UAE, Saudi spur GCC retail sales surge to $297 billion

Powered by a buoyant retail sector in the UAE and Saudi Arabia, retail sales across the GCC will jump 15.7 per cent year-on-year basis to $296.8 billion by the end of 2022, according to Alpen Capital’s latest report.

Further spurring the retail buoyancy is the rebounding business confidence subsequent to the reopening of borders, easing of travel restrictions, and rise in hydrocarbon revenues, Alpen Capital’s said in its latest GCC Retail Industry report.

The GCC is fast becoming a global centre for business, entertainment, and sporting events with a slew of events slated to take place to boost tourist arrivals. Moreover, the rising population, with a high concentration of expatriates and HNWIs, remains one of the primary factors for driving the growth of the GCC retail industry.

Additionally, the recently signed FTAs with India and Israel will not only increase the range of foreign food and non-food products within the domestic retail outlets but also expand the establishment of international brands in the region, said the report that was released at the Middle East Retail Forum.

Going forward, retail sales in the region are set to grow at a compound annual growth rate (CAGR) of 5.7 per cent to $370 billion in 2026 with the UAE accounting for $113.8 billion and Saudi Arabia contributing $176.5 billion, the UAE-based investment banking advisory firm said in the report.

“The GCC retail industry is poised to grow at a healthy pace due to favorable demographics, improving macroeconomic factors, and revival of the tourism industry. The sector is also expected to benefit from the government's push towards economic diversification and a growing prominence of omnichannel business models,” said the report.

Krishna Dhanak, managing director, Alpen Capital (ME) Limited, said the region’s retail industry is in a transformation phase with the pandemic impacting the consumer behaviour and buying patterns while putting e-commerce at the forefront of retail.

“Operators have shifted their focus on brand acquisition to strengthen their geographical presence as well as expand and diversify their product offerings. Larger e-commerce players are likely to acquire niche operators offering customized products and services. Going forward, we expect consolidation in the industry to intensify in order to drive earnings, gain market share and improve operational efficiency,” Dhanak said.

Non-food retail sales are forecasted to grow at a CAGR of 6.2 per cent between 2022 and 2026 while food retail sales are anticipated to increase at an annualized rate of 4.9 per cent during the period.

Saudi Arabia and UAE continue to lead retail sales regionally, cumulatively accounting for 78.5 per cent of the total sales by 2026. This is largely due to their large and diverse population base, liberalization of policies and a growing appetite for unique shopping experiences. Retail sales in the kingdom and the UAE are forecasted to grow at a CAGR of 6.5 per cent and 5.1 per cent, respectively, between 2022 and 2026.

— issacjohn@khaleejtimes.com