\nFuelled by its dominantly young, wealthy and tech-savvy population, Saudi Arabia\u2019s retail sector has managed to bounce back from the effects of the Covid-19 pandemic.<\/p>\n
Consumer appetite in the Middle Eastern nation is improving, translating into a positive outlook on a strong rebound in consumption. Home to a young population, who are increasing broadband and smartphone penetration, they have driven Saudi Arabia\u2019s shift towards online buying.<\/p>\n
According to\u00a0Euromonitor<\/em>, Saudi Arabia\u2019s retail market is expected to grow by about 20% by the end of this year, while the value of ecommerce is expected to more than double.<\/p>\n Today\u2019s consumers are networked and connected like never before. They expect a place to foster conviviality and be more than a retail and entertainment destination. It\u2019s about engaging in the physical and digital world.<\/p>\n According to Data<\/em> Reportal<\/em>,\u00a0there are 33.58 million internet users in Saudi Arabia within a total population of 35 million, and\u00a096% of the population are internet users.<\/p>\n In 2017, ecommerce platform Souq.com was acquired by Amazon, and continues to be the market leader in the Saudi market.<\/p>\n Amazon launched Amazon.sa in Saudi Arabia in June 2020 as a rebranding of Souq.com. Then, in late January this year, Amazon rolled out its Prime membership service in Saudi Arabia, in a bid to further develop its offer in the market.<\/p>\n Saudi Arabia generates 21% of its GDP from its capital city Riyadh. With a population of just over seven million people, Riyadh is the largest city in the Gulf Cooperation Council by more than two million, with an expected population growth to 15 \u2013 20 million by 2030, according to Vision 2030.<\/p>\n Riyadh has a youthful audience with 52% of the population under the age of 30, while 40% are under the age of 25. Government data indicates that the population is composed of 73% Saudi nationals and 27% expatriates.<\/p>\n Some of the biggest retailers in Saudi Arabia include\u00a0Jarir, Home Centre, Saco, Panda, Max, Abdullah Al-Othaim Supermarket, Al Aamer Furniture, Babyshop, Splash, and Danube.<\/p>\n According to Market Research<\/em>, the Saudi Arabian food and grocery retail market had total revenues of \u00a340.4 billion last year, representing a compound annual growth rate of 2.9% between 2016 and 2020.<\/p>\n The food segment was the market\u2019s most lucrative in 2020, with total revenues of \u00a330.3 billion, equivalent to 75.2% of the market\u2019s overall value.<\/p>\n The value of the Saudi Arabian food and groceries market grew by 4.6% in 2020, as a result of the pandemic, with increased demand driven by precautionary buying and a spending shift from foodservice channels.<\/p>\n Meanwhile, performance across Saudi Arabia\u2019s various real estate market asset classes remains mixed.<\/p>\n However, the residential market continues to outperform, according to the latest quarterly Saudi Arabia Real Estate Market Review by\u00a0Knight Frank<\/em>.<\/p>\n The retail sector has been one of the most significant casualties of the pandemic, with headline lease rates in prime shopping malls across the country falling by between 1% and 5% over the last 18 months.<\/p>\n During Q2 alone, rents in the Kingdom\u2019s best shopping malls declined by between 1.5-3% in Riyadh, Jeddah and DMA.<\/p>\n \u201cHugely reduced footfall as a result of the pandemic and repeated restrictions on international arrivals has been a double whammy for the retail market,\u201d Knight Frank partner and head of Middle East research, Faisal Durrani said.<\/p>\n \u201cThat said, the reopening of the border to tourists from 49 nations recently, combined with \u2018revenge spending\u2019 from surging domestic tourism may help to cushion the market from further sharp declines.\u201d<\/p>\n President of Diriyah Development Company and former president and chief operating officer, Jonathan Timms said the company was fortunate under the leadership of Saudi Arabia that they were able to act quickly.<\/p>\n \u201cWe avoided the worst of Covid. It\u2019s been a fairly non-event because it hasn\u2019t affected people,\u201d he told\u00a0Retail Gazette<\/em>. \u201cThey quickly put measures in place when needed, which has protected us from more dramatic measures.<\/p>\n \u201cThere was a period when shops were closed and that probably accelerated some of the move to online. It\u2019s been business as usual for close to a year in Saudi Arabia now post-Covid.\u201d<\/p>\n Saudi Arabia\u2019s international appeal has been boosted by positive momentum around its socio-economic transformation.<\/p>\n Real estate firm GRMC predicted that there will be 4.7 billion SAR (\u00a393 million) projected domestic tourism retail spend in 2024, with 4.4 billion SAR (\u00a387 million) projected international tourism retail spend in 2024.<\/p>\n Timms urged international retailers to \u201ccome quickly\u201d if they want to launch in Saudi Arabia.<\/p>\n \u201cInternational retailers already understand the incredible economic opportunity which Saudi Arabia provides,\u201d he said.<\/p>\n \u201cI\u2019ve spoken to a lot of major international retailers. When they\u2019re looking at the existing stock on the ground, it\u2019s a bit of a challenge, especially if they want to open a great store, we can do a model store there.<\/p>\n \u201cBut if they really want to come to Saudi Arabia, they\u2019re looking at where can we put our foot on the ground and say, this is our brand.<\/p>\n \u201cThere\u2019s a lot of potential developments, and the unique thing about us is we\u2019re already building, we\u2019re vision led, we\u2019re not constrained in terms of anything other than getting the best possible product on the ground.\u201d<\/p>\n To further boost its domestic and international appeal,\u00a0Saudi Arabia is set to launch Diriyah Square in 2024.<\/p>\n Diriyah is expected to attract visitors from across the world and become the country\u2019s foremost historic, cultural and lifestyle destination, nestled around At-Turaif \u2013 a UNESCO World Heritage site.<\/p>\n Diriyah is the largest and most significant commercial project of its type underway anywhere in the world today, with an investment of 190 billion SAR (\u00a337 billion).<\/p>\n The district will have 500 brands and 2.2 million sq ft of retail space. It is expected to contribute 500 billion SAR (\u00a399.9 billion) cumulatively to Saudi Arabia\u2019s GDP until 2030.<\/p>\n Timms told\u00a0Retail Gazette<\/em>\u00a0that the challenge for the Saudi retail sector is similar to the retail sector globally.<\/p>\n \u201cRetail is always changing,\u201d he said. \u201cThe amount of retail in Saudi Arabia is so constrained. We\u2019re making decisions as to how we can modify this for the next generation.<\/p>\n \u201cWe have an incredible Saudi team who really understand the market and together, we\u2019re able to curate something that\u2019s going to make the best possible environment for those retailers to respond to the changing market.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Saudi Arabia boasts a young, wealthy and tech-savvy population who are willing to spend their money across the nation’s retail sector. Retail Gazette looks at how the Middle Eastern country has performed during the pandemic and how future developments are expected to perform.<\/p>\n","protected":false},"author":39,"featured_media":17794,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4140],"tags":[3958,2683],"_links":{"self":[{"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/posts\/17449"}],"collection":[{"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/comments?post=17449"}],"version-history":[{"count":7,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/posts\/17449\/revisions"}],"predecessor-version":[{"id":18007,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/posts\/17449\/revisions\/18007"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/media\/17794"}],"wp:attachment":[{"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/media?parent=17449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/categories?post=17449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.meretailnews.com\/wp-json\/wp\/v2\/tags?post=17449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}