According to Kearney‘s latest Global Retail Development Index (GRDI), the MENA region is emerging as a dominant force in the retail industry. The GRDI is a bi-yearly survey that identifies the most promising retail markets worldwide, and it highlights the MENA region’s upward trajectory in global retail development. Notably, Saudi Arabia has made significant progress in the rankings, jumping nine points to secure the third position in the survey.
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The Kingdom benefits from a young demographic, a growing adoption of technology, and ambitious government plans, all of which contribute to a thriving retail environment. This positive development reflects the Kingdom’s strategic shift away from oil dependence, which currently makes up around 40 percent of its GDP. Additionally, the establishment of a favorable business climate has further supported this upward trend. Also, the Kingdom’s strategic reforms have created fertile ground for promoting innovation and growth in the retail sector.
Key contributors
Saudi Arabia’s remarkable ascent in the GRDI rankings can be attributed to several significant factors:
- Accomplishing substantial growth in the employment of Saudi nationals in high-skilled positions and surpassing the targets set by Vision 2030. Additionally, there has been a doubling of female workforce participation, further contributing to the nation’s progress.
- Witnessing a significant increase in non-cash retail transactions, which rose from 16 percent in 2016 to 62 percent in 2022. The country aims to further elevate this figure to 70 percent by 2030.
- Experiencing a surge in the popularity and adoption of Buy Now Pay Later services, with domestic providers Tamara and Tabby leading the way in this domain.
- Noteworthy growth in investment deals (95 percent) and licenses (267 percent) in 2022, indicating a robust economic climate and attracting more business opportunities.
- Witnessing the integration of digital technology and AI within the Saudi consumer market, with the rapid adoption of mobile commerce and AI-powered experiential retail.
- The entry of international brands and the expansion of the entertainment and lifestyle sectors, indicating a thriving retail environment in the country.
Debashish Mukherjee, partner at Kearney Middle East & Africa – Consumer & Retail Practice Lead, stated, “The MENA region, and notably the Kingdom of Saudi Arabia, are at the forefront of retail’s next wave of growth. The 2023 GRDI illustrates how these markets are redefining the retail ecosystem with strategic digital adoption and consumer-centric approaches.”
Furthermore, Mukherjee added, “Saudi Arabia’s impressive rise in this year’s GRDI is a clear indicator of its dynamic retail environment and its strategic initiatives to foster a competitive and diverse economic landscape.”
GRDI criteria
The GRDI evaluates the retail potential of 35-40 emerging economies based on various criteria such as economic health, consumer wealth, and regulatory framework. Moreover, it serves as a valuable resource for retailers seeking to navigate the complexities and seize opportunities in these emerging markets.
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