The accomplishments made by the retail sector in Oman are, today, making their mark on the economic scene. Over the years from 2015 to 2017, the retail sector has contributed around 8 per cent to the Gross Domestic Product (GDP), representing an annual contribution of over RO 2 billion.
The optimistic view regarding this promising sector is built on facts and figures, as it is expected to achieve development of more than $300 billion in the GCC region by 2021. Experts in the sector expect it to develop in the Sultanate over the next three years to account for 10 per cent of the GDP, based on forecasts of growth of the tourism sector thanks to a widening network of airports. This means that Oman is poised to create thousands of direct and indirect jobs. The question that arises here is: “How can the Sultanate maximise its economic benefits from this sector?”.
At its basic level, a definition of the retail sector includes all activities related to selling products and services and delivering them to consumers with the purpose of achieving profit through an integrated chain of supplies — starting from manufacturing, warehousing and distribution from the initial supplier and ending with delivery to the final consumer. Perhaps its most evident manifestation in recent times is the shopping mall, a one-stop platform where buyer and seller meet. And shopping malls are being built across the country at a fast rhythm, as large construction cranes compete for dominance of the skyline of Oman.
In spite of its importance to the GDP and our daily interaction with it, little research is available to us about the retail sector in Oman. Having met little success at finding such research papers or documentation, I carried out my own ‘field study’ through which I was lucky enough to meet international and local experts of the sector. The importance of this sector lies in its contribution — that comes close to that of the manufacturing sector — which accounts for 9 per cent of the GDP. This becomes more important with the expected growth of the sector in the GCC region, driven by growth in population, rising per capita incomes, a rise in the number of tourists, as well as major international events that will take place in the area, such as the Dubai Expo 2020 and the Doha 2022 World Cup.
According to statistics published in 2017, the number of Omanis working in the retail sector reached 36K out of 275K in total. Yet, it should be taken into account that the official statistics combine workers in both retail sector and automotive sector which are two separate sectors. Thus, the 13 per cent ratio of Omanisation reflects both the retail and automotive sectors. Achieving the required 65 per cent Omanisation ratio in the retail sector is an ambitious one; it requires developing an “educational infrastructure” that should both be tailored to the changing needs of the sector and fulfilling the aspirations of Omani youth. But how can we resolve the dilemma of alignment between education outcomes and labour market requirements? This requires detailed knowledge of the career ladder of the current jobs of Omanis in the retail sector in order to draw up an executive plan of action to prepare human resources for mid-career positions (managers and HoDs) and above (CEOs and senior management).
This article is a proposal explained with figures and substantiated with field research illustrating that the sector should be considered an industry in the next Five-Year Plan. Yet, capturing available opportunities requires “immediate” action based on available statistical figures and data, particularly with the establishment of the National Training Fund (NTF) which facilitates funding and “quick decision-making” to enable those searching for work to find available work opportunities suitable for their qualifications. Establishing the right foundations for retail sector education and setting the career path for Omani youth will contribute to changing the stereotype of the limited opportunities in this promising sector associated with just the job of a salesman whereas the nature of the sector provides a career ladder to achieve success not only regionally but also globally. Unsurprisingly, the international franchise operator Al-Shaya Group is expanding its business in the Sultanate, where it is expected — based on current and upcoming expansions — that the total number of international brands will exceed 30 brands in the Sultanate out of a total of 90 international brands operating under the umbrella of Al-Shaya Group that employs more than 53,000 employees.
The challenges of employment the retail sector faces in the Sultanate do not differ from those in other GCC countries. Thus, there are many lessons to be learned from the Saudi experience, where the media field is full of professional articles analysing the economic situation and criticising the partially successful substitution process and introducing proposals for solutions to overcome the challenges. One of the initiatives that we can mention here as an example is that Al-Shaya Group has established Al-Shaya Retail Academy in the Kingdom of Saudi Arabia, where Saudisation in this sector reached 12 per cent, paving the way before the Saudi Ministry of Labour to make its decision to fully Saudise jobs in a market valued at more than 350 billion Saudi Riyals.
The Sultanate has success stories upon which it can capitalise. Majid Al Futtaim Group’s Omanisation rate reached 90 per cent at the level of management of the specialised shopping malls in the retail market. Moreover, their regional head is Omani whose group has Omanised more than 60 per cent both in quantity and quality in the International Carrefour Group with Omani branch directors. I wonder if other competing entities could give the platform to Omanis without “guardianship”!
Retail is a sector that has its administrative hierarchical structure and specialised departments that include marketing, finance, human resources management and regional managers. It is an integrated chain that can provide Omanis with rewarding employment opportunities. This groundwork paves the way for Omanis with specialist skills to be among the leaders of this sector, particularly that Majid Al Futtaim Group has a leadership training institute. Achieving this ambitious objective requires a clear roadmap for the private sector regarding labour market policies. Recruitment should not distract us from preparing leaders for the private sector.
Building local cadres is one of the three main pillars of the roadmap for the retail sector. The other pillars are the legislative and economic frameworks built on the bases of the outputs of “Gap Analysis” to know the current situation and build a bridge between the actual situation and the current and future needs. Retail is a dynamic sector. The e-commerce competition with traditional shopping for the retail sector which is estimated globally at more than $2 trillion has pushed the latter to be more innovative in creating a shopping experience rather than creating selling outlets. Paradoxically, giant global e-shopping platforms such as Amazon have entered into traditional shopping malls after having a merely virtual existence.
The GCC retail sector is known as one of the big sectors in which ‘hidden trade’ (also known as the ‘hidden economy’) is practiced. It is not an exaggeration to say that the beginning of solving the problem of ‘hidden trade’ begins with this sector. Like any other sector, it is necessary to have a legislative and supervisory administrative system. Yet, I did not find in the GCC countries an authority or an institution fully dedicated to this sector. “Will the Sultanate be a pioneer in setting up such an establishment?” Indeed, the Sultanate has already taken the initiative of organising other sectors, such as telecommunications and electricity and water. Will we see initiatives from the Omani private sector to cooperate with the National Training Fund for qualifying Omanis for the retail sector? The future remains blurred. [The author is a Strategist and Board member of the Omani
Economic Association. Her twitter handle is: @AnnAlkindi]