“Growing per capita GDP and disposable income, expanding population base and consistent inflow of tourists will boost the region’s retail sector going forward,” it added.
“The retail industry has been one of the fastest growing sectors in the Middle East for the last few years,” Sameena Ahmad, Managing Director at Alpen Capital, said.
“It is the second largest sector in the oil-rich GCC region, and is considered to be the most preferred means of promoting diversification and sustained economic development in the region,” she added.
“The industry is dominated by a number of privately held companies, whose relentless drive and innovation has transformed the retail landscape of the region. These companies have shown great resilience in the face of the economic crisis and now face a period of healthy growth ahead of them,” she said.
“While the financial crisis slowed down the pace of growth, the GCC retail sector continues its uptrend supported by fundamental drivers, including growing affluence and disposable income, rise in tourism, and a large expatriate population, favorable demographic factors, and large-scale infrastructure development”, Mahboob Murshed, Managing Director, Alpen Capital, added.
“Retail sales of supermarkets and hypermarkets in the GCC are estimated to expand at a CAGR of 10.7% between 2010 and 2015, thus outpacing the broader retail industry,” the report said.
“Middle East duty free and travel retail sales are projected to expand at a CAGR of 9.9% between 2010 and 2015. The Middle East luxury goods market looks poised for strong performance going forward. The region’s luxury goods sector is estimated to expand at a CAGR of 8.5% within the same period.”
“Given a larger size of the population base, Saudi Arabia will continue to account for the largest slice of the GCC retail industry. Based on projections, it is estimated to grow at a CAGR of 9.4% and increase its share in the total GCC retail sales from approximately 42% in 2010 to 44% by 2015. UAE and Qatar are expected to show a robust growth at 7.9% and 7.7% respectively CAGR from 2010–15,” the report added.
“Approximately 5.4 million square meters of area was under planning and development in 2010 in the GCC, which is likely to be gradually added to the existing GLA of 10.3 million sq m by 2015. As per our projections, around 65% of the pipeline will be added to the current stockpile by 2013. Assuming an 80% occupancy rate, total occupied retail GLA in the GCC is forecasted to reach 11.1 million square meters in 2011 before expanding to 14.6 million sq m in 2015.”
“The retail sector is witnessing increased competition which has posed several challenges to companies in this highly fragmented market to maintain market share and keep attracting patrons. Heightened competition has forced retailers to consider product diversification, attractive pricing, and convenient location. Positioning shopping malls as complete entertainment centers and not just as shopping outlets have become imperative to maintain increasing footfalls,” the report said, while highlighting the challenges ahead.
“We expect the GCC retail sector to continue its pace of growth leading to diversification and sustained economic development in the region,” the report added.