UAE retail sector remains resilient
The UAE remains a resilient retail environment with an overall growth rate of 3-4 per cent notwithstanding the emergence of an era of disruption in the sector caused by e-commerce, according to a study by a leading global management consulting firm.
A.T. Kearney's Global Retail Development Index (GRDI) also reveals that economic development and trade policy remain the largest factors in shaping retail growth in consumer markets.
"While social media and e-commerce fuel the evolution of global consumers, local realities such as Internet connectivity and the availability and cost of labor, continue to shape retail development in this region," it said.
The bi-annual study of the global retailing landscape also revealed that retail in the UAE is seeing a new era of disruption this year, with e-commerce growth estimated at upwards of 20 per cent per year. While China and India have been ranked first and second in the GRDI, Saudi Arabia, Jordan and the UAE were at seventh, eight and ninth places respectively.
"Retailers, consumer goods manufacturers, and international service providers rely on the GRDI as the definitive source for understanding which economies are growing, stagnant or declining, and why. The 2019 GRDI ranks 30 developing countries - selected from a list of 200 nations - based on three criteria: achieving a "Country Risk" score above 35; having a population of at least five million and enjoying a per capita GDP of more than $3,000," said the consulting firm.
India's online retail market is projected to increase at a healthy CAGR of 25-28 per cent, reach $55-60 billion by 2020, account for 25 per cent of the total organised market, and grow to 37 per cent by 2030. China's retail sector-valued today at $3.8 trillion and expected to reach $6.6 trillion by 2024-is characterised by a blurring of the line separating offline and online retail (a model known in China as "new retail").
Saudi Arabia's reforms and economic restructuring are beginning to yield positive results, which the country hopes will positively impact retail, even as it has levied a five per cent VAT on goods to increase nonoil revenues, said the study. A key theme in this year's findings is the "Arrival of the Middle East and Africa" - 10 of the top 30 countries fall into this bucket, suggesting that emerging economies are maturing, and the next wave of retail development and growth will certainly be in the broader region.
"Driven by government-led economic reforms, a large & digitally connected youth consumer segment, and growing purchasing power, economies in the region have made significant gains in our rankings and have caught the attention of leading retailers. In addition to local retailers investing incountry, many regional such as Majid Al Futtaim, Landmark and Lulu, and international including Zara and IKEA, retailers are investing in both brickand-mortar and digital across these markets," said the study.