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December 2012

Retail industry, which is one of the fastest growing sectors in the GCC has thrived over the last several years due to increasing purchasing power, growing expatriate population, changing lifestyle and an expanding tourism & hospitality industry. Retailers have benefited from the government initiatives and progressive policy agenda and have a healthy period of growth ahead of them.

Industry Outlook

According to Alpen Capital, between 2011 and 2016, the GCC´s retail sales are expected to grow at a CAGR of 7.7% to reach US$ 270.3 billion by the end of the forecast period. Food retail sales are anticipated to expand at a CAGR of 8.8% during this period while non-food retail sales are likely to grow at an annual average growth rate of 6.6%. Food sales growth will outperform non-food sales growth during the forecast period as high-value and healthier food products could find greater demand.

Sales of supermarkets and hypermarkets in the GCC are expected to grow at an annual average rate of 10.5% between 2011 and 2016. The relatively under-penetrated markets in terms of modern grocery retail formats like Saudi Arabia, Qatar and Kuwait are likely to outperform the mature UAE market.

Duty free and travel retail sales in the Middle East are forecasted to grow at a CAGR of 11.6% from 2011 to 2016, outperforming the broader retail industry in terms of growth. Although the growth of the luxury segment may be moderate in 2012 due to the global economic uncertainty and high base effect, outlook for the segment remains positive.

The region´s retail sector has displayed strong resilience in the face of global economic downturn and is expected to continue to grow at a steady pace given its attractiveness to tourists and residents, geographic location, developed logistics and availability of diverse shopping options. While the sector presents attractive opportunities, it is highly competitive and retailers need to continue to innovate so that they can achieve sustainable growth and profitability.

For more details please click here to access the complete version of the GCC Retail Industry Report.