A.T. Kearney’s Global Retail Development Index 2019: Economic Development and Trade Policy are the largest factors in shaping global retail growth
A.T. Kearney’s Global Retail Development Index finds a continuous increase in level of resilience of the UAE’s retail environment
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.
The bi-annual study of the global retailing landscape also revealed that the UAE remains a resilient retail environment with an overall growth rate of 3-4%. This year, retail in the UAE is seeing a new era of disruption, with eCommerce growth estimated at upwards of 20% per year.
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.
We expect growth to continue at nearly 2% this year and 3% in Saudi 2020. The government will increase spending by a record 7% and plans to provide one million retail jobs, increasing women’s participation in the labor force by 30% during the next 11 years.
Numbers aside, the country’s youthful population, healthy spend capacity, and dynamism are attracting major retailers using regional partnerships to establish themselves in the country.
E-commerce is healthy and likely to grow further thanks to government plans to deploy high-speed Internet. Currently valued at $6.3 billion, online retail could reach $10.2 billion by 2023. It is thriving in part due to major e-commerce retailers such as Souq.com and Noon.com.
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 in-country, many regional (e.g. Majid Al Futtaim, Landmark, Lulu) and international (e.g. Zara, IKEA, etc.) retailers are investing in both brick-and-mortar and digital across these markets.
2019 global retail development index
This year’s findings in the region also explored important factors such as:
In Saudi Arabia, the government’s comprehensive reforms are yielding positive results; the retail sector is set to grow faster as a result, contributing ~1 million additional jobs and an increase of women labor force participation to 30%
Egypt (debut on A.T. Kearney’s GRDI) has seen retail sector growth of 25% between 2017-18 on the back of economic and fiscal reforms – and is “open” for business – as many regional and international retailers are aggressively entering the market and transforming the landscape from traditional to modern trade
The Jordanian retail sector is expected to grow between 4-5% as the country transforms to a modern trade environment; solving for a price-sensitive consumer and navigating complex logistics can result in faster growth
Ghana is Africa’s new “bright spot” driven by increased foreign & public investment as well as urbanization of the population; department stores/shopping store space is set to grow by 15% per year and many international retailers are taking notice
To learn more, read the full report here.