The Gulf Cooperation Council (GCC) retail sector is projected to grow at an annual rate of 4.6% from 2023 to 2028, primarily fueled by the UAE and Saudi Arabian markets, according to a new report from Alpen Capital. 

Retail sales in the region are expected to increase from $309.6 billion in 2023 to $386.9 billion by 2028.

The UAE and Saudi Arabia are anticipated to spearhead this growth, with annual expansions of 5.4% and 5.1%, respectively, reaching $161.4 billion and $139.1 billion. This surge is attributed to several factors, including population growth, rising per capita income, and increased tourism.

A strong retail sector is essential for Saudi Arabia, which aims to position itself as a business and tourism hub, aligning with its Vision 2030 economic diversification plan.

In February, Saudi Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail emphasized that the retail sector currently represents 23% of the country’s non-oil economy and is aiming for a valuation of $122.6 billion by the end of 2024.

“The long-term outlook for the GCC retail industry remains promising due to economic growth, favorable demographics, relaxed visa regulations, and liberalization policies,” said Sameena Ahmad, managing director of Alpen Capital. 

The report also noted emerging trends such as the growing adoption of “buy now, pay later” models and shifting consumer behaviors, reshaping the market. 

While retail sales in Kuwait and Bahrain are expected to grow at a compound annual rate of 3.1% from 2023 to 2028, Qatar and Oman are projected to see more modest growth rates of 2.2% and 1%, respectively.

Alpen Capital noted that the rising population, particularly among expatriates and high-net-worth individuals, will remain a key driver of retail expansion in the GCC. Additionally, religious and cultural tourism significantly boosts retail demand, especially during pilgrimage seasons and cultural festivals.

However, the report also highlighted potential risks, including geopolitical instability. The sector’s reliance on hydrocarbon revenues and global economic uncertainties could present challenges. “The region is sensitive to supply-side shocks, which could lead to inflationary pressures and affect consumer spending power,” the report stated.

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.