Saudi Arabia is the largest consumer market in the GGC countries. Despite the fall in oil prices, the market in Saudi Arabia has been continuing to enjoy a robust growth, due to its solid base of domestic consumers and growing youth population with high disposable income, the rising level of disposable income (higher than the global average), and high consumer confidence index. In 2020, total retail sales were estimated at approximately USD 37 billion (USDA). Euromonitor expects Saudi Arabia’s retail market to grow by about 20% by 2022 (Retail Gazette). Consumer spending increased by 10% in February 2022 compared to the previous month, Saudi consumers spending about SR 88.5 billion (SAMA). Fitch Solutions forecasts real household spending to post growth of 3.5% in 2022.
The government has moved on in order not to rely solely on revenues from fuel as the global energy market dynamics is changing and demographics of the country is expected to enter the transition phase with an increasing number of working-age Saudi Arabians by 2030. One of the main characteristics of the retail market is the high demand for luxury products. Saudi nationals make up 48.4% of the retail workforce, with just under half of these employees, some 125,000, being women. This strong representation in the retail workforce helped take the overall Saudi female economic participation rate to 19.7% as of the end of September 2019 (SAMA). There are three main commercially active regions in the Kingdom: the Western Region, with the city of Jeddah as the main commercial centre; the Central Region, including the capital Riyadh; and the Eastern Province, where the oil and gas industry is concentrated. In terms of product category, food & beverages account for a nearly one-third market and the segment is anticipated to maintain its market dominance in the short-term. Some of the major players operating in Saudi Arabia retail market are Panda Retail Co (Savola Group), Abdullah Al Othaim Markets, BinDaWood Holding, Farm Superstores, Al Raya Supermarkets, Tamimi Super Markets, Lulu Group International (EMKE Group) and Carrefour Saudi Arabia (USDA).
Market share
The Saudi food retail sector is increasingly competitive, marked by the presence of domestic, regional and international outlets. The structure of retailing is characterized by the presence of supermarkets, hypermarkets and other convenience-oriented sales channels. The number of supermarkets and hypermarkets in Saudi Arabia increased by more than double between 2011 and 2016. In the fragmented domestic retail market, there is high pressure to innovate. Due to the recent government decision to reduce the share of the Saudi labor force consisting of low-skilled expatriate workers, relative margins have decreased, therefore driving up wage bills. This has disproportionately affected independent and convenience retailers (bakalas) and creates strong pressure to realize cost savings in other areas of operation without compromising consumer experience. According to USDA, the total number of supermarkets and hypermarkets in Saudi Arabia was estimated at 1,255 stores in 2016 (latest data available). This is a relatively small number, and accounts for only 2.9% of the retail outlets. However, this 2.9% of outlets accounted for approximately 37% of total grocery sales in Saudi Arabia. They are mostly located in the three major cites of the Kingdom (Riyadh, Jeddah and Dammam). Some of the major players operating in Saudi Arabia retail market are Panda Retail Co (Savola Group), Abdullah Al Othaim Markets, BinDaWood Holding, Farm Superstores, Al Raya Supermarkets, Tamimi Super Markets, Lulu Group International (EMKE Group) and Carrefour Saudi Arabia (USDA). Traditional retailers and independent grocers collectively account for the large majority of sales in Saudi Arabia. Bakalas are well-suited to cater to day-to-day consumer needs, particularly in terms of small quantity purchases. Prices in bakalas tend to be high, but they maintain an advantage over supermarkets by providing different services to shoppers looking to buy quickly a few items.
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Aràbia Saudita: Compra i venda
