GCC retail sector forecasted to grow to $313 billion

By Business Reporter — MUSCAT: MAY 28 – While the long-term fundamentals remain strong, the retail market in Oman is presently under pressure due to economic slowdown. The impact on the retail sector has been higher compared to its GCC counterparts. The country’s wholesale and retail trade stood at $4.9 billion in 2016 compared to $5.1 billion in 2012. Growth decelerated since 2014 and slumped by 18.2 per cent in 2016, according to the GCC Retail Industry Report published by Alpen Capital, an investment banking advisory firm.
Weak consumer sentiments, on account of subsidy cuts, are the major factor behind the drastic decline in retail sales. Consumers are becoming cautious and focusing on buying essential items. Their spending power may further come under pressure, as the government plans to introduce selective taxes in 2017.
Oman’s retail landscape is concentrated in the hands of standalone retail outlets and has only a few regional and international retailers. As consumers look for a wholesome shopping experience combined with entertainment, the retail market in the country is transforming to accommodate large leisure shopping complexes.
Supply of retail space has gained steam in the last two years, which saw addition of large shopping centres like Avenues Mall (GLA of 80,000 sq m), Oasis Mall (GLA of 35,600 sq m) and Panorama Mall (GLA of 21,000 sq m), among others. The organised malls and standalone retail outlets are largely concentrated in Muscat.
Overall, the city has about 345,000 sq m of leased mall space. There are many retail projects underway, including Palm Mall Muscat (105,000 sq m at a cost of $234 million), Mall of Oman (137,000 sq m at a cost of $715.2 million) and some community centres. The UAE-based Majid Al Futtaim plans to invest $1.3 billion on retail developments in Oman by 2020.
Increasing population and international tourist arrivals have been the vital driving forces of the retail market in Oman. A high composition of young and working class has led to a shift in consumer preferences towards international foods and western products. This is further supported by an increase in household spending power over the years on account of the economic diversification and government-mandated pay hikes for nationals. Such favourable factors have allured several retailers to Oman.
Alpen Capital’s GCC Retail Industry report presents an overview of the retail landscape in the GCC as well as a synopsis of the demand-supply dynamics of the industry. The report also covers recent trends, growth drivers and challenges of the retail sector in the region. Finally, it profiles some of the renowned retail companies in the GCC.
“The GCC retail sector continues to remain an active contributor to the region’s economic development. Although the sector is experiencing a slowdown, the long-term fundamentals of the sector remain strong and are expected to grow steadily through 2021. A favourable demography, high per capita income and an active tourism industry have attracted renowned international retail brands to the GCC.
Changing consumer preferences and proliferation of digital devices are further reforming the region’s retail landscape. The numerous mall developments in the pipeline and growing penetration of modern store formats are a testament to immense opportunities in the sector.  Furthermore, government efforts to encourage foreign investments, to strengthen tourism infrastructure and prevent entry of counterfeit products are lending impetus to the GCC retail sector”, says Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.