GCC retail set to “boom”

The GCC retail industry is projected to grow at a compound annual growth rate (CAGR) of 4.6% to over $390 billion in 2028 from $309.6 billion in 2023, revealed Alpen Capital at MRF 2024.

“There has been resilience in the GCC retail landscape post pandemic largely fuelled by population growth – around 2% across the GCC over the next four years – and the development of new ways of distribution through a multichannel approach, among other factors,” stated Hameed Noor Mohamed, Managing Director of Alpen Capital.

Add to that demand for luxury goods also set to boost retail sales. Taken together luxury goods and duty-free sales are expected to touch the $5-billion-mark in 2028, driven largely by tourist arrivals and nominal population growth across the GCC.

GCC Retail Snapshots

• The UAE and Saudi Arabia to account for 78% of GCC retail sales by 2028.
• The UAE is expected to clock the highest growth at approximately 5.4% over the next 4 years.
• 70% of all new retail spaces – approximately 3.9 million sqm – are slated to come up in the UAE and KSA.

A quick look at challenges

The industry, however, is not immune to global dynamics. With 70% of total exports of Kuwait, Qatar, Saudi Arabia and Oman being hydrocarbon driven, oil prices have a significant effect on the spending and rise in retail sales.

“Amid inflation, purchasing habits are changing. Consumers are closely looking at price differentials. In addition, emergence of online platforms, dark stores and omnichannel presence across the board are causing intense margin pressures on all the existing retailers and this challenge is expected to increase,” Mohamed summarised.

Among other trends, the health and wellbeing space is set to grow, while there could be possible consolidation in the BNPL (buy now pay later) landscape.