https://arab.news/5fqf3
RIYADH: The retail sector in the Gulf Cooperation Council is projected to grow at an annual rate of 4.6 percent between 2023 and 2028, primarily fueled by the UAE and Saudi markets, according to a recent analysis by investment banking advisory firm Alpen Capital.
Retail sales in the GCC are expected to rise from $309.6 billion in 2023 to $386.9 billion by 2028.
The UAE and Saudi Arabia are set to see expansions of 5.4 percent and 5.1 percent, respectively, reaching $161.4 billion and $139.1 billion during this period. This growth is attributed to factors such as population increases, rising per capita income, and heightened tourism activities. Strengthening the retail sector is essential for Saudi Arabia as it seeks to position itself as a leading business and tourist destination, aligning with the economic diversification goals outlined in Vision 2030.
In February, Majid Al-Hogail, Saudi Arabia’s minister of municipal and rural affairs and housing, noted that the retail sector contributes 23 percent to the non-oil economy and aims to surpass $122.6 billion by the end of 2024.
“The long-term prospects of the GCC retail industry continue to remain positive owing to economic growth, favorable demographics, relaxation of visa rules, and liberalization policies,” said Sameena Ahmad, managing director of Alpen Capital.
She added that ambitious government agendas for economic diversification are leading to significant advancements in infrastructure and tourism, further enhancing the region’s appeal.
Emerging trends such as “buy now, pay later” options and evolving consumer preferences are also reshaping market dynamics. The report projects that retail sales in Kuwait and Bahrain will grow at a compound annual growth rate of 3.1 percent each from 2023 to 2028, while Qatar and Oman are expected to grow at rates of 2.2 percent and 1 percent, respectively.
Alpen Capital emphasizes that the rising population, particularly with a concentration of expatriates and high-net-worth individuals, is a key driver of GCC retail growth.
“Anticipated pick up in the economic activity and improvement in per capita income is expected to further advance the appetite for global brands and luxury items. Amid expanding infrastructure developments, the GCC economies are establishing themselves as a hub for global business, entertainment, and sporting events,” the report said.
Additionally, religious and cultural tourism significantly contributes to sector growth, attracting many tourists during pilgrimages and festivals. However, the analysis also identifies risks that could hinder growth, such as geopolitical tensions. Vulnerabilities in hydrocarbon revenues, rising geopolitical concerns, and global macroeconomic challenges may pressure the industry. “The region is sensitive to supply-side shocks, which could lead to inflationary pressures and affect consumer spending power,” added Alpen Capital.