RIYADH: Retailers in the Gulf Cooperation Council region are reporting higher turnovers due to inflation rises and consumers increasing spending on necessities, according to investment banking advisory firm Alpen Capital.

A report from the Dubai-based company forecasts the GCC’s overall retail sector is set to register 15.7 percent year-on-year growth, reaching revenue of $296.8 billion in 2022 — with the period covering the FIFA World Cup 2022 in Qatar prompting 36 percent year-on-year growth.

Alpen Capital also expects to see a compound annual growth rate of 5.7 percent to reach $370 billion by 2026.

Qatar will see the highest growth in the region during 2022, with its sales expected to reach $18.5 billion, however, growth is expected to normalize at a CAGR of 3.5 percent after the World Cup.

Favorable demographics, improving macroeconomic factors and tourism revival will contribute to the growth, along with governments’ push for economic diversification and growing prominence of retailers who sell in both bricks and mortar and online settings, the report added.

“The industry was severely hit by the restrictions imposed during the pandemic; however, retailers were responsive to the changing demands and innovated to sail through difficult times,” said Sameena Ahmad, managing director of corporate affairs at Alpen Capital.

She added: “As the retail industry continues to recover, there is an urgent need for retailers to upscale their digital presence to stay relevant as well as compete with regional and international players.” 

Another Alpen Capital managing director, Krishna Dhanak, said GCC retail is transforming post-pandemic and that consolidation is expected.

“Operators have shifted their focus on brand acquisition to strengthen their geographical presence as well as expand and diversify their product offerings,” he explained.

“Larger e-commerce players are likely to acquire niche operators offering customized products and services. Going forward, we expect consolidation in the industry to intensify in order to drive earnings, gain market share and improve operational efficiency,” Dhanak added.

Alpen said across the region, non-food retail sales are forecasted to grow at a CAGR of 6.2 percent between 2022 and 2026, while food retail sales are anticipated to increase at an annualized rate of 4.9 percent during the same period.

Saudi Arabia and the UAE lead sales regionally, cumulatively accounting for 78.5 percent of the total sales by 2026, the report added, due to large and diverse populations, liberalization of policies and a growing appetite for unique shopping experiences.

Retail sales in the Kingdom and the UAE are forecasted to grow at a CAGR of 6.5 percent and 5.1 percent, respectively, between 2022 and 2026, Alpen said.  

Bahrain, Oman and Kuwait are expected to grow at a CAGR of 7.3 percent, 6.1 percent and 3.5 percent, respectively during the forecast period, Alpen concluded.