Retail GCC retail industry concern as shoppers move online By Gavin Gibbon September 6, 2023 Dubai Tourism Smaller retailers may need to invest more in their online operations to maintain market share Huge growth in online shopping Smaller retailers may have to digitise Price pressures in region easing The Gulf’s retail industry remains an area of concern amid ongoing changes in consumer spending habits. The Q2 2023 edition of the Middle East Turnaround and Restructuring Survey, published by professional services firm Alvarez & Marsal, found more than two-thirds of respondents anticipated continued pressures in the sector as consumers increasingly turn to digital shopping platforms over physical stores. Data from Oxford Economics showed that price pressures in the region were easing, with inflation at its lowest in Bahrain and Oman (0.7 percent and 1.2 percent respectively). Majid Al Futtaim’s profit surges 74% as GCC flourishes UAE consumers save less, borrow more in second quarter Bahrain shopping malls must adapt or risk losing tenants Yet in its latest regional quarterly update it cautions that “domestic price pressures are now a major driver of inflation, particularly in Saudi Arabia, where rental prices are rising at a record pace”. As a result, the group lifted its inflation forecast by 0.3 percentage points to 2.7 percent for 2023, which is still down from 3.3 percent in 2022. Oxford Economics expects regional inflation to ease below 2.5 percent in 2024. GCC online retail has witnessed significant growth in recent years, leapfrogging from $10 billion in 2019 to $30 billion in 2022, according to consultants Redseer. In a nod to the changing shopping dynamics, UAE conglomerate Majid Al Futtaim (MAF) Holding announced its retail revenue from physical stores fell three percent annually in the first half of 2023. Online revenue rose 13 percent to AED1.2 billion over the period, from AED1.1 billion for the same time last year. Reuters/Abdel Hadi RamahiShoppers at Dubai’s Mall of the Emirates. Owner MAF said retail revenue from physical stores fell 3% in the first half of 2023 Research from Redseer revealed the larger conglomerates in the GCC have captured around 40 percent of the online retail market, three times more than emerging economies like India. Arun Leslie John, chief market analyst with Century Financial, admitted the transition to digital shopping is not likely to impact retail giants such as MAF, Emaar, Lulu Group International or Al Ghurair, who dominate in the UAE. However, he cautioned “smaller fish in the market may have to scale up to digitise their business to acquire market share in this sector”. Emaar founder and CEO of online retail company noon.com, Mohamed Alabbar, revealed this week that there were no plans to take the company public or list shares on financial markets, according to a report from state-run news agency Wam. Alabbar said such a move could be considered in the future and bemoaned the lack of publicly listed e-commerce entities in the Arab world.