GCC Retail Boom: 6 Steps Gulf Cities Need To Take To Cash In On $300 Billion Shopping Bonanza

With retail spend in the region expected to increase by 37 per cent from 2022 to reach $300bn by 2028, Strategy &’s latest report titled “Shopping for growth: How to build an urban retail destination” identifies the strong growth potential for the sector to significantly contribute to economic development.

Shopping spending in the GCC

Ramy Sfeir, Partner at Strategy & said: “We see major cities in the GCC region pursuing urban transformation and expansion with mega-projects, diversifying economies with the aim of achieving growth.

“Within this transformation and expansion is tremendous opportunity to realise the potential for growth in the retail sector, translating to significant opportunity to boost economies”. 

Strategy&’s analysis of six leading shopping destinations (Dubai, London, Milan, New York City, Seoul, and Tokyo) shows significant direct retail spending per capita of $8,000 to $18,000 annually.

This includes a contribution of up to 24 per cent to urban GDP in these cities, as well as the employment of up to 20 per cent of the urban workforce in the sector.

According to Strategy&’s analysis, Dubai, the only GCC representative among the six listed cities, records a retail spend per capita of approximately $14,000, second only to New York City.

Additionally, around 21 per cent of the emirate’s workforce is employed in the retail sector, the highest of all six cities, and the sector contributes an impressive 24 per cent to the urban GDP.

The report notes that retail sectors in these cities support growth of other local businesses, especially in creative industries such as design and fashion, and subsequently boost progress towards broader economic goals, including economic diversification and resilience.

Makram Debbas, Partner at Strategy& Middle East, said: “It is clear that investment in the retail sector in major cities across the GCC region can, and would, have far-reaching impact.

“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.”

While the retail sector in the GCC shows potential for economic impact, it faces significant challenges. The ease of foreign travel poses a risk of shoppers seeking unique retail experiences abroad.

A recent Strategy& survey indicates that residents in Riyadh, Jeddah and Doha spend $3,500 to $5,000 per capita annually on retail, with a staggering 50-60 per cent of them shopping abroad at least twice a year.

However, with proper governance and strategy, GCC cities can address these challenges effectively.

Notably, the report highlights opportunities to expand brand and product offerings to encourage local shopping. Dedicated training for retail talent would improve service satisfaction. Strengthening supply chain management, logistics, and customer technologies is essential.

New investment regulations are needed to attract retailers. Additionally, enhancing the shopping experience with culinary, entertainment, and cultural venues would enrich the overall journey.

The report identifies two crucial elements for creating a global shopping destination; a dedicated governance and a clear vision.

A governance entity ensures policy decisions align with the city’s goals, establishes key partnerships, implements initiatives, and tracks progress.

The city’s vision should reflect its identity, history, culture, and broader ambitions. It should define the type of shopping destination, scale of retail ambitions, target shoppers, and metrics for success.

Sukalp Tipre, principal at Strategy& Middle East, said: “With the scale of development currently underway and in the pipeline, major GCC cities show tremendous potential to capitalize on opportunities and gradually join the ranks of global shopping destinations in Europe and North America.

“The adoption of a measured, systematic approach is imperative for the growth and development of GCC’s retail sectors, which can become a key contributor in the region’s economic transformation”.

With a strong governance model and vision in place, the report proposes that cities undertake six key initiatives to develop its retail sector.