DUBAI, UAE — E-commerce in the GCC, according to a recent research report, has expanded by 22 percent over the previous two years, with over 46 percent of online buyers in Saudi Arabia and the UAE planning to continue relying on online retail stores rather than visiting shopping malls.
Amazon indicated that Saudi Arabia and the UAE lead e-retail sales in the GCC. At the same time, Egypt plays a pivotal role in the success of the sector in the African continent. That e-commerce in Saudi Arabia constitutes about 3.8 percent of the total retail trade in the Kingdom and 4.2 percent in the UAE.
“E-commerce has gained meteoric traction in recent years, largely because of a structural shift in consumer interests and partly because of the pandemic-induced accelerated digitalization. We witnessed it first-hand as our e-commerce segment registered 200 percent growth across GCC markets, particularly the UAE,” said Elias Abboud, CEO & Founder of PECTIV.
UAE retail 2022
According to Alpen Capital, a Dubai-based investment banking advisory firm, the retail industry in the UAE is projected to develop at a compound annual rate of 5.1 percent from 2022 to 2026, reaching US$ 113.8 billion at the end of that period.
Since the UAE’s population is expected to rise at a compound annual rate of 1.6 percent between 2022 and 2026, this is one of the many factors stimulating the expansion of the retail sector in the UAE, along with an increase in the number of high-net-worth individuals.
In addition, the rise in individual incomes, the recovery of the travel and tourism sector, and plans to expand the capacity of the country’s airports, including Al Maktoum International Airport, Sharjah International Airport, and Fujairah International Airport, which will, in turn, stimulate sales of duty-free shops, in addition to the rapid growth of the e-commerce sector, will lead to Enhancing purchasing power and improving living standards for the population in the country.
The analysis found that the UAE’s e-commerce market will expand to US$ 17 billion by 2025, a CAGR of 14.2 percent.
“Unlike other countries with specific drivers, the UAE has an entire ecosystem supporting e-commerce growth,” says Abboud.
“That is perhaps why we are setting ambitious growth targets for our e-commerce segment. Aside from the 100 percent internet penetration rate, which has brought myriads under the digital fold, there is a solid institutional push toward innovative retail models, including e-commerce,” Abboud said.
GCC retail expectations
According to Alpen Capital’s report, the retail business in the GCC would increase at an annualized rate of 15.7 percent in 2022, bringing in a total of US$ 296.8 billion in revenue, surpassing its pre-pandemic levels for the first time. The report further states that by 2026, the sector will have grown at a CAGR of 5.7 percent.
Between 2022 and 2026, experts predict that retail sales in the GCC will increase at a CAGR of 3.5 percent to 7.3 percent. By 2026, the combined retail markets of the Kingdom of Saudi Arabia and the UAE will account for 78.5 percent of regional sales.
It’s primarily due to their extensive and varied populations, more liberalized legislation, and consumers’ increasing need for one-of-a-kind shopping opportunities. As a result, between 2022 and 2026, retailers in Saudi Arabia and the UAE anticipate a CAGR of 6.5 percent and 5.1 percent, respectively.
Whereas, because of the flood of tourists for the 2022 FIFA World Cup, retail sales in Qatar are predicted to expand by 36 percent year-on-year to US$ 18.5 billion, making it the region’s fastest-growing economy in 2022. After the World Cup, growth will return to its average level of 3.5 percent.
During the projection period, the economies of Bahrain, the Sultanate of Oman, and Kuwait are projected to expand by 7.3 percent, 6.1 percent, and 3.5 percent, respectively. The analysis projects a 65.5 percent annual growth rate in duty-free sales at airports in the GCC by 2022, with a projected increase to US$ 3 billion by 2026, an increase of 8.4 percent annually on average.