation and the use of nature.

Today, human rights arguably draw their ideological strength from the dominance of humanism—usually in its secular version—in international discourse, influenced by Western thought. UN bodies tend to describe human rights with broad strokes of proclaimed universality, declaring them to be “rights inherent to all human beings” on top of the homepage of the UN’s High Commissioner on Human Rights (UNHCR). In a speech he delivered in the fall of 2017, UN Secretary General Antonio Guterres—who formerly held the office of UNHCR chief and appears to be a darling of some civil-society stakeholders—juxtaposed human rights with terrorism. He stated that human rights “are a true recognition of our common humanity,” diametrically opposed to terrorism, of which he said, “Terrorism is fundamentally the denial and destruction of human rights.”

Notwithstanding such regular bursts of ideological confirmation and unwavering adherence by highly credible human rights advocates, human rights can also be considered to be anything but universal in 2017—69 years after the United Nations General Assembly adopted the Universal Declaration of Human Rights (UDHR) in 1948, with the votes of 48 countries against the eight which abstained, and two which voted no. 

Implementation still a dream

It would be insane to claim that human rights are applied universally today, even on the most basic level. Whether the focus is on freedoms from or freedoms to, one cannot ignore today that freedom of conscience, freedom of worship, freedom from torture, and freedom from want scarcely exist in even the most democratic or the most economically developed societies.

The same goes for additional layers of human rights, such as the right to education and health, gender equality, and protection from violence and discrimination. The human rights to work and to live in dignified social circumstances and without environmental hazards do not even see serious pretense or attempts of universal implementation. If anything, each addition of a new human right only leads to a higher count of human rights violations in the daily experiences of the ever-growing numbers of humanity. Human rights are also far from universal in conceptual and philosophical terms. This is evidenced by many changes and diverse understandings of human rights, since the first renderings of the phrase in Enlightenment-era political documents.   

Yet, despite the precarious state of their implementation and their dependence on human definition and cultural evolution, human rights are, today, inextricably linked to the social, political, and economic future. Increasingly, human rights are of economic importance and impact all areas of economic activity. Sometimes, the business community might even be more aware of this relevancy than the civil society and activist community. The old ideological divide between left and right in this regard still shines through today when civil-society stakeholders embellish their human rights appeals by  bashing transnational corporations and bad capitalists.

It is not unheard-of that transnational corporations are guilty of, or at least complicit in, human rights violations in the world of work, in the climate and environmental arena, and elsewhere. But neither make corporations perfect culprits, nor do activists—who are often at the forefront of human rights battles—make innocent and pure lambs of self-sacrifice for the good of humanity and universal rights. Activism and capitalism both are deeply human endeavors.

The human rights discourse of today deserves to be freed from the ideological definitions and 19th and 20th century  juxtapositions between an ideological left and a capitalist right. Capitalism in the 21st century is an imperfect, but adjustable economic system that reflects imperfect human behavior. It is not the 10th reincarnation of the 18th and 19th century socioeconomic and politico-ideological reality of hapless exploiters and growing proletariat that Karl Marx exposed in a visionary, but flawed, set of observations and assumptions garnished with materialist determinism.

A geo-social triangle of progression

Human rights today belong to a complex of forward-pointing qualifiers of any society’s achievement potential, with deep economic implications. This moral and practical relevance to the corporate and business world is as clear to economists and corporate leaders as the perils of the capitalist mode of our world are to civil society exponents. The relevancy of improvements in the global state of business is visible at every corner and side of the triangle composed of human rights, humanitarian principles that are expressed in international humanitarian law, and geosocial aims which are enshrined at this stage of international discourse in the sustainable development goals (SDGs).

Lebanon is part of the world in the 21st century and depends on being a part of this world. This is demonstrated very convincingly from the country’s extreme sensitivity to regional and international political decisions, from the intensity of its interaction with external partners in everything, and from the enormity of the national trade deficit. Despite its humongous political and systemic inconsistencies, Lebanon does function as a society, and is not fit to be thrown to the dustbin or treated as a failed state. But it is, and has for many years, been a troubled state as far as the implementation of human rights is concerned. This year, 2017, saw some legal progress on rights of children and women, and indeed of all people in Lebanon, in the changes to the legal protection of rape victims against forced marriage, and in the law criminalizing torture. Much, however, still needs to be revised in its legal frameworks outlawing torture. From the perspective of international human rights organizations, Lebanon is still no example when it comes to the protection of human rights, and especially when it comes to social, political, and economic rights or environmental, education or health rights.

On the other hand, comments from diplomats, UN officials, and political leaders of developed countries upon visiting Lebanon from about 2012 onward were filled with praise for the humanitarian role that the Lebanese fulfilled in the Syrian refugee crisis of the last five years. The global community’s moral debt to Lebanon in this regard has been acknowledged more than once (in the speeches by World Bank President Jim Yong Kim and then-UN Secretary General Ban Ki Moon during a joint visit to Beirut in spring 2016), and the Lebanese people were recently described as “humanitarian and responsible,” during President Michel Aoun’s speech to the UN General Assembly this September, in which he also advocated for Lebanon to be given the role of official center of dialogue with a mandate from the United Nations.

Great opportunities await

Were it to take steps to capitalize on its potential for implementing human rights and SDGs, a whole bouquet of benefits could bloom for the country—of which at least six come to mind that are very practical and economically rewarding. First, above any economic regard, it is good for self-esteem to do what is recognized as right by time-honored moral teachings, and by present-day world consensus. Second, and better accessible to economic quantification, Lebanon has a definite opportunity to improve productivity and social coherence within its multi-faceted society by applying rights-based approaches to inheritance and personal status, by improving its human rights protections, and by upgrading the provision of education, utilities, and even infrastructures, which are all in line with human rights and SDGs.

A third and closely related benefit to making the country more livable and “leave no one behind” is to keep Lebanese from emigrating for the wrong reasons. By no indication will emigration  ever cease, but there are positive and negative economic outcomes of emigration that could well be correlated more or less strongly to positive and negative reasons for emigration. According to anecdotal evidence, many of the negative reasons seem to be related to people’s experiences of inequality, poor infrastructure, and feeling deprived of physical opportunities or freedoms. Positive reasons for emigration include a desire to advance your career and acquire knowledge for the sake of one day coming back home to share the wealth of knowledge.

Fourth is the humanitarian economy, where Lebanese entrepreneurship appears to have untapped potentials. One recent groundbreaking study on humanitarian economics—written by the Swiss academic Gilles Carbonnier partly during a stay in Lebanon—shows how the economic and political-economy dimensions of humanitarian crises and responses have risen in importance in the world. Being involved in humanitarian economic activity can be the mental opposite of profiteering from wars, but nonetheless, quite profitable.

In writing the book on humanitarian economics—which, as he told Executive, draws on both neoclassical and behavioral economics—Carbonnier states on one side that essential principles of humanity and impartiality in this economic activity “require a degree of altruism, refraining from acting only out of self-interest,” but that on the other side it is necessary for actors in this field to channel or constrain “the altruistic impulse in order to pursue greater effectiveness” and avoid negative side-effects of emotional and thus anti-economic decisions.

He shows how the dimension of this economic activity has shaped a humanitarian marketplace with an immense growth trajectory from the 1970s to the 2010s. According to his research, the international humanitarian aid sector in 2010 was “a multi-billion dollar enterprise with more than 270,000 workers involved.” Make space, carmakers, at least as far as employment growth rates are concerned.

Carbonnier cites data according to which international humanitarian aid volumes grew in the short term (more than one third to $24.5 billion from 2012 to 2014) and long term, from substantially less than $3 billion annually before 1980 to over $15 billion at the start of the current decade (in constant 2012 prices). Moreover, he finds that over the past two decades, the supply of humanitarian aid increased rapidly, but that this was caused in part by economic demand from donor countries using humanitarian assistance as a “default foreign-policy instrument” rather than by a parallel surge in actual humanitarian needs. Plus, he finds that the humanitarian marketplace has greatly diversified in terms of participants and types of services provided. For a country like Lebanon and its entrepreneurs, this has important implications. One implication is that private-sector actors can contribute to humanitarian economics and do not have to shun moral profit.

Fifth, if one agrees with the assertion Secretary General Guterres made in his anti-terrorism speech at the University of London’s School of Oriental and African Studies in November, implementing human rights can be a preventive instrument in the fight against terrorism. This is bound to produce any number of financial and economic benefits. Guterres implied as much when he called for all parties to conflict to “respect and ensure respect for international humanitarian law and human rights in situations of armed conflict.” He pointed to short- and long-term aspects, stating that “all human rights, including economic, social, and cultural rights, are unquestionably a part of the solution in fighting terrorism,” and that “upholding human rights and the rule of law is the safest way to prevent a vicious circle of instability and resentment.”

[media-credit name=”Ahmad Barclay & Thomas Schellen” align=”alignright” width=”621″][/media-credit]

The sixth element

The sixth opportunity for growing Lebanese humanitarianism and proverbial generosity into a magic beanstalk for accessing untapped socioeconomic potential lies in fulfilling the country’s aspiration to be a hub of international peace diplomacy and conflict management. This opportunity presumably comes with the prerequisite of having stronger legal frameworks and more convincing societal practices in human rights, stronger application of international humanitarian law, and greater efforts toward fulfilling the SDG agenda in the period until 2030.

Scrutiny of and by nations of international roles with a moral dimension, such as holding a seat on the UN Human Rights Council or membership in UN organizations such as UNESCO is increasing, with reasons for protests or withdrawals existing at the opposite ends of the political-ideological spectrum. But it would not be harmful for Lebanon’s desire “to be a permanent center for dialogue between different civilizations, religions and races as an United Nations organ”—as President Aoun told the UN general assembly in September—to have a strong human-rights framework and a convincing monitoring process for SDG achievements, in addition to being “a microcosm of diversity” and practical example of humanitarianism.

Neither would it hurt for the government to clarify its position on rights of refugees, step back from harsh measures against refugee populations, and counter rumors of alleged refugee criminality—thus improving the overall positive impression of Lebanese assistance to the huge refugee population.

The country might influence the international discourse on human rights, just as it did as the UDHR was being drafted in 1946-48 through the Lebanese scholar Charles Malek. It has the humanitarian credentials to be a laboratory for the study and implementation of international humanitarian law on a country level, it is home to academics and civil-society thinkers with the mental prowess to contribute much to the global debate on geo-social goals in the SDG discussion, and it has an appetite for a culture that is a bit more satisfying to the spirit than global consumerism. 

If Lebanon were to upgrade its implementation of human rights, strengthen adherence to international humanitarian law, expand its role in the global humanitarian economy, implement the SDGs, and monitor progress of these goals, it could avail itself of a new meta-economic growth opportunity that is not dependent on finite resources or the reconstruction needs of a neighboring country. It would not be a moral failing nor an economic sin for Lebanon to capitalize on its experience as small country that, for more than six decades of its not-even-a-century-old nationhood, has been exposed to competing global interests in the center of the world’s most conflict-rich region. It would be an act of wisdom.

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Q&ARetail

Black clouds in the retail sky

by Nabila Rahhal
written by Nabila Rahhal

Executive sat with Nicolas Chammas, chairman of the Beirut Traders’ Association, to discuss the retail sector’s performance in 2017, in light of continuous market stagnation in Lebanon.

E   As of mid-November, how has 2017 been for the trade sector in Lebanon?

This year has, unfortunately, been another bad year. The decline in the commercial sector has been a steady one since 2011. The growth rate for the economy in the past five or six years has been less than 2 percent, which is negligible. This is the nominal growth, not the real growth—which is less—while the growth per capita is negative.

Taking the period between end of 2011 and end of 2017, the average decline for the trade sectors combined is 35 to 40 percent. This is really a meltdown of the trade sector in Lebanon, keeping in mind that it’s the [greatest] contributor to GDP.

The food and beverage and staple segments have been in better shape than durables [furniture, cars], or luxury [watches, high-end electronics, jewelry]. Durables and luxury have suffered much more than these staples.

E   There is a popular belief that the luxury segment is not very affected in times of economic hardship because “the rich get richer.” To what extent is this true?

Not really—they are not getting richer anymore.

Let’s not forget that remittances from abroad have declined as well. Traditionally, expatriates transfer money—mainly from the Gulf and Africa—but these regions have been affected tremendously [by] the drop in the price of oil.

Meanwhile, the purchasing power of Lebanese residents has declined for everyone, even the rich. The more you substitute the Lebanese labor force with [a] Syrian labor force, the more the national purchasing power is declining.

E   How does this situation affect you as traders?

Every economic agent is in a state of deficit today, but what is visible is the twin deficit of the state, meaning the balance of payment and the fiscal budget. When you have a negative balance of payment, it means that the state is living beyond its means; same thing for companies, where most are indebted, and for most households.

As the economy is a chain, every part of the chain is suffering. Take the commercial sector, for instance: We’re the biggest borrower from the banking system, because we’re the largest sector. This is what I call the visible debt, you see it in the books of the banks—but what you don’t see is the payables from the customers to the retailer. Today, retailers don’t sell, unless, in many instances, they make financial facilities to the consumer.

Also, there is liquidity stuck between the retailer and the wholesaler, and between the wholesaler and the supplier. So, in this commercial chain there is maybe $7 or $8 billion stuck.

E   Does this situation explain why there seems to be an increase in discount stores and sales across the retail sector?

Absolutely. Not only have sales diminished in volume, we also have a price factor. Traditionally, the commercial sector goes on sale twice a year: after the summer and after the end of year, in order to liquidate the stock and bring in the new collection.

But now, it is happening all year round to attract people—but this kills your margins as a retailer. Even if you are selling, you are selling practically at a loss. Also, what this is doing is getting people accustomed to buying only when there is discount.

E   Did the situation not improve at all in 2017, especially with the election of President Aoun in October 2016?

Lebanon today is more stable than most countries [in the region], but the perception of Lebanon is still not good.

And let us not forget that [the government] enacted a law with about 25 new taxes that very much hurt consumption and investment. Add to this the ongoing political crisis, and the terrible strife between Saudi Arabia and Iran, which is reverberating across the Lebanese economy.

So people today are afraid to consume, let alone invest. And this is very deplorable because it is happening during the fourth quarter which is most important [period] for the economy and the trade sector: it typically represents something like 35 percent of our yearly turnover. So if we lose momentum in the fourth quarter, it will be a dire sign heading into 2018.

E   What solutions do we have?

We need a political settlement under a favorable regional umbrella.

Lebanon can’t pay the price of any outside conflict as we’re too weak and small a country. We have to put our own house in order, find a political settlement, and arrange elections as soon as possible. 

E   Following such a settlement, how quickly will the situation improve for the retail sector?

Provided it’s a credible settlement, the situation will pick up quickly, just like it did after the Doha settlement in 2008.

It will take longer for the financial situation in the sector to improve, but at least you would’ve started a trend. You can’t change the situation of debt and deficit overnight, but you can put it on the right track.

This can happen with one prerequisite: growth.

E   How do we ensure this growth?

Growth is built on two things: the facts on the ground, which will take time to change, and expectations. The economy is to a large extent reliant on expectations; if people have positive expectations then this drives growth quickly. For instance, if we were to say ‘in six months [we will] be in good shape economically,’ this will give back confidence in the Lebanese economy, which is currently scaring people away. Only a credible settlement can attract them back.

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Q&ARetail

The long journey of a large retailer

by Nabila Rahhal & Thomas Schellen
written by Nabila Rahhal & Thomas Schellen

Local markets have proven remarkably resilient when it comes to resisting the dominance of large retailers that offer fast-moving consumer goods (FMCG) in hypermarkets and supermarkets—those behemoths of daily shopping that you enter with an empty shopping cart the size of a compact car and leave with said cart overflowing. One operator of mega-sized retail stores, Kuwait-based The Sultan Center (TSC), closed its Lebanon stores in 2017, but at the same time, other operators steered their outlets into major expansions. Majid Al Futtaim’s Carrefour franchise, for example, ventured into Beirut’s Dora City Mall following its very large operation in the Beirut City Centre Mall in Hazmieh. But perhaps no FMCG retailer added more outlets in 2017 than Spinneys. Hitting age 20 in Lebanon in its current incarnation—it entered Lebanon in the 1940s but opened its first post-war store in Dbayeh in 1998—Spinneys opened three new outlets by end of October 2017 and is set to operate 19 stores all across Lebanon by the end of the year. Executive sat down with Spinneys Group chief executive Michael Wright to discuss the FMCG sector in Lebanon and the details behind its ongoing expansion.

E   2017 saw changes in the landscape of large retail in Lebanon, perhaps most visibly in the shuttering of TSC stores. Where is the Lebanese FMCG sector heading, and how do you assess the market for large retailers, such as Spinneys and your direct competitors? 

This market is long overdue to modernize in terms of the segmentation [between large and small operators]. People often will tell you here that the Lebanese market is [unique] because you have a personal relationship with a local small shop and when you buy, you will get credit. However, when I was a child in England, it was exactly the same: There was a little corner shop and you knew the name of the guy and you played with his kids. But all markets end up modernizing because of the benefits of what mass-market retailing can bring to consumers and to everybody.

This process has, for various reasons, been delayed in Lebanon. One important reason is that distributors make more profit when selling to the small stores. Because the small stores have no bargaining power, the distributors purposely support that end of the market for their own benefit. The small retailer has been grazing off his shop: He doesn’t really make money out of it, but his family picks out their dinner for the night off the shelf and they feel that things are going well. I think this segment will come under more pressure in future. Then we look at modern retail and ask: Why did it not take market share? One reason is that the differential in the market has not been supported by what distributors do. So what I see happening now is that there have been too many modern retailers struggling in this one-third of the market that they operate in.

E   Is it still one-third of the FMCG retail market that is in the hands of modern retail?

It is still one-third. Within that, it means the battle is amongst them, and the weaker players eventually lose out. Some players [in modern retail] only exist because of their accounting methods, which don’t count property costs. They think they are in business, but should better employ their capital somewhere else. The result of that has been a slow process of some retailers losing out, which takes a lot of time because of the commercial model, where it takes a long time for the death to happen. You have trade credit, and [even] if your profit and loss (P&L) component falls apart, you still have cash and carry on. TSC has lost out. Monoprix tried to expand and retrenched, Bou Khalil has been in trouble for many years, there is no secret in all of these things. I warned my friends in the distribution business of this slow death of some. TSC were trying to give us their business in exchange for some shares in the combined business and we refused that.

E   Why did you refuse?

I didn’t want to take their business because it was full of debts and losses. It was just a bad setup. Some of their [store locations] were okay, but some of the deals on their sites were horrible.

E   Do you mean in terms of store leasing costs?

Yeah, the leases were unsustainable. When I looked at it, yes, I gained a bit of market share, but their losses were as much as my profitability. I don’t see the benefit of that.

E   There has been talk that the forced exit of TSC has impacted many distributors and smaller suppliers. By your estimate, are these impacts digestible for the distributors, or will they change the retail business in Lebanon?

I think the scale of the debacle in TSC is probably digestible. Of course, nobody likes it, but I think even the least cautious [distributors] had de-leveraged a little with them over the past few years. So I doubt we’re going to see any distributors going under or being in financial difficulties because of their losses to TSC. Of course, the same can’t be said for the poor staff.

E   What is the scenario for the small individual suppliers? Rumors are that TSC also left those people sitting high and dry.

They left everybody. They were taking products from anybody who they could get it from and one of the reasons why we broke off talks with them [was] because of their intentions that they described to us previously. We had turned down taking their entire business because it was just too much work, so they came up with other scenarios where they would carve out their operation and leave behind the rump of their problem and bankrupt it. And we said we did not like that plan because it was going to leave a big mess behind, and we didn’t want to be involved with that. So yes, I’m sure that some small suppliers [are left with unpaid invoices]. The numbers I heard with the large and medium suppliers are that they can absorb [these losses], but I’m not sure about the smaller end [of the market], where I don’t have the information.

E   What is the rationale for Happy, your new brand?

We recognize that part of the market is entirely price-focused and perhaps not driven at all by any quality development, neither range nor service. This is why we developed Happy as a discount brand, which is doing very well and is our strongest-growing format. The discount model just means a different way of working. Consumers have to adapt to the offering, and [discount markets have internationally] taken a big chunk of mass market purchasing. Some of the market has moved up to shop at the higher-end of quality supermarkets, and some people mix and match; they do some shopping here, and some shopping there. This market is changing. The advantage that Spinneys has over the rest of the mass-market people is that they can’t offer the quality elements that Spinneys offers, and neither can they compete with the pricing of Happy. Because Happy is not about cutting prices of products that you find in every supermarket; the main products are there, but a big part of the range [consists of] different, but comparative products [offered at lower price].

E   Where are you in market share today?

A year ago, which is the latest figures we have from Nielsen Data, we were at 4.5 percent of the total [FMCG retail] market and 12-point-something percent of the modern trade. Since then, we’ve opened three new stores, and we have two more to open; thus, I’d like to think that [in future market assessments] we’ll be in the 10 percent range of the total mass market, and the 15 to 20 percent range of modern trade. When I speak to some of the larger international brand [owners who distribute their products in Lebanon], I never hear anyone saying that we’re less than 7 percent of the total market.

E   By rolling out new stores, are you trying to dominate the market in the modern retail segment?

Dominate is not at all the word I like to use for what we’re doing. I like to say that we want to serve the consumers who ask in all surveys to have a Spinneys near their house. That is what we’re doing. With anything we do, we don’t aim at attacking our competitors; we aim everything we do at being customer-centric.

E   What is your total network size in 2017, including markets, hypermarkets, discount markets, delivery centers, warehouses, and fleets?

If we include the two stores that we’re about to open, this takes us to 19 stores, including Happy. If we split it down by sizes, we have five large stores, four small stores, and 10 medium-size stores, of which three are Happy stores. The new stores haven’t yet broken even because they are in the first few months of operation, but they are growing nicely; all our middle-aged and older stores are doing very well. Some regions go up, while others go down, but the general trend of the overall business is going up. One thing to note is that price deflation has been an interesting factor over the last few years, in the sense that consumers react violently to any inflation and seem to not notice deflation at all.

E   Does price deflation occur in Lebanon because of varied movements of currencies that you could use to advantage in your purchasing strategies, or are other factors in play?

The deflation, which was substantial—many large categories had 30 percent deflation—was driven by two factors. One is parallel imports: Currency fluctuations in Egypt and Turkey [where the Egyptian pound and Turkish lira moved lower against the dollar in recent years] allowed a big arbitrage on price differential [for parallel importers]. These were mainly unscrupulous third parties who not only brought in parallel products but also did a lot of under-invoicing to avoid taxation. All modern retail chains steered clear of [such deals]. Instead, we all worked with the distributors on achieving more promotions to counter the effect [of cut-price parallel imports] on consumers. But inevitably, the distributors weren’t able to stop the political influences that allowed people to cheat, and so they cut their prices.

The other driving factor is that the economy is stagnant, and all distributors are under pressure from their principals to increase their volumes every year. They, therefore, lower their prices, expecting sales to go up. It doesn’t work, because everybody is doing the same thing [in the context of the currency movements of the euro against the dollar, which were enabling this deflation]. As a result, you can look through many categories and see prices that are much lower than they were a few years ago. Coffee, milk powder, detergents, and whisky have seen 30 percent [downward] price moves, which is an enormous transition in [an FMCG] market.

E   Isn’t it true that you’ve had increased prices in the consumer goods basket—for example, in dairy products such as butter and imported yogurts—some imported goods, or in meat? And how much of an impact do we have to expect from new, or increased taxes for future prices in the FMCG sector?

I don’t see that there has been much commodity inflation expected for butter, which has gone up recently because consumers in China developed a taste for it. Some of this [consumer-price] inflation you mentioned has been driven by government decisions, like the move from loose white cheese to pre-packed white cheese, which is much more expensive. The decision is driven by protecting local industry, but at the cost of not allowing consumers to have the choice between pre-packed and loose.

E   Do you expect inflation from higher Value Added Tax? There was one concern voiced by critics of trade and commerce in general, saying that retailers will use the impending VAT increase to hike prices in advance.

That’s the theory of consumer groups and ministries of economy in all countries. The first reaction [from consumer advocates] when taxes are slated to go up—or when Ramadan or Christmas is coming—is to cry out that retailers will exploit this opportunity and prices will go up. I’ve never seen [such price gouging] to be the case in any multi-chain modern retailer, but it’s a good story [for] people saying that we will protect you against these horrible retailers. But it doesn’t happen because in a market where you have multiple FMCG competitors, we do a much better job of competing with each other than any regulator could ever do.

E   Still, the impending tax changes in Lebanon have created some commotion and feelings of concern.

I remember when the VAT in Lebanon was first introduced in 2002. In most cases, except for cars, it was a re-regulation of taxation policy and a trade-off between implementation of VAT and a reduction of import duty, which in most cases ended up in a [price-] neutral position. Despite the neutrality of the price change, the consumers reacted terribly. [Sales] volumes dropped by 20 percent and never recovered, even though there was no change in prices. So I hope the Lebanese consumer won’t panic when these VAT increases are implemented [from the start of 2018] because it will probably be absorbed into the system.

E   Also for alcohol?

It’s a bit different for alcohol. Alcohol prices have been very depressed and whisky for example has been very cheap. I think everybody has hit the bottom in pricing alcoholic beverages and the currency exchange rate on the euro is moving against everybody, so there is no room on that side. I think that any increase in alcohol taxes will have to be reflected in price increases.

E   How important is alcohol for Spinneys in terms of turnover and profits?

In turnover it’s below 5 percent of total business, and in profits it is on par with the rest, neither more, nor less profitable than other products.

E   When it comes to digital, will big data and retail analytics change your game, where you can track consumer habits through their cell phone and such?

We aren’t at that level yet, but we will be. I already have more information about my consumer shopping habits through our loyalty points program than I’m able to use today. We’re still working our way through using that kind of information.

E   But the trends in digital retail have reached the FMCG business globally. How do you deal with that?

We look at what trends are hyped and what are ready to be tried or implemented. Home delivery is one aspect—home delivery is the dream of many app creators who want to design an app for supermarket deliveries and make money from it, but it doesn’t work. [British FMCG retailer] Tesco, for example, was waxing lyrical about how much money they were making from home delivery under the previous management, but when the new management came in they said they were losing money.

E   So how does home delivery work for you, since you have been at it for a few years even without the digital aspect?

I was very specific about my aims in home delivery. I wanted to gain expertise in it, to try and find what the possibilities are, and to do it in such a way that doesn’t commit me to never-ending losses of pursuing it full-scope. Therefore, I allocated certain [capital expenditure] and marketing expenditure to it, I set up a specific model that I believe would be profitable, and let it run with those and see where it naturally goes. Where it took us was into profitability, but not very high profitability.

E   You haven’t mentioned yet how many warehouses the group has and how large your fleet is. What are these numbers?

We operate from three warehouses: One is a third-party logistics warehouse and two are in-house satellite warehouses. We mix and match products between these locations according to type, volume, and value mix. Our delivery fleet for consumers is, I think, three vehicles. The fleet serving the stores is 15 plus, I believe, but I’m not sure of this.

E   So delivery of goods from your warehouses to your stores is mostly outsourced to the various logistic providers?

Exactly. However, we’re going to bring logistics in-house because we believe we can flex what we’re doing better in the future if we take ownership of the logistics side of our business. Our role is being more than just a retailer. This year, we brought around 300 containers through direct relationships with exporters and our company, which puts us as a mid-range distributor in terms of volume, and I would hope by the end of next year we should have at least added 50 percent to that. By a year’s time, we will hopefully be almost in the high tier as a distributor.

E   Does that mean you will be growing the portfolio of stores branded as Spinneys and Happy?

Yes. Between already-signed stores, stores that are agreed and about to be signed, and stores which we’re still working on, we have a plan to reach 30 stores within two and a half years. That’s not assuming any expansion of Happy, which we will [also pursue], acquisitions of existing stores from somebody, or moving into any smaller store format. 

E   Do you plan to grow Spinneys’ own label?

Spinneys’ own label brand has its positioning and is becoming stronger and stronger. But I have a belief that it’s very important to avoid overemphasis on Spinneys’ own label, and I prevent it becoming over-expanded for the sake of over-expanding it, because that actually reduces some of our quality aspects to consumers.

E   Finally, congratulations on your 30 years at Spinneys. Did working in the Middle Eastern food market fulfill your expectations?

Yes. I joined the company on Dec 14, 1987, and I remember wondering at the time how long this job will last. I was not lacking a career in the UK, but left the UK because the retail market was being de-skilled in [that] they didn’t want management taking the decisions. So I wanted to come to a market where I could think about things, and then implement them and make changes. I have to say that [was] one of the gratifying paths of my career, and I’m glad that I came.

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OverviewRetail

Highs and lows

by Nabila Rahhal
written by Nabila Rahhal

This year, consumers were bombarded with text messages announcing all the latest store sales and irresistible promotions. Those able to ignore the messages could not have failed to notice the multiple number of shopfront displays with massive red sale signs. Despite all this, most shops remained relatively empty.

On the whole, it was yet another disappointing year for many of the country’s retailers. And yet, there were a few bright spots. Summer 2017 was reported by many retailers as a busy season with an increase in sales, while the opening of several new malls added dynamism to the sector.

A good summer

Many tourists and expats visited Lebanon in summer 2017, boosting the retail sector in multiple ways. Global Blue’s insight into tourist spending report revealed a slight overall increase in purchasing this year up until October 2017 (the latest available figures) as compared to the same period in 2016—with the largest increase coming in the third quarter of the year, during the summer.

Retailers have credited visiting expats for most of the increase in summer business. Izzat Traboulsi, CEO of T2 Trading, the retailer for Hugo Boss in Lebanon and Egypt, says summer 2017 was “phenomenal.” “We had Iraqi and Egyptian customers with high purchasing power, but the people we depend on the most are the Lebanese expats who come to Lebanon in the summer,” says Traboulsi, explaining that since these Lebanese expats are here on vacation from their daily life and work, they have more leisure time to shop.

In an interview conducted in August 2017, Mher Atamian, managing director at Est. Hagop Atamian, a distributor of luxury and medium-end watches in Lebanon, said his business now relies more on visiting expats who come to Lebanon during the summer vacation than on Gulf tourists, who have been frequenting the country less and less.

Indeed, although more tourists visit Lebanon during the summer, it seems their direct impact on retail through their spending is still small. “There has always been a positive correlation between tourism and businesses in general, and this year is no different. However, the size of the impact differs from one industry to another. For instance, [usually] tourism affects the hospitality sector the most, with retail coming in second place,” explains Khalil Noujaim, managing partner at Level 5 Holding, the exclusive agent of the French luxury brand Eden Park in Lebanon, in an interview with Executive conducted in August 2017.

Traboulsi explains that a good tourism season, such as summer 2017, reflects positively on his existing customers, and, as such, has an indirect impact on Hugo Boss. “We’re not reliant on tourists and expats alone during the summer, but also on existing clients who spent more this summer. When tourists are in Lebanon, they’re going to spend money on hotels, restaurants, car rentals … and this has a positive impact on our customers. When our customers make more money, they will shop more,” he says, explaining that 90 percent of their sales are from locals, while tourists—when they are present—are a bonus.

It’s a mall world

Another bright spot for the retail sector was the launching of new commercial centers, with the largest branch of The Spot Mall opening in Choueifat in May 2017, and ABC Verdun welcoming customers as of July 2017.

It usually takes up to one and a half years for a new mall to show good results, according to Traboulsi, because it takes time for people to get used to it, and for advertising campaigns to take effect. Despite that, he says Hugo Boss has done well so far in ABC Verdun.

Both Traboulsi and Atamian say that ABC Verdun opens a new catchment area for them, mainly Lebanese residing in Africa who come home for the summer, and whose homes are in proximity to Verdun.

Traboulsi also speaks of the consumer-behavior patterns shoppers in ABC Verdun have displayed. “The footfall wasn’t [high], but the average ticket was, meaning there is purchasing power in Verdun. Also, our high-priced items in Verdun performed better than those in Achrafieh and Dbayeh—this is a good indication for us because, again, it shows the purchasing power is there,” he explains.

A downward spiral

Despite those small highs in summer 2017, it was, overall, another bad year for the retail sector. Talk of tax increases—which began early in 2017—did nothing to encourage consumer spending.

The results of the Byblos Bank/AUB Consumer Confidence Index for the third quarter of 2017 show that the index dropped by 13.5 percent from June to July, by 5.5 percent from July to August, and by 2.2 percent from August to September. The authorities’ determination to increase taxes and fees, at the expense of households’ day-to-day needs, exacerbated consumers’ skepticism and added an unnecessary burden on the already stretched budgets of households,” says Nassib Ghobril, chief economist and head of the economic research and analysis department at Byblos Bank Group in the report.

This effect was  felt in the premium fashion retail sector as well. “Talk and fear of increased taxes have impacted us a lot in that people worry about increased cost of living, and so decide to save their money instead of shopping. This is normal; even in Dubai when they announced the introduction of a 5 percent VAT, it slowed down the market tremendously there as well,” says Traboulsi, explaining that he only felt the impact on business starting October 2017, when talks of a tax increase intensified, and that so far sales figures have not dipped too significantly—citing a 10 percent drop in October.

Outlets and savings

With consumer focus on economizing, it is no wonder that outlet stores did so well this year, and that events like Black Friday, which was held at the Beirut International Exhibition and Leisure Center (BIEL) in November, were popular with consumers. Traboulsi says Hugo Boss participated in the BIEL Black Friday  event and made approximately the same amount of money in the first three days of the event as they did the whole month of November.

It is also no wonder that the idea of dedicated outlet malls is finally taking root in Lebanon. Centerfalls, projected to open in Metn’s Mazraat Yachou in October 2018, will be Lebanon’s first designer outlet mall and will attract many of the country’s premium retail brands.

Traboulsi says that while he would consider opening a Hugo Boss in such a dedicated outlet mall in a remote location, he would never open one in proximity to any of his stores, as some brands have done. “We focus on our clients to sell them [merchandise] in our stores either at full price, or at a small discount during the sales period. The client of an outlet store should be a different business: You can’t open an outlet mall in the middle of a busy area where there is high footfall and potential clients for your full-price collection. My aim is to keep my clients coming to my store and have the outlet clients go to my outlet. The outlet is the bonus, while the real margins are in the shop,” he says.

The retail sector is betting on the end-of-year festivities and gift-giving—which usually account for a high percentage of their sales—to make up for some of the losses this year. Otherwise, the going will be tough heading into 2018, and we may be reporting more of the same next year.

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CommentHospitality & Tourism

Breaking new grounds

by Christine Assouad
written by Christine Assouad

Entrepreneurship is about dreaming, and making those dreams come true. This has been my story for the past 20 years.

I started my Dunkin adventure at the age of 20, not thinking for a second that I would still be here 20 years later, still passionate and excited about the brand as if I had opened my first branch yesterday. For me, this is key: I love what we are doing, especially the fact that, with coffee and donuts, we are spreading happiness every morning in 35 branches across Lebanon. Making sure we are putting a smile on people’s faces has been my driving force for the past 20 years.

Semsom is another passion of mine. Inspired by a conversation I had 10 years ago with an American taxi driver who had no idea what Lebanese cuisine could offer, I was determined to spread the joys of our food to the world. I like to think that if he knew what we had achieved since, he would be really proud. We have opened branches in Beirut, Jeddah, Kuwait, Muscat, Dubai, and New York, and the best is yet to come.

I get a lot of questions about my New York experience. It has been very challenging, but very rewarding as well. The main difference with the MENA is that New Yorkers do not know what Lebanese cuisine is.

[pullquote]While our guests knew what hummus, shawarma, and falafel were, they did not associate them with Lebanese cuisine[/pullquote]

We purposefully did not open in areas with a high density of Lebanese because education has been our main mission. One challenge we faced was that while our guests knew what hummus, shawarma, and falafel were, they did not associate them with Lebanese cuisine. Another challenge is that most guests do not like to take risks, especially on their lunch. They have 30 minutes, and they have their favorite spots or numerous options, either on their block or through delivery, to choose from. The risk is not financial, as our meals are around $10, but it is more that they do not want to be disappointed with a meal. So we did a lot of sampling, office tours, and neighborhood parties to introduce them to Semsom because once they taste our hummus—which is made with my grandmother’s recipe—they are hooked and keep coming back: More than 20 percent of our guests visit more than once a week. But, the biggest challenge has been real estate: We had to visit more than 100 locations to finally get a lease. The main reason was that we compete with major global brands such as Pret A Manger, Chipotle, and Starbucks, so it was difficult to get a landlord to give us a space. We had to change all our cooking techniques to be workable at hoodless outlets. We knew going in that the first outlet would be challenging, but it was a way to get our foot in the door.

Overall, it was a challenging two-year learning curve to fully understand how the market worked. We are in a much better place now with three outlets, a pop-up store at Goldman Sachs, great catering deals with major brands, and two more stores in the pipeline. We will be ready as of 2018 to start expanding into other cities.

I have not yet discussed how being a woman factors into all of the above. Perhaps it is because I actually do not label myself a “woman entrepreneur,” but rather, simply, a passionate entrepreneur. It is a challenging world out there for all of us, women and men. The highs and lows are the same for both. And teaching this to young women entrepreneurs through mentoring has been one of the most rewarding experiences for me. I thrive in helping others flourish, in ensuring that they dare to dream, and more importantly, in guiding them to equip themselves with the tools to realize their dreams.

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Hospitality & TourismQ&A

More than one way to cluster

by Nabila Rahhal
written by Nabila Rahhal

Rabih Saba and Marwan Ayoub are the founders of Venture Group, a development and consulting group known for its hospitality clusters.The group developed Uruguay Street in 2012, followed by The Village Dbayeh and The Backyard Hazmieh. Saba and Ayoub sat down with Executive to discuss their new venture, Restos St. Nicholas, as well as their future plans for developing more diversified clusters.

E   Can you tell our readers more about your newest project, Restos St. Nicholas, in Ashrafieh?

The project was a joint venture with the landlord [Emile Sabbagha], who is the owner of Sabbagha Development, a land and real estate development group. We would say it’s one of our most strategic and harmonious partnerships, not in the least because Emile is an engineer himself, and so was integral in the development process.     

Starting with this partnership, we developed what we like to call a boutique cluster that complements Ashrafieh. We’re answering a particular need: While in the evening people [in the area] usually go out, in the daytime, there is a high presence of commercial spaces like banks and offices, which require such F&B clusters.

E   How does St. Nicholas differ from your other hospitality clusters?

It’s more integrated with its environment. There are three access points on three different streets, so you can walk through it without sitting in any outlet or feeling that you’re entering a cluster.

Our other projects are introverted, but in this one, the facades are on the street, and you can see those dining. So, you see, there is a different concept development process for every cluster and every location we work with.

E    Looking back on your experience in cluster development, what are the lessons you have learned?

We started with F&B because this is our background, and where we come from. But we learned through experience that what we’re doing is much more than just having restaurants and bars; it’s about developing real estate properties, have them make revenue, yet retain their owners. So now we see our kind of cluster development from a different angle, which may not involve restaurants at all.

E   How does the cluster model operate at a wider level?

It works on the economics of proximity and answers a need. For example, we go into a rural city in Lebanon with a certain purchasing power and a certain understanding of a given service, like healthcare, and say that we’ll bring them expertise that they usually commute to the capital to access—for example, a medical center with a couple of floors for children’s healthcare and other types of clinics, with the same value they usually get in the capital.

E    So is that your outlook moving forward in your development projects?

That’s the next thing for us. There’s certain ceiling to what the F&B industry can accommodate in Lebanon. Now, we’re developing F&B clusters in Ramlet Al Baida, Zahle, Beit Mery, Ajaltoun, Saida [Sidon], and Sour [Tyre].

We’ll adapt the clusters based on the areas I mentioned because they are, in some sense, not as mature as the capital—with the exception of Ramlet Al Baida—so we’ll go with brands that are more affordable for the purchasing power of the area, and so on.

But again, there would be a certain ceiling. We’ll be developing these six to seven projects in the coming three years, and then what? We’re into development, so going forward we’ll look at other industries, as we have started doing.

E   So in total, you’ll be developing and managing around nine hospitality clusters? Isn’t that spreading yourself too thin?

On the contrary, our business model works better when there are many projects because it operates on economies of scale and scope. This is where an experience in one cluster would benefit the other.

E   What type of industries are you considering for your future developments?

We’re looking into a couple of concepts now, basically in the line of an office park and healthcare. But again, we’ll only develop value-added conceptual projects. You won’t see Venture Group develop a building with offices—it has to be a full experience: a compound where you get parallel activities, just like what we did with the restaurants.

You can see that our clusters have complementing services which cater to everything but shopping. So they are more community centers than a collection of restaurants or bars.

E    What makes a good location for a cluster from your experience?

It depends on the industry. For F&B, it has to be accessible and visible, and the proximal market or catchment area has to have a need for such a project. There are many factors we consider. We look into the build-up area designated by law, and as such, if it would be feasible financially to have a project.

E    How do you decide which industry would perform best in a certain location?

We consider the local market needs and the maturity of the area. We would not develop an F&B project with places to drink and dine out if there isn’t a lifestyle which suits such outings.

We, as Venture Group, would start with F&B because it’s a sure thing so far that we’ve done. If the F&B is not adequate—either because we already have a project in the area or the area doesn’t need an F&B-focused project—we would be looking at other industries.

E   On what basis do you select your tenants?

It’s product and price related. It depends on which F&B brands are willing and have the investment capacity to penetrate a certain area. They know better than us somehow, those big brands, where they want to go because they are more in touch with the consumers than us, and actually that’s how we test the market. From 10 phone calls, we can almost know whether a location in Zahle is good enough or not because these brands would tell us if they have potential clients in the area or not.

E   Lebanese are notorious for their short attention spans when it comes to F&B locations. How do you keep your existing projects viable, knowing that you celebrated The Village Dbayeh’s two-year anniversary in November 2017?

It’s all based on keeping them “happening.” There are two angles. The first is the normal dynamics of the consumer: You wouldn’t see a Hazmieh resident in The Backyard Hazmieh in August, but you would see many Lebanese expats there instead.

The other angle is how we add value to the project by having a calendar of events. These events keep people coming back. You visit an F&B cluster either because it’s within your community, or because there’s something happening, and that’s why events are important.

E   Last time we spoke, in 2016, you were developing F&B projects in Egypt. Can you update us on these projects and your expansion plans?

We signed projects in Saudi Arabia and Dubai, but our core presence as a company with a full set-up is in Egypt. We have a couple of projects there that we’re already working on, and a couple more in the pipeline. We also have our eyes on growing stable markets at the touristic level, such as Cyprus, but we want to grow organically and not burn ourselves by moving too fast.

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Hospitality & TourismQ&A

Diversifying Lebanon’s tourism

by Nabila Rahhal
written by Nabila Rahhal

Executive spoke with Pierre Achkar, president of the Lebanese Federation for Tourism Industries and the Lebanese Hotel Association, who says the tourism industry has learned the hard way the dangers of relying on one market.

Although no single market can replace the Gulf tourists, he says, the tourism sector is developing alternative markets and new revenue streams to try and make up for the decreasing number of visitors from the Gulf.

E   Lebanon’s tourism industry has been largely reliant on tourists from the Gulf. Was that still the case in 2017?

For the past 50 years, Lebanon has been reliant on the Gulf market for tourism. And this is normal, whether in Lebanon, Europe, or America: It’s called proximal tourism. France can’t have its touristic boom if its neighbors, Germany and Italy, boycott it, for example. This doesn’t mean that we in Lebanon aren’t developing other markets such as Europe, Russia, and China. But these markets demand stability in Lebanon and need a long-term strategy. Also, some of these countries require infrastructures that don’t exist in Lebanon.

E   Can you give some examples?

I’ll give you an example of my recent trip to Russia with Jean Abboud, the president of the Association of Travel and Tourist Agents [in Lebanon]. We learned that Russian tourists want to stay in beachfront resorts where they can swim in the sea. While we have a few resorts like that in Lebanon, we don’t have enough volume to satisfy a large demand. What is needed today are beach resort hotels in touristic areas such as Beirut, Jounieh, Byblos, and Batroun.

E   What is stopping us from developing such properties?

We, in the hotel industry, are working on this. We would need at least 3,000 rooms on the seashore to create this resort tourism, and the locations of these properties would have to be in well-developed touristic cities with restaurants, nightlife, and [other] activities.

But the problem is that the cost of land is very high in these areas, and the area available to be developed only allows for a small number of rooms. Therefore, it would take an extremely long time to return one’s investment, so it doesn’t make financial sense to develop such projects in the current circumstances—unless one owns the land.

Russia, Germany, Scandinavia, and all those cold countries that want beach tourism constitute a major tourism market, with 700,000 Russians visiting the beaches of Turkey this summer. Capturing this market would allow us to diversify our tourism portfolio and reduce our reliance on tourists from the Gulf—but we have to prepare and be ready for it. Lebanon has to decide if it wants to adjust the building laws to accommodate resorts. This is just one example of the tourism diversifications that we’re working on.

E   What about tourism from other European countries?

The lack of stability in Lebanon is discouraging European travel agents from proposing Lebanon as a destination to their clients.

The past 10 years in Lebanon have been filled with internal turmoil. Many European travel agents invested in promoting Lebanon during this period, and even sold travel packages to groups, only to have an incident happen that would cause cancellations.

When this happened several times, these agents removed Lebanon from their product offerings, and now they would only put it back if we had four to five years of continuous and consistent stability in the country.

Meanwhile, the tourists from the Gulf were still visiting Lebanon despite the internal security situation. This is why we say that Gulf tourists not coming to Lebanon in recent years is a political statement, and not out of fear for their security.

E   But following the election of President Aoun in November 2016, they returned to Lebanon, correct? Many in the sector are saying that 2017 was a good year for tourism overall. 

They started coming back in small numbers, and we did indeed see an increase in the number of Gulf tourists over the previous year—but it was nowhere near the numbers in 2010 and before. This is because the political tension didn’t ease up completely, despite the election of President Aoun.

On the surface, however, the situation looked positive, especially since security in the country has been well controlled over the past three years, thank God, contrary to most countries in the world.

We also have the Lebanese Diaspora Energy initiative, and the events it hosted in the countries [with high levels] of Lebanese immigration. It also organized a large conference, which was held in Beirut and was attended by 2,000 visitors [who will in turn encourage family and friends to visit].The Ministry of Foreign Affairs and Emigrants had a big role to play in activating this Lebanese diaspora market, which has huge tourism potential; the improvement in tourism that we saw in 2017 was thanks, in part, to this market.

Other factors that contributed to a positive outlook in 2017 are the security and the alternative tourism streams that we had developed.

But, the big difference [between these tourists and those from the Gulf] is in the length of stay. When Gulf tourists used to visit Lebanon, their average stay was 10 days. Meanwhile, the average stay of European tourists, for example, is three days. So while this year we had a big volume of tourists, their shorter stays meant less profits and lower room rates [because more empty rooms need to be filled].

This is not to mention that the Gulf tourists spend more than other tourists, and also they tend to invest in Lebanon or in Lebanese F&B concepts, which they take back to their own country. This doesn’t happen with tourists from other parts of the world.   

E   You mentioned alternative tourism. Can you elaborate on what that means, and what you, in the hospitality industry, have been doing to develop this?

When you’re faced with a problem in the country, and your main touristic market is not visiting, then you’re forced to seek alternative forms of tourism to attract different nationalities and markets of tourists.

So, we started developing alternative tourism streams in Lebanon, from medical to religious to beach tourism. This is something we should have begun working on 10 years ago, instead of waiting until now. But today, we’ve become so desperate for business and, as they say, “necessity is the mother of all inventions.”

E   At the end of 2017, because of the political crisis surrounding Prime Minister Saad Hariri, the tourism situation was back to being uncertain. What’s the outlook for 2018?

We have entered a new scenario which is definitely harmful for the hospitality sector. The few thousand Gulf tourists who were visiting Lebanon again will stop doing so.

If you ask me if their visits since the end of 2016 were that impactful to the sector, my answer would be no. Because, as I said earlier, they had not come back to Lebanon in big numbers yet. Also, those who were visiting Lebanon this past year largely had their own homes, so they were not that significant to the hotels.

But what is harmful is what is being circulated in the international media about Prime Minister Hariri and potential armed conflicts in the country [at the time of interview in November 2017]. Everybody has access to news these days, and what they are reading and seeing is discouraging for tourism, especially for European tourists.

The only nationalities which wouldn’t be affected by such news are the Arabs: The situation in Syria, Iraq, and Egypt is worse than Lebanon, and so they would continue to visit Lebanon for vacations. But they are not enough to build a tourism market on.

Up until now, everything is uncertain. If the current crisis is the beginning of a solution, then all will be good for tourism. If it’s going to escalate further, then we’re in trouble—the whole economy will be in trouble, but the first to be affected in tourism are hotels and furnished apartments.

The positive point is that tourism in Lebanon is very resilient, as history has shown: The minute a crisis is resolved, hotels are fully booked the next day.

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F&B OverviewHospitality & Tourism

A mature market

by Nabila Rahhal
written by Nabila Rahhal

Lebanon’s food and beverage (F&B) industry is finally getting the kudos it deserves: Beirut was named Travel and Leisure Magazine’s Best International City for Food in 2017, and the country has recently been recommended in many global publications for its food, wine, and nightlife.

The country is developing into an F&B haven, as more establishments step out of the box with their culinary concepts. Meanwhile, Lebanon exports  nightlife trends to the region. Despite this, those who work in the industry still have to cope with the challenges of an increasingly competitive and unregulated market, and with consumers’ decreasing purchasing power.

Summer Lovin’

The F&B operators Executive spoke to say summer 2017 was a good one, almost reminiscent of 2010—a record year for many in the industry. “We really felt a difference [compared to the last three years]: Everybody in the sector was working, hotels were fully booked. If it were only the Lebanese expats that had come back for the summer, it would’ve been enough for us. But on top of that, many tourists—especially Kuwaitis—came, too,” says Tony Haber, CEO of Addmind, a Lebanese F&B and nightlife management company, explaining that Lebanon is resilient and quick to rebound from a crisis.

In his bars, TRI Concepts CEO Toni Rizk noticed a relatively new trend. “The good thing about Lebanon this summer is that we got a lot of European tourists who are actually residing in the Gulf but came to Lebanon for a quick getaway, since they find it authentic and have read about its food and nightlife in the press,” he says.

Seasonal escape

Summer is when many take a break from the city’s heat and head to the beach or mountain bars that pop up during this season. The past year saw more such venues mushroom across Lebanon, venturing into new territories or reviving familiar ones such as Qlayaat, Aley, and Jounieh.

Established locations continued to be an attraction this year, with around 10 new F&B venues setting up shop in Broummana, and some, such as Roadster, Starbucks and Zaatar w Zeit, establishing year-round venues. “We opened a seasonal Trumpet Cocktails Food and Tunes in Villa Printania, Broummana, and it was very good exposure and experience. Everybody in the summer wants a change from Beirut and escape to the beach areas or cool mountains. So, if you open a seasonal project that caters to them, you’ll have a good market,” says Rizk, explaining that the cost is relatively high for such projects because rent is calculated over three months, and because salaries are higher in the summer when demand is higher and operators have to do their calculations carefully, or they might end up losing money.

Rabih Fakhreddine, CEO of 7 Management, says that while seasonal outlets come and go, the real business is in Beirut. “The year was good for us, despite many places opening this year. The expansion is happening geographically—with venues opening in different areas across Lebanon—but Beirut will always remain the hub of nightlife, since the main purchasing power is here; it’s the showcase for the country,” he says.

A dog-eat-dog market

New F&B venue openings were not restricted to the summer, and it seemed as though there was a new concept opening every week this year, with almost the same number shutting down. “The rule of F&B in a mature market is that you have many venues that enter the market, but almost an equal number that exit it. This is the case in London and New York, for example. But in Lebanon, it has gone out of control,” says Haber, noting that Beirut’s mature F&B market means that those who want to open new establishments need to know what they are doing in the face of high-quality competition.

While Lebanon is a free market, Rizk says some regulation would benefit the whole sector. “There are so many new outlets that it’s not a healthy market anymore; there needs to be some control in this. It’s the role of the municipality and the Ministry of Tourism to regulate this [market], but there is no coordination or common strategy among them: They wait until residents complain of noise or traffic before they take action. They can control this through increasing the price of [the operating] license, since it is very cheap here,” says Rizk, explaining that F&B in markets abroad is generally regulated through costly licensing.

When the going gets tough

This increased competition, coupled with consumers’ dwindling purchasing power, is making it challenging to operate an F&B outlet in Lebanon. “The market is tighter, the average check is dropping, spending power is getting lower year after year, and the economy is not helping at all. It’s not easy for us operators because we have to maintain a certain level of quality and consistency. All this comes at the expense of our profit margins,” says Fakhreddine.

Rizk also speaks of the projected impact of recent tax increases on the F&B sector. “With the tax increases, expenses will be higher at a time when the purchasing power is even lower: Average salaries are low in Lebanon, and so people will barely have any money to spend. Over the long run, if the situation continues like this, it will affect our sector. It’s too soon for the effects to show now, but they will gradually,” he says.

This situation has led to a market where both differentiation and value are key. Snack and fast food F&B concepts are growing in popularity. At the same time, almost all F&B concepts from the casual diner to the medium-end restaurant to the neighborhood bar are promoting offers and formulas aimed at attracting customers through reduced pricing and value meals.

The Orient expression

When it comes to nightlife, differentiation is often in the entertainment. Theme nights or themed concepts from latin to jazz to oriental have become commonplace. The most enduring trend is the oriental or Lebanese one.

Fakhreddine claims his groups are pioneers when it comes to oriental-themed concepts and were among the first to introduce Arabic songs in their playlists back in 2012 with their Hamra venue February 30. According to him, they were also the first to introduce shisha in nightclubs in their Mar Mikhael summer venue Sayf Feb 30. “Shisha is becoming trendy, and not just in Lebanon—clubs in London and Paris are introducing shisha to their menu. The trend is everywhere, so we capitalized on this while trying to provide a unique experience. It’s the young people who are driving the trend of shisha, which is interesting because it’s usually the older crowds who like it,” he explains, adding that they sell 300 shishas per week in Sayf Feb 30, which is good for a club.

The oriental or Lebanese concept is also reflected in the many Lebanese cuisine cafes that entered the market this year—or expanded into prime locations, such as Falamanki in Raouche. Fakhreddine says his Lebanese café concept, Kahwet Beirut, located in Downtown, has a capacity of 400 and has been full almost every night since its launch in October 2016—allowing him to return his $500,000 investment in less than a year.

A foodie destination

Whether it is poke, ice-cream rolls, oysters, chicken burgers with innovative sauces, lobster rolls, or barbecued pork, Lebanese F&B operators went all-out this year with their adaptations and personal interpretations of global culinary trends.

There is a newfound appreciation among Lebanese consumers for good quality food. “More and more restaurants are now focusing on the food rather than just trying to impress people through the way the restaurant looks. This is because people are developing more of a palate and an understanding of where the food comes from, so there’s more focus on farm-to-table or seasonal food,” says Karl Naim, cofounder and CEO of ChefXChange, an online platform for people to book culinary experiences that also offers menu consultations for restaurants. Naim also founded Lobster Society, a “passion-project” restaurant with a focus on lobster-based dishes.

Riad Abou Lteif, a chef and co-owner of Ferdinand, a neighborhood bar in Hamra, and Meats & Bread Hardcore BBQ, a restaurant in Gemmayzeh, says the Lebanese are quick to adopt trends and have taken an interest in niche fresh food. “When it comes to niche food, people will go to places that cater to their tastes. Those that usually like sushi will go to the new poke places, for example. As long as the product tastes good, [a venue] will survive and have its clientele among the Lebanese,” Abou Lteif says, adding that he believes ramen noodles, soul food, and stews with a twist will be the upcoming food trends in Lebanon. 

Food has even become an important aspect of business in bars, which are not typically known for their mouthwatering cuisine. “There is more of a general interest in food in Lebanon, even in nightlife, and one of our bars, Trumpet, has had an increase in footfall because it’s becoming known for the good food we serve in it,” says TRI Concept’s Rizk.

Operators who used to solely be into nightlife developments are now branching into F&B. Fakhreddine says his positive experience with Kahwet Beirut has encouraged him to venture more into F&B in 2018 through the planned opening of a Japanese restaurant, and a snack concept called El Kbeer.

Meanwhile, Haber says Addmind will also be venturing into F&B, with a twist (see box above). “Nightlife has always been much more developed in Lebanon than other countries. But I think today, the market is changing in that sense, and that’s why we are changing with it and going more into F&B concepts with an element of fun,” he says.

What the future holds

Many of Lebanon’s F&B operators have their eye on markets beyond Lebanon. Naim says that once Lobster Society completes its first year of operation, he will look into taking it to the Gulf.

Some of Fakhreddine’s venues will also be going regional next year. “We tested the market, gathered a database, and made a very solid name and equity for our brand through the Antika nights we used to host in hotel ballrooms in Dubai.  Now is the time to capitalize on that. Although Dubai is in recession, 7 Management’s strategy is to target the mid-sector, and we are investing in a calculated and smart way,” says Fakhreddine, who plans to launch Seven Sisters rooftop in Dubai by the end of January 2018 and Antika Bar in August 2018.

Whether it is through food or nightlife entertainment, Lebanon’s F&B operators continue to find ways to keep their consumers happy despite the obstacles currently in their path—and those that will surely arise in the future. That is the Lebanese way, after all. 

[media-credit name=”Ahmad Barclay & Nabila Rahhal” align=”alignright” width=”945″][/media-credit]

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Big dataEntrepreneurship

Predictive analytics and TMI syndromes

by Thomas Schellen
written by Thomas Schellen

Too-much-information (TMI) syndrome is a chronic affliction of contemporary existence. The affliction is growing, without an app that can alert us to its threats and update us on the speed with which the disease of big data is invading ever more of our lives. Other IT buzzwords with mystifying potentials are artificial intelligence (AI) and fintech, short for financial technology.

For corporations, the disease of TMI takes the form of an addiction. Everyone seems to need big data, without necessarily having found a way to understand its specificities and implications. But there is a very human coping strategy that says, “If you can’t beat them, join them.” In local entrepreneurship, this maxim manifests itself through startups that catch on to external trends and produce a locally designed version of an app that is expected to benefit from the trend—in this case, the desire to analyze and benefit from big data.

Technical challenges related to big data give rise to extensive research needs and very costly development efforts for data storage and processing solutions on the scale of petabytes and exabytes, the latter term having recently been added to our vocabulary in order to describe a quintillion of bytes. Quintillion is what comes after million, billion, trillion, and quadrillion. Clear? (Not to this writer, sorry). Blessed are those who understand the mathematics needed for managing such numbers, but the business of capturing and managing these information volumes seems to be cut out for larger corporate entities rather than the typical two to four-person startup.

Startups that use big data in Lebanon wisely seem to concern themselves mainly with the more recent interpretation of the term—analyzing previously inaccessible data volumes for predictive analytics of customer behaviors to improve corporate performance in customer responsiveness. As such, big data apps represent the digital workshop of attention merchants and marketing magicians who nudge people to behave in ways that are most profitable to the company they serve, whether it is a manufacturer, distributor, specialized retailer, or large provider of commercial healthcare, insurance, or finance.

Restraints

Besides the requirements for large capacities on the tech side of big data, what also restrains the space for specialized Lebanese startups in the areas of fintech, big data, AI, and Blockchain or cryptocurrencies, are cultural and legal factors such as the conservatism of the financial industry and regulators. In conferences that promote Lebanese investment and economic potential, such as the Lebanese Diaspora Energy (LDE) event in late spring of 2017, fintech was touted as promising field of entrepreneurship, but the numbers of successful independent startups in this area are limited. Digital currencies were—until recently—officially disavowed by the central bank,  and enabling distributed-ledger technology (Blockchain) apparently means that the ecosystem has yet to produce startups with a track record of operations in this realm.

Despite this local reality, there is absolutely no reason to question findings by global consulting groups that show a huge boost in fintech investments from Q1 to Q2 in 2017, reaching a total of $12 billion during that period—$8.6 billion of that was in Q2 alone, according to KPMG, says a December 2017 note by Arabnet. The note also quoted another report, by CB Insights, saying that venture capital (VC) investments in fintech in Q2 of 2017 reached $5.2 billion globally.

The numbers for MENA are next to nothing in comparison. Arabnet cites “over $24 million” in fintech investments in 2017, and refers to just three investment deals that are supposedly fintech-related. They actually add up to $24.96 million, with the largest of these investments being a $20 million injection by undisclosed parties into a three-year-old payment gateway called PayTabs that in an earlier round got funding from Aramco Investment Ventures. The other two fintech startups cited with funding in 2017 are based in Dubai. It is hard to imagine how MENA fintech investments might even have reached 1 percent of global fintech funding over the years, as Arabnet suggested.

When endeavoring to profile startups in areas such as AI, fintech, and big data, Executive was treated to a number of incomplete leads, rumors, and less-than-coherent startup narratives that suggested deficiencies in the communication strategies of these entities and their partners in the ecosystem. Also, this magazine has yet to see impressive numbers of new startups relating to AI or fintech that are not iterations of companies that we profiled in one of our previous annual reviews on Lebanese entrepreneurs—but Executive has to admit that its investigative capacity has been recently somewhat impaired  because of human resource attrition. (A core editorial team member had to invest immense personal efforts into a near-term repatriation to the land of his birth; Matt, thank you for years of good work at Lebanon’s discerning voice of business and entrepreneurship!)

A big data startup sampler

Thus, in this 2017 roundup of entrepreneurship companies, Executive offers profiles of only two startups that are active in the space of big data retail analytics. The companies share a specialization in data collection from in-store environments for the purpose of predictive analytics and marketing optimization. What is striking about their differences, however, is that they represent diametrically opposite professional backgrounds in the small field of big data retail analytics entrepreneurs.

One company, Vision in Motion (ViM), is the brainchild of a fresh entrepreneur with no personal experience managing a fast-moving consumer goods (FMCG) enterprise. In fact, having started the company while still working toward his Lebanese high school baccalaureate, 19-year old Samy Khoury embarked on his venture with no enterprise management experience whatsoever.

He was an achiever that had been recognized in 2015 as young innovator at an international competition in Warsaw, Poland, but his entry into entrepreneurship came in the form of a lucky break. To join the Speed Beirut Digital District (BDD) acceleration program in 2016, he was required to have “a technical co-founder,” Khoury tells Executive. Not having found the required partner until the day before the application deadline, Khoury called a friend who owns a small grocery in Ashrafieh.  As Khoury tells his startup tale, the friend answered, “I don’t know any programmers,” but a customer in her store said, “Yes, you know a programmer. He’s your friend from school.” This chance connection à la Libanaise led to a phone call between Khoury and this programmer, who established their partnership in the last minute to qualify for joining the Speed program.

The other company, eQuality, tilts to the other extreme in terms of the typical startup founder’s age and professional track record. Nadim Tabet incorporated the company in his mid-50s, and already had 30 years of experience in the FMCG game, 16 of them as a management consultant. “I’m a management consultant by profession, and [I] specialized in the FMCG business, where I worked with Procter & Gamble and managed companies that relate to the FMCG business,” he tells Executive.

His professional journey to set up eQuality included stations in the United States and Dubai before establishing himself in Lebanon. Here, Tabet met his co-founder, a computer engineer named Rafic Hage, through a work relationship. Hage, 37 years old and seasoned as founder of several IT startups, explains how he developed his passion to serve an industry with lack of technology in specific niche areas.

“I was attracted to FMCG because it was new to me. I have been in IT ever since I graduated and have started three companies, which means I was always in this scope of responsibility such as finding resources, hiring resources, setting up plans, scoping projects, and leading developments from scoping to delivery. What was interesting in the partnership with Nadim in particular was to do IT solutions for businesses within a specific vertical,” Hage tells Executive.

`ViM’s path in entrepreneurship last year involved three months of participation in the Speed@BDD program, and one month immersed in Silicon Valley upon invitation through Speed. The accelerator injected $30,000 cash and provided other benefits in exchange for a 10 percent equity stake in ViM. This year, the team won a number of competitions at Arabnet in Beirut and Dubai, coming to an agreement there with PepsiCo under which ViM will implement a test project in one or two Dubai supermarkets from January 2018, with an eye to expanding the relationship if this test goes well.

eQuality progressed on its own financial power and did not participate in any incubation or acceleration program. Tabet says that the startup is oriented to the sophisticated end of the market, and its trilingual app comes with upmarket flair when compared with competitors. He is exploring the use of image-recognition software for future applications, but describes the technology in the market as currently too costly and not yet mature. Hage says eQuality is geared toward using artificial intelligence: “In any project involving AI, you start with collecting data. You need a large set of information for you to mine,” he explains. “For the past two-and-a-half years, our customers have been collecting data, and now we have enough data to start coming up with the proper analytics and predictive analysis.”

According to Tabet, since eQuality entered business with a target of serving large corporate customers, 25 client companies in the FMCG space signed on for its first product, a “merchandising intelligence application.” Under the name eye2, it offers FMCG distributors and suppliers a new way to assess their products’ merchandising status inside hypermarket store environments. While data is entered through interconnected devices, processed in the cloud, and immediately displayed on a dashboard, data-collection and entry methods are not the core strength that eQuality is focused on. Rather, the type of data collected and its fast translation into percentage-share visuals displayed on a dashboard are what Tabet describes as particular strengths of eye2. He claims that the dollar turnover of his company is already in “the high six digits,” and puts seven digits to the value of company, though he has not commissioned a formal valuation exercise. “Today, we are still self-financed, but we are considering different options [of future investments from VCs or strategic partners], because we want to expand dramatically,” he says.   

Neither company is yet at the stage of offering predictive analytics, but they are working to develop the capacity, with some built-in assurances of customer anonymity. According to Khoury, the English-language ViM is a comparatively affordable solution, because it uses data from security cameras that are already installed in stores. “The data we provide our customers is aggregate data, not specific data,” he says, so ViM could not be employed to identify individual customers and build personal behavior profiles. “We don’t show faces, we don’t show anything [individual]. It is basically a picture of an empty shop with a heat map on top of it. People are already filmed for security purposes and there is no invasion of privacy here,” he argues.

Despite of this limitation by design, ViM rose in less than two years to an estimated corporate worth in the millions of dollars. Khoury says ViM recently did a valuation exercise with a person in the retail industry who was interested in buying a stake or even all of the startup. “Value was estimated to be anywhere between $2 million and $4 million,” he says.

Both startup examples imply that Lebanon-based entrepreneurs can use the future of big data to aim for considerable business success, even if they begin their journeys to big data and predictive analytics while still working on the requisite capabilities. While neither is currently involved in formal valuation exercises with potential investors, both see themselves as million-dollar enterprises in year three after launch, and both are aggressively optimistic about their future. But beyond this sample, what will be the role of big data for local companies?

Some critical notes on big data

The term “big data” has been in use for 20 years and has been defined by three sets of challenges: One challenge is the technical side, where information is accumulating faster. It is today faster than it ever was before, faster and more varied than predicted even during the past decade of fast data growth. In the future, the accumulation of data in terms of volume, velocity, and variety will be greater and faster still.

The second challenge is what to do with the growing resource of raw information: How to analyze it correctly and put the insights to use, and how to protect people from exploitation of their data that is able to overpower them through manipulation or destruction of what used to be their privacy.

The third challenge is the gap between data reality and human assumption, the propensity of humans to think that quantity affects quality. This is what has been called a mythology problem with big data.

New information is supplied much faster than it can be consumed. That is true for unidirectional outbound media (such as this magazine), for bidirectional communication (all verbal and nonverbal chats on mutual media such as communication channels and social networks), and essentially also unidirectional inbound information channels where data from cameras equipped with facial recognition software and computerized communication-monitoring tools amass data volumes that are preserved and remain indefinitely accessible.

In the distributed non-collective data processing sphere of the past few millennia, also known as human memory, the oversupply of such data was a given, and one can blindly assert that it was growing permanently. But it was not a problem because the data from human eyes and ears went no farther than the individual brain, and was limited by a mix of individual data-handling limits (a.k.a. cognitive capacity) and forgetfulness—a blessing, after all.

To tackle the mythological assumption that big data is going to change everything beyond imagination, an ancient paradox is helpful. The sentence, “all Cretans lie,” has been used to confuse unwary students of logic for at least a century. But it is much older. Antiquity attributed the phrase “Cretans are always liars, evil brutes, lazy gluttons” to a pre-Socratic thinker from Crete by name of Epimedes. This dude lived—exact timing is as unknown as the real number of expatriate Lebanese shoppers globally—some five, six or seven centuries before Christ. (The before-Christ part is sure, because the semantic paradox of a Cretan saying that all Cretans lie was quoted by St. Paul in a moralizing tweet to a follower residing on the very island). 

Apparently, disinformation is not a new idea at all. Even in the book of psalms, one statement says, “All men lie.” So what is new about big data when the best thing that an economist-cum-data analyst can come up with after several years on the job at Google, sifting through the world’s largest available data stacks, is a 2017 book titled, “Everybody Lies”? 

This is not a book review, so issues such as the leading body-perception concerns, unexpected racial stereotypes, origins of media biases, the success of advertising, and questions asked about internet porn by male and female Google users will, unlike in the book by Seth Stephens-Davidowitz, not be addressed.

There is much reason to believe that future influencers will be data-savvier than their contemporaries, and Stephens-Davidowitz concludes that “the future of data analysis is bright,” asserting his belief that every future influencer—every coming Kinsey, Foucault, Freud, Marx, and Salk—is likely to be a data analyst. But so were intellectual influencers since antiquity, from Archimedes and Plato to the original Sigmund Freud and Karl Marx, and certainly also the pre-Google economic shakers and thinkers, from Astor and Vanderbilt to Carnegie, the Hearst and the Koch families, and from Adam Smith to Keynes and Greenspan.

Early in his book, Stephens-Davidowitz concedes that a major reason for the value of Google searches is not so much the large quantity of mined data, but the honesty of people who undertake them, thinking they search unobserved. But will humans adapt their behavior in an age when big data analytics is known to everybody?

One can only wonder when the big data analytics providers for retailers will spot the first data anomalies caused by GPS-tracked legions of pretend-customers, dispatched by interested parties to roam supermarket aisles with the explicit mission of influencing the data that are being collected.

Big data and AI together will improve aspects of economies. But what one should be prepared for, especially anyone presently under 70, is that with the near-term confluence of advanced surveillance technology, and a new intensity of data analytics, the tiny niche of individual human freedom will be even harder to claim than ever.

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