The GCC region’s retail industry is set to witness growth at a compounded annual growth rate (CAGR) of 4.6 percent between 2023 and 2028, with the UAE and Saudi Arabia leading the regionโs growth at CAGRs of 5.4 percent and 5.1 percent, respectively.
The latest report from Alpen Capital, a UAE-based investment banking advisory firm, highlights the factors supporting the long-term prospects of the GCC retail industry including economic growth, favorable demographics, the relaxation of visa rules, and the liberalization policies.
Ambitious diversification agendas drive growth
The report also notes that the ambitious agendas GCC governments have adopted to diversify their economies are leading to significant advancements in the infrastructure and tourism sectors. These efforts further enhance the value proposition of the region.
“As the industry continues to mature, several emerging trends such as Buy Now Pay Later, and evolving consumer preferences are reshaping the market dynamics,” stated Sameena Ahmad, managing director, Alpen Capital (ME) Limited.
As e-commerce grows in significance, retailers are adopting dynamic business strategies to better meet consumer demands and widen their market presence.
The report expects retail sales in the GCC region to grow at a CAGR of 4.6 percent to reach $386.9 billion in 2028 from $309.6 billion in 2023. The increase in population, rise in per capita income, and boost in tourism activities will further support this growth. E-commerce will also continue to play a critical role as several new players are gaining prominence. In addition, there remains scope for niche platforms to adopt innovative business models to make the GCC retail industry more competitive.
UAE, Saudi Arabia drive industry surge
According to the report, the retail industry’s sales in the GCC nations will grow in the range of 1.0 percent and 5.4 percent CAGR between 2023 and 2028. Saudi Arabia and the UAE will grow at a CAGR of 5.1 percent and 5.4 percent to reach $161.4 billion and $139.1 billion, respectively.
The diverse and expanding population base and vibrant infrastructure make them top international shopping destinations. These two nations should cumulatively account for 77.7 percent of the total GCC retail sales by 2028.
The report expects retail sales in Kuwait and Bahrain to witness a CAGR of 3.1 percent each between 2023 and 2028. Meanwhile, Qatar and Oman will grow at a CAGR of 2.2 percent and 1.0 percent, respectively.
Duty-free retail sales at the airports in the GCC (Dubai, Abu Dhabi, Qatar, and Bahrain) will likely reach $ 4.7 billion in 2028, growing at a CAGR of 9.3 percent between 2023 and 2028.
Read: Six new highlights to look forward to at Expand North Star 2024
Leveraging technological advancements
GCC retail industry participantsย continue to adopt omni-channel business models to remain competitive and meet the rising demand of consumers for seamless and integrated shopping experiences. Operators are utilizing technological advancements and data analytics to streamline procedures, reduce costs, increase revenue and enhance customer experience.
Furthermore, trends like Buy Now Pay later, enabled by fintech providers, are experiencing significant growth as consumers become more price conscious.
โGCC retailers have increased their focus towards adopting and integrating technology to streamline operations and provide personalized offerings. As the regional retail landscape continues to evolve, larger e-commerce players are likely to acquire niche operators offering customized products and services while traditional players will continue to collaborate with digital platforms to reach out to a wider audience,” stated Hameed Noor Mohamed, managing director, Alpen Capital (ME) Limited.
Therefore, Mohamed explains that consolidation in the retail industry is expected to intensify as the pressure on companies to drive earnings and gain market share continues to mount in the face of rising competition.
For more economy news, clickย here.
