GCC retail sales forecast to reach $284.5bn by 2018

Retail sales across the Gulf region are forecast to grow annually by more than 7 percent to 2018, reaching a total of $284.5 billion, according to a new report.

Food retail sales growth is anticipated to outperform the non-food retail sales due to higher demand for healthier and high-value food in the region, said the report published by Alpen Capital.

It said sales in supermarkets and hypermarkets in the GCC are expected to reach $59.3 billion, translating into a five-year compound annual growth rate (CAGR) of 9.2 percent, driven by increasing disposable incomes and modernisation of the industry.

Airport-based duty free sales in the Middle East are estimated to increase from $3.9 billion in 2013 to $6.6 billion in 2018 as passenger traffic continues to increase across the region, the report added.

The personal luxury goods segment in the Middle East is also expected to grow at a 4.6 percent CAGR between 2013 and 2018 to reach $9.4 billion in sales.

The report said: “While retails sales growth across all the GCC countries is expected to remain positive between 2013 and 2018, the outlook for Qatar is most optimistic. During the period, the Qatari retail market is expected to grow at a CAGR of 9.8 percent.”

Alpen Capital said the supply of new modern retail sales area is expected to adequately meet the increasing demand for retail space over the next five years.

It added that although the industry is growing there are still factors that pose a threat or challenge to its growth, including the upward trend of retail rental rates in many Gulf cities.

“Such overhead escalations can have a negative bearing on retailers’ margins. A shortage of skilled local workforce increases the dependence of the industry on the expatriate staff,” the report noted.

“The retail industry continues to maintain a positive momentum attributed to key factors influencing the market like robust economic growth, rising purchasing power, growing population comprising a large proportion of expatriates, changing consumption patterns and increasing penetration of international retail players,” said Sameena Ahmad, managing director, Alpen Capital.

“Retail structure in the GCC region is undergoing significant transformation, driven by the social and economic developments that has resulted in an increase in modern retail formats such as hypermarkets and supermarkets.

“The Gulf is also gearing to host events such as World Expo 2020 and FIFA 2022, leading to a growing influx of tourists and creating immense opportunities for existing and new retailers in the region.”

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Posted on February 2, 2015, in #middleast, #retail. Bookmark the permalink. Leave a comment.

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