Consumer spending remains the Middle East economy’s biggest engine, as the non-oil sector is expanding solidly. Cities like Dubai, Abu Dhabi, Riyadh, and Doha are positioning retail as a key driver of economic progress. Retailers are targeting these cities because that’s where their customer base—affluent, high-disposable income customers—is living.

Various reports say confidence in the outlook over the next 12 months is accelerating, supported by stronger market conditions and higher profits. Now, as retailers continue to innovate to match consumer expectations, can the sector drive further economic advancement in the region?

DRIVING ECONOMIC DEVELOPMENT

“Retail is no longer just about transactions. It’s about creating value across the entire supply chain,” says Rohan Kapoor, Group Vice President of Digital Marketing & Loyalty at Cenomi Group. 

Kapoor adds that the convergence of digital and physical retail, driven by the growth of omnichannel experiences, is reshaping the sector into a key driver of economic resilience. He emphasizes the role of homegrown incubators in the region’s retail landscape, urging the creation of more platforms that offer mentorship, funding, and market access to ensure local talent and innovative ideas thrive.

Highlighting the retail industry as a crucial engine for economic growth in the Middle East, driving job creation, boosting consumer spending, and enhancing market competitiveness, Naser Musaed AlSayer, Chairperson of AlSayer Franchising Company, says, “By investing in local talent and supporting entrepreneurial ventures, retailers not only strengthen their businesses but also contribute significantly to the region’s overall economic development.” 

Some of the largest cities in the Middle East are experiencing economic growth, partly driven by the retail sector. 

For example, the retail sector in the UAE is experiencing significant growth, with projections suggesting it will reach approximately $74.87 billion by 2028. The e-commerce segment’s contribution to the retail economy increased from 10% in 2022 to 12% in 2023, highlighting a growing consumer preference for online shopping.

At a summit in Dubai, Abdul Aziz Abdulla Al Ghurair, Chairman of Dubai Chambers, highlighted the transformative impact of technological advancements on e-commerce. He stated, “The world is witnessing exponential growth in e-commerce driven by rapid technological advancements and a significant shift in consumer behavior. It is imperative for decision-makers and professionals in the retail sector to closely monitor these changes and leverage them to benefit their businesses and the end consumer.”

Dubai has welcomed 9.31 million visitors this year, and data from the Dubai Department of Economy and Tourism indicates a 9% rise in tourists arriving, significantly boosting retail sales in the city.

Experts anticipate strong economic performance this year, with increased spending and investment, particularly in entertainment, tourism, and real estate, which are expected to drive further growth in the retail sector.

Several reports highlight robust retail market growth in 2024. According to Statista, Qatar’s retail delivery market is projected to have a compound annual growth rate of 13.72% over the next five years, with an expected revenue of $1.22 billion this year. The market volume is forecasted to reach $2.32 billion by 2029.

In Saudi Arabia, the retail sector contributes approximately 23% to the non-oil GDP. As a key component of the kingdom’s broader economic strategy, the retail sector enhances various industries, including tourism and entertainment, to create jobs and stimulate growth. The retail industry in Saudi Arabia is expected to grow to $159 billion this year, driven by the expansion of e-commerce and the luxury retail market, positioning the country as the largest retail market in the region.

The rise of e-commerce in the Middle East has fundamentally altered retail dynamics. “It’s not just about expanding reach but about leveraging data and technology to build agile, customer-centric strategies that set the stage for long-term success,” says Kapoor. E-commerce has transformed the region’s retail sector by broadening market access, enhancing customer convenience, and driving digital innovation.

AlSayer believes that e-commerce has evolved from a niche market to a mainstream retail channel, compelling businesses to adopt omnichannel strategies, harness data analytics, and streamline supply chain processes. As a key growth driver, e-commerce has become integral to retail strategy, ensuring competitiveness in an increasingly digital-first market.

CUSTOMER EXPERIENCE 

Leveraging digital platforms and innovative loyalty programs is key to enhancing customer lifetime value and engaging the Middle East’s young consumers effectively. “By creating meaningful interactions across social media, mobile apps, and e-commerce, retailers can not only boost customer lifetime value but also influence global marketing trends,” says Kapoor.

AlSayer emphasizes that a holistic approach to enhancing customer lifetime value involves integrating advanced technologies, personalized marketing, and exceptional customer service. To stay competitive in the global market, retailers must continuously adapt to evolving consumer trends. A core principle in engaging with youth is actively listening to their needs and tracking how retailers can address them effectively.

Sustainability and ethical practices should be central to a retail strategy, adds AlSayer. ” Responsible business operations are essential to building resilient and forward-thinking companies. Consumers in the Middle East are increasingly aware of and concerned about sustainability and ethics..”

Kapoor adds that sustainability and ethical practices also foster a culture of conscious consumption. Customers are becoming more selective, opting for eco-friendly products produced under fair working conditions. This evolving consumer mindset is setting new standards across the retail industry in the Middle East.

THE IMPACT OF TECH 

In today’s hyper-connected age, consumers have come to expect personalization from the brands they interact with. 

Unsurprisingly, technologies like AI and the Internet of Things (IoT) significantly impact the retail sector by personalizing interactions and improving customer service. Advanced technologies are transforming the retail industry by boosting speed, efficiency, and accuracy across various business functions, advancing data and predictive analytics systems, and empowering companies to make data-driven decisions.

AlSayer points out that IoT will enable better connectivity among systems, enhance supply chains, and meet customer expectations. This shift will change the roles of retail employees, allowing them to move from manual analytics to addressing core operational issues and building stronger customer relationships.

“One needs to look at the popularity of massive online games such as Minecraft, Roblox, and Fortnite to realize that the future of retail is already here. The question is how these and similar platforms will incorporate brands and retailers over time without alienating their users,” says Ryan Den Rooijen, former Chief E-commerce Officer at Chalhoub, a luxury goods retailer and distributor.

Kapoor adds that integrating technologies such as augmented reality and AI is not just about enhancing the customer experience—it’s about redefining employee roles. “As automation takes over routine tasks, employees are empowered to provide more personalized service, fostering deeper customer connections.”

BALANCING PROFITABILITY WITH SOCIAL RESPONSIBILITY

The future of Middle Eastern retail depends on combining profitability with a strong commitment to sustainability and ethics. Success in this balance will improve brand reputation and contribute to a sustainable future, according to Kapoor.

However, he adds that balancing profitability and social responsibility requires a strategic approach that involves clear goals, progress measurement, and transparent stakeholder communication.

Investing in sustainable and ethical practices can reduce costs through waste reduction and efficiency improvements while also creating new revenue opportunities, ultimately boosting profitability, says AlSayer.

Fast Company Middle East’s Next Big Things in Retail Summit, which will be held on November 12 in Riyadh, will cover key topics in retail, such as experiential retail, traditional store optimization, and e-commerce strategies like social commerce and hyper-personalization. It will also discuss how design and innovation will play a role in reshaping the retail landscape. 

Delegates can register here.