In the latest Global Retail Development Index (GRDI) by Kearney, the MENA region stands out as the emerging retail powerhouse.
The report, a bi-yearly survey of the most promising retail markets worldwide, underscores the region’s upward trajectory in global retail development, with an emphasis on Saudi Arabia’s notable climb in the rankings, ascending nine points to secure the third rank in the survey.
The Kingdom’s young demographic, rapidly increasing adoption of technological advancements and ambitious government plans are all contributing to a highly attractive retail environment. This rise in position is a testament to the country’s strategic pivot away from oil dependency, which currently accounts for approximately 40% of its GDP, as well as the establishment of a favorable business climate. The Kingdom’s strategic reforms have created a fertile ground for fostering retail innovation and growth.
Saudi Arabia’s impressive climb in the GRDI rankings is also underpinned by several other key factors:
Achieving substantial growth in the employment of Saudi nationals in high-skilled jobs and doubling female workforce participation, exceeding Vision 2030 targets.
A rise in non-cash retail transactions from 16% in 2016 to 62% in 2022, aiming for 70% by 2030.
Growing popularity and adoption of Buy Now Pay Later services, with domestic providers Tamara and Tabby paving the way.
Significant increases in investment deals (95%) and licenses (267%) in 2022, signaling a strong economic climate.
Digital and AI Integration within the Saudi consumer market, with the rapid adoption of mobile commerce and AI-enabled experiential retail.
The entry of international brands and the expansion of entertainment and lifestyle sectors indicate a thriving retail environment.
Debashish Mukherjee, Partner at Kearney Middle East & Africa – Consumer & Retail Practice Lead, stated, “The MENA region, and notably the Kingdom of Saudi Arabia, are at the forefront of retail’s next wave of growth. The 2023 GRDI illustrates how these markets are redefining the retail ecosystem with strategic digital adoption and consumer-centric approaches. Saudi Arabia’s impressive rise in this year’s GRDI is a clear indicator of its dynamic retail environment and its strategic initiatives to foster a competitive and diverse economic landscape.”
The GRDI leverages a comprehensive set of criteria, including economic health, consumer wealth, and regulatory framework, to gauge the retail potential of 35-40 emerging economies. It serves as a crucial guide for retailers looking to navigate the complexities and capitalize on the opportunities within these emerging markets.