E-commerce and luxury goods sector will lead the GCC’s retail industry, Retail Leaders Circle Chairman Panos Linardos said.
“Luxury continues to perform well and favours the in-store model, as consumers investing significantly in a product want to examine it physically before committing to purchase,” Mr Linardos told Arab News.
In Saudi Arabia, the overall retail industry is expected to hit $158.6 billion by 2024.
The global luxury segment reached $1.4 trillion in sales last year, witnessing a 21 per cent jump in revenue.
In the UAE, the luxury goods market is valued at $3.8 billion and is projected to register a CAGR of 5.2 per cent in the next five years.
Dubai and Riyadh are also expected to lead luxury retail growth this year, a report by Barclays had said in January.
The report said that the Middle East is predicted to account for eight per cent of luxury goods sales in the next seven years, which is up from the current five per cent.
Apart from this, e-commerce in the Mena region is expected to grow at 15 per cent CAGR in 2023.
“E-commerce is growing fast as customers continue their buying habits from the pandemic. Spending power among younger digital buyers, who generally enjoy the convenience of online shopping, will also contribute significantly to the growth of retail in the GCC,” Mr Linardos said.
The UAE’s e-commerce market grew by 46 per cent in 2021, and is expected to reach more than $140 billion by 2031.
In Saudi Arabia, social commerce industry is set to grow by 35 per cent this year, to reach $1338 million.
A report added that the social commerce industry is expected to grow steadily over the forecast period, recording a CAGR of 21.7 per cent between 2022 and 2028.
Social commerce in the Mena region also grew by 70 per cent in 2022, as compared to the previous year, according to another report.
Mr Linardos added that one of the key trends in the industry will be the integration of physical and digital retail, apart from conscientious consumerism.
“Transparent reporting and independent auditing of sustainability claims are going to become increasingly significant to retailers hoping to protect and grow their market share,” Mr Linardos added.
Speaking at the Investopia 2023 Conference in Abu Dhabi, Chalhoub Group CEO Patrick Chalhoub said that the luxury industry is committed to sustainability. He said that significant steps are being taken to comply with the net-zero agenda by 2030, focusing on recycled products and a circular economy.
Mr Linardos also noted that businesses should design the entire customer journey around digital integration.
“Artificial intelligence will help to anticipate and respond to shifting consumer demand patterns by streamlining inventory processes, increasing supply chain efficiency and tracking production, and augmented reality will make the online and physical shopping experiences more immersive, while also supporting product customisation and enhance brand loyalty,” he said.
As such, retailers in the region are focusing on using AI and personalisation.
Brands such as Carrefour said it had introduced a face verification platform for payments in its Deira and Amsaf stores. Here, customers will be able to use their face as biometrical feature at a payment terminal instead of a phone or card.
AI powered chatbots can also improve customer personalisation and engagement by answering customer questions, recommending products, and building customer profiles.
Retailers like Chalhoub Group have already invested in similar technology, and recently won an award for its ‘Connect’ app — connects customers to frontline workers, backroom staff and management. Its aim is to increase brand loyalty, encourage repeat purchases and enhance customer engagement.
The app gives frontline workers access to customer profiles, distant and in-store sales journeys, and other personalised content.
“Digital is making the biggest impact on the modern retail landscape, and it will be a central to the discussions at the Retail Leaders Circle Mena Summit,” Mr Linardos said.
The Retail Leaders Circle Summit will begin on March 7 in Riyadh with the theme ‘Digital Economy and Purposeful Growth’.
The summit is expecting more than 4,000 attendees, 750 retail firms, 500 sector CEOs, and over 75 speakers from around the world.
