Kingdom retail sales to reach Sr394.13bn by 2015

JEDDAH: The Kingdom’s retail sales are expected to grow from an expected SR256.13 billion ($68.39bn) in 2011 to SR394.13 billion ($105.24bn) by 2015, according to a new report from Research and Markets.

It provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the industry.

Principal factors behind the forecast growth in Saudi Arabia’s retail sales are: strong underlying economic growth, rising disposable incomes, increasing acceptance of the concept of modern retailing, a youthful population and an enlarged consumer base created by the improved position of women in society.

Saudi Arabia’s nominal GDP in 2011 is predicted to be $464.3 billion, with growth of 6.3 percent in real terms expected for the year.

Average annual real GDP growth of 4 percent is predicted by BMI between 2011 and 2015, according to the Business Wires press release.

With the population increasing, GDP per capita is predicted to rise to $21,260 by the end of the forecast period.

The retail sector benefits from the large number of tourists visiting the country to take part in the Haj and Umrah pilgrimages every year. Sales of gifts and souvenirs in 2008 were estimated to have risen by at least SR4 billion due to shopping by Haj pilgrims, according to media reports. Increasing urbanization is also driving retail sales.

The report said Gap is among the latest international retailers to enter the market. It plans to open 44 Gap stores (and variations) and 10 Banana Republic stores in Saudi Arabia by 2012.

Retail sub-sectors that are predicted by BMI to show strong growth over the forecast period include over-the-counter (OTC) pharmaceuticals with sales expected to increase by nearly 45 percent, from an expected $0.39 billion in 2011 to $0.57 billion by 2015.

With the Saudi consumer electronics market one of the largest in the Gulf, accounting for about 40 percent of regional spending, sales in this sector are forecast to increase from an estimated $4.03 billion in 2011 to $5.01 billion by 2015, a rise of more than 24 percent.

Consumer electronics spending will be driven by youthful demographics, a regional economic boom and a buoyant real estate sector.

High business confidence and increased disposable incomes also provide a favorable background for the automotives sector. Vehicle sales are forecast to rise nearly 39 percent by the end of the period, from a forecast 688,883 units in 2011 to 956,382 units by 2015.

Retail sales for grouping of Middle East and Africa (MEA) countries in 2011 are predicted to amount to $255.86bn, based on the varying national definitions.

Total consumer spending for the region based on BMI’S macroeconomic database is forecast at $722.41 billion.

In 2011, BMI predicts that South Africa and Saudi Arabia will together account for an estimated 56.2 percent of regional retail sales; by 2015, the combined share of South Africa and Saudi Arabia is expected to reach 58.3 percent.

For Saudi Arabia, its estimated 2011 market share of 26.7 percent is expected to increase to 28.0 percent by 2015.

High business confidence and increased disposable incomes provide

a favorable background for the automotives sector.