UAE and Saudi Arabia Lead GCC Retail Industry Growth
- Business Companies Regional Retail
Global Business Magazine- 5 minutes read
Growing population coupled with rise in per capita income is aiding the growth of retail industry in the GCC region, which is projected to grow at a CAGR of 4.6% from $309.6 billion in 2023 to reach $386.9 billion in 2028, a new report from the UAE-based investment banking advisory firm, Alpen Capital, showed.
Increased tourism activities and e-commerce are also expected to play a critical role as several new players are gaining prominence, and there remains a scope for niche platforms to adopt innovative business models to make the GCC retail landscape more competitive, the report said.
Retail sales in the GCC nations are projected to grow between 1% and 5.4% CAGR between 2023 and 2028, and they are projected to grow at a CAGR of 5.1% and 5.4% to reach $161.4 billion and $139.1 billion respectively in Saudi Arabia and the UAE.
“This growth will be driven by its diverse and expanding population base, and vibrant infrastructure that makes them top international shopping destinations. These two nations are expected to cumulatively account for 77.7% of the total GCC retail sales by 2028,” the report pointed out.
Retail sales in Kuwait and Bahrain are projected to witness a CAGR of 3.1% each between 2023 to 2028, whereas Qatar and Oman are expected to grow at a CAGR of 2.2% and 1%, respectively.
Positive Future
Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited, said that the long-term prospects of the GCC retail industry continue to remain positive owing to economic growth, favourable demographics, relaxation of visa rules and liberalisation policies.
Furthermore, the ambitious agendas adopted by the GCC governments to diversity their economies are leading to significant advancements in the infrastructure and tourism sectors, she said.
“This is expected to 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. Amid the growing prominence of e-commerce, retailers are adopting dynamic business strategies to better meet consumer demands and widen market presence,” she added.
According to Hameed Noor Mohamed, Managing Director, Alpen Capital (ME) Limited, the GCC retailers have increased their focus towards adopting and integrating technology to streamline operations and provide personalised offerings.
He said that regardless of margin pressures, majority of them are investing in advanced digital solutions and creating omni-channel strategies to improve customer experience.
He added: “As the regional retail landscape continues to evolve, larger e-commerce players are likely to acquire niche operators offering customised products and services while traditional players will continue to collaborate with digital platforms to reach out to a wider audience.”
Duty Free Sales
Duty free sales at the airports in the GCC (Dubai, Abu Dhabi, Qatar and Bahrain) are expected to reach $4.7 billion in 2028, growing at a CAGR of 9.3% between 2023 and 2028. This growth can be attributed to the anticipated rise in passenger traffic, largely driven by government initiatives to promote tourism.
“At 80% completion of projected additions, 3.9 million sq. m. of retail space is likely to come up in the GCC between 2023 and 2028, taking the total organised retail gross lease area (GLA) to 24.3 million sq. m. This is a modest growth scenario, wherein organised retail GLA is anticipated to grow at a CAGR of 2.9% during the period,” the report added.
