Saudi’s retail sector on growth path, digital transformation in development
The retail sector is gaining growing importance in Saudi, which has predicted a few days ago that this sector will grow by 20 percent this year and more than double the value of e-commerce, driven by a young generation, its dynamism, and digital expertise, all in line with Saudi Vision 2030.
The Corona pandemic has prompted the shift of consumers towards electronic commerce, which has accelerated the process of digital transformation. The growing awareness of the Kingdom’s digital economy has brought the future of retail into the online space, from clothing retailers to pharmacies, restaurants, and even supermarkets.
Among the latest announced projects in the retail sector in the Kingdom is the inauguration by the largest retail pharmacy chain, “Al-Nahdi Medical Company”, the first smart distribution center for the retail sector in the Middle East and North Africa region.
Middle East and North Africa Retail Leaders’ Summit
In confirmation of the strong potential of the retail market in Saudi, in addition to the signing of the Saudi Ministry of Investment and the signing of a memorandum of understanding with Amazon to develop e-commerce in the Kingdom and attract sustainable investment practices, Saudi Arabia hosted the “Retail Leaders Circle in the Middle East and North Africa.”
The summit was its eighth edition and the first in the world for the global retail industry, held in partnership with the Convention and Exhibition Authority.
The 2022 edition of the event introduced groundbreaking new programs, field initiatives, and live experiences, all aimed at facilitating learning, collaboration, and partnerships at scale and reinventing industry standards in real time.
The list of experts included more than 60 speakers and influencers from the region and the world, who spoke about the retail sector, its present, and its future, with the aim of building a common and collaborative vision, to contribute to reshaping the features and developing the global retail sector, highlighting the areas related to the retail sector, as well as identifying challenges.
The most urgent need in the sector is aimed at building a strategic agenda that contributes to the growth of this industry and its adaptation to the new global environment in the wake of the pandemic.
“We chose Riyadh as the location for the eighth edition of the MENA Retail Leaders Circle Summit due to the tremendous growth and resilience the retail industry has shown within the Kingdom in recent years,” said Retail Leaders Circle President Panos Lenardos.
According to the CEO-designate of the General Authority for Exhibitions and Conferences, Amjad Shaker, hosting the eighth edition of the summit “will provide a platform for discussing and studying sector issues and changes in the regional retail scene.”
Retail represents 12 percent of Riyadh’s GDP
Shaker said that retail trade represents 12 percent of Riyadh’s GDP, and the compounded annual growth of e-commerce in the Kingdom is expected to reach 18.95 percent by 2025.
The number of e-commerce transactions
The number of e-commerce transactions reached nearly 41 million, with an average of 201 Saudi riyals per transaction. The percentage of January sales of this year was equivalent to about 80 percent of the total e-commerce sales recorded in 2019, which amounted at that time to about 10.25 billion riyals.
Growth in the share of electronic payments
In this context, the Saudi Central Bank announced the share of electronic payments in the retail sector, showing that individuals (Retail Payments) generated 57 percent of the total for 2021, including cash deals in the Kingdom, exceeding the target percentage within the financial sector development program, one of the programs of the Kingdom’s Vision 2030, which is set at 55 percent for the year 2021.
Saudi Central Bank Governor, Dr. Fahd bin Abdullah Al-Mubarak, said in a statement that the Central Bank is working to enhance its approach to expanding the electronic payments sector, digital transformation of payments, and the development of the supporting infrastructure to activate the use of electronic channels.
The future of retail trade in the Kingdom
As for those wishing to enter the field of e-commerce, the figures that deal with the future of retail trade in the Kingdom are promising. The sectors that can be considered as spaces for innovation and growth to operate in the future are food and beverages, fashion and pharmaceuticals, which are expected to witness significant growth.
Pharmaceuticals and food and beverages, in particular, are expected to show a compound annual growth rate of 10 percent and 6 percent consecutively through 2025, according to Middle East and Asia-Pacific strategy consultancy Market Research.