14 Aug 2024
RIYADH: Cities in the Gulf Cooperation Council, with Dubai at the forefront, are poised to become top global shopping destinations, according to an industry report.
This transformation is expected to significantly enhance urban gross domestic product and create numerous job opportunities. Retail spending in the region is expected to rise by 37 percent from 2022, reaching $300 billion by 2028, highlighting the sector’s substantial economic potential.
The report titled “Shopping for growth: how to build an urban retail destination” issued by Strategy& Middle East, part of the PwC network, Dubai stands out as the only GCC city among the six top global retail destinations, which include London, Milan, New York, Seoul, and Tokyo.
With a retail spend per capita of approximately $14,000, Dubai ranks second only to New York City in terms of consumer expenditure.
Approximately 21 percent of Dubai's workforce is employed in the retail sector, the highest proportion among the six leading cities. This sector also contributes a remarkable 24 percent to the city's urban GDP.
“We see major cities in the GCC region pursuing urban transformation and expansion with mega-projects, diversifying economies with the aim of achieving growth,” Ramy Sfeir, partner at Strategy&, and the leader of the family business, investments, and real estate practice in the Middle East, said.
He added: “Within this transformation and expansion is tremendous opportunity to realize the potential for growth in the retail sector, translating to significant opportunity to boost economies.”
The report highlights that the retail sectors in these cities not only support local businesses but also bolster creative industries like design and fashion. Additionally, they play a key role in achieving broader economic objectives such as diversification and resilience.
“It is clear that investment in the retail sector in major cities across the GCC region can, and would, have (a) far-reaching impact,” Makram Debbas, another partner at Strategy& Middle East, said.
He added: “Beyond the fiscal benefits, establishing global shopping destinations across the GCC would advance the region’s tourism ambitions. Positive impact would also be felt in an improvement of quality of life for citizens and residents as well as bolstering the overall reputation of the city itself.”
Despite the retail sector's substantial economic potential, the report also identifies significant challenges. One concern is the ease of international travel, which allows shoppers to seek unique retail experiences abroad. According to a recent Strategy& survey, residents in Riyadh, Jeddah, and Doha spend between $3,500 and $5,000 per capita annually on retail, with 50-60 percent shopping abroad at least twice a year.
However, with effective governance and strategic planning, GCC cities can overcome these challenges. The report highlights several key opportunities to boost local shopping, such as expanding brand and product offerings and investing in specialized training for retail staff to enhance service quality.
Improving supply chain management, logistics, and customer technologies is crucial for advancing the retail sector. To attract more retailers, updated investment regulations are also needed. Enhancing the shopping experience by incorporating diverse culinary, entertainment, and cultural venues can significantly enrich the overall experience and appeal to a broader audience.