Retail in Saudi Arabia is experiencing robust growth, fueled by the kingdom’s focus on tourism, entertainment, and urban development, and increasing consumer spending Shopping malls, luxury brands, and online retail platforms are thriving, with e-commerce witnessing a significant boom due to high internet penetration and tech-savvy youth. 

In the second episode of the Journeys Unpacked podcast KSA series, Dr. Saeeda Jaffar, Senior Vice President & Group Country Manager—GCC at Visa, explores the opportunities and challenges in the retail sector and Saudi Arabia’s evolution as a retail hub, with Alison Rehill-Erguven, CEO of Cenomi Centers. 

TAPPING THE MARKET

According to the OECD, Saudi Arabia welcomed more than 100 million inbound and domestic tourists in 2023, seven years ahead of the initial timeline set by Saudi Vision 2030. Dr. Jaffar opened the conversation addressing this influx of visitors to the kingdom, and how Cenomi Centers was catering to this inflow of international tourists. 

“We currently serve a predominantly Saudi customer base, tailoring our offerings to their needs. Through research, we’re ensuring our tenant mix is relevant and aligned with their preferences. However, we’re also mindful of the growing influx of tourists. As such, we’re focusing on evolving our tenant mix to cater to both the Saudi consumer and this increasing wave of tourism,” Rehill-Erguven said. 

Furthermore, she explained Cenomi Centers’s plan to launch two major projects at the end of 2025. “Jawharat Jeddah and Jawharat Riyadh—‘the jewels’ of our portfolio are designed to offer a new caliber of experience, building on our success with top-performing malls like Mall of Arabia and Al Nakheel Mall, but with a larger scale and international best-in-class features. We’re excited for the future and confident in the growth ahead.”

According to Rehill-Erguven, in Jeddah, the focus will be on creating “distinct luxury precincts,” with over 60 luxury brands bringing their flagship experiences to the region. 

Beyond high-end retail, the developments will also enhance the overall experience. 

 One major new feature will be the introduction of food halls, a first for the region. Service will be a key differentiator for these luxury precincts, with amenities like VIP lounges, personal shopping experiences, and valet services. “We’re excited about these changes,” Rehill-Erguven said. The location of the Jawaharat Jeddah development is particularly noteworthy. Positioned in an area that captures around 90% of the kingdom’s high-net-worth individuals, the location is ten minutes from the airport. This proximity creates a connection to tourism, bringing in domestic and international clientele. 

Meanwhile, Riyadh’s luxury precinct benefits from an equally strategic location in the heart of the downtown area. It is supported by three major roadways, ensuring easy access. “We are across the street from one of the best-performing office markets and the diplomatic quarter,” Rehill-Erguven said. This central location further enhances the appeal for both business and leisure travelers. 

“As Saudi Arabia continues to diversify its economy, these new developments hold promise to set a new standard for elevated luxury retail, dining, and entertainment experiences,” said Dr. Jaffar.

CATERING TO A GEN-Z CONSUMER BASE 

When discussing the future of retail, it is essential to address the growing influential role of the Gen Z demographic in shaping the future of business. 

“Few countries have as large a Gen Z base as KSA. Gen Z consumers are digitally native; they’re much more used to getting things in a different world than some older consumers are. This generational shift requires businesses to rethink their strategies and embrace digital transformation to meet the unique expectations of this new wave of consumers,” said Dr. Jaffar. 

“It’s one of the reasons why you build the new jewels. Saudis know what’s out there, and we must bring it back home, capturing that spend. The challenge lies in tapping into their digital fluency — using data and social media to connect with this generation and deliver a phygital experience that speaks to their needs and interests,” said Rehill-Erguven. 

With the pace of change in retail, building and maintaining customer loyalty is more complex than ever. How can brands create meaningful, long-lasting connections with consumers constantly bombarded by various loyalty programs? 

“Over 70% of the population is part of at least one rewards program,” Rehill-Erguven said, emphasizing the growing importance of loyalty programs in retaining customers.

Citing her team’s launch of their first rewards program in early 2023, Rehill-Erguven explained that the initial response was nearly a million sign-ups. However, despite the initial success in attracting customers, the engagement was not as sustained as hoped. “It wasn’t an ongoing, active engagement, and the user experience wasn’t as smooth as it needed to be.” 

Rather than seeing the program as a failure, Rehill-Erguven views the early results as a valuable learning experience. “The best thing you can do is try. It’s not about failure; it’s about learning from what didn’t work and improving it.” This mindset led to the decision to revamp the program entirely. 

“We realized there was a lot of friction in the system,” Rehill-Erguven said. “So we took a step back and reassessed what we had built.” In response to the challenges of the first iteration, the company is now preparing to launch version 2.0. This updated program will be integrated with a new mall app, creating a unified digital ecosystem. “We’ll be launching it together with a mall app, creating an all-encompassing Cenomi mall platform that offers various services and information,” Rehill-Erguven said.

This new platform aims to offer a more seamless user experience, focusing on personalized and relevant rewards. Rehill-Erguven emphasizes that the program will not just be transactional but will also offer customized content and personalized offers. “We’re incorporating personalized content and customized offers to ensure the experience feels connected and relevant,” she said. In addition, the company is integrating value-added services like free parking, VIP lounges, and exclusive discounts to enhance the customer experience further.  “With Visa as one of our strategic partners, we’re also utilizing their merchant loyalty solutions,” Rehill-Erguven said. “This will help us deliver a more engaging and enhanced experience faster.”

“Consumers today want personalized, user-friendly loyalty programs that are easy to use.”

Rehill-Erguven said loyalty programs cannot be static—they must evolve with consumers’ needs and expectations. “We’re trying to take a more holistic approach to loyalty. It can’t be a static offering—it has to evolve with the consumer,” she added.

CHANGING PAYMENT TRENDS 

Payments in Saudi Arabia have evolved into one of the most sophisticated systems globally, with over 98% of face-to-face transactions now being contactless. This “tap economy” has become a defining feature of the kingdom’s retail landscape, driving consumer behavior and innovation.  

Dr. Jaffar notes the profound shift in consumer behavior, with most transactions in Saudi Arabia now taking place via digital payment methods. 

Reflecting on her time in China, Rehill-Erguven compared the kingdom’s payment landscape to global players, noting how Saudi Arabia, much like China, has embraced innovative payment solutions at an early stage. “It’s refreshing to see such a high adoption of digital payments here.”

However, beyond just digital payment methods, the rise of flexible payment solutions like buy now, pay later (BNPL) is also noteworthy. Dr. Jaffar pointed to a significant trend in this area, sharing that approximately 25-30% of purchases in Saudi malls today involve BNPL options. 

Dr. Jaffar and Rehill-Erguven both emphasize the importance of reducing friction in the shopping experience. Research shows that 70% of Saudi consumers expect a smooth, integrated experience across online and offline platforms. Achieving this level of convenience requires a shift toward omnichannel solutions—where the physical store complements the online experience. For example, offering services like “click and collect” or “buy now, pick up in-store” enables retailers to provide flexibility to their customers while maintaining the convenience of digital shopping.

Looking to the future, Rehill-Erguven sees significant opportunities in blending digital advancements with physical retail experiences. Drawing from past trends, she recalls a time when many predicted the demise of physical malls due to the rise of e-commerce. Yet, as she observes, the retail landscape didn’t collapse—it evolved. Retailers adapted by creating engaging in-store experiences that couldn’t be replicated online.

“We’ve learned that being physical is our superpower,” says Rehill-Erguven. “You can’t taste or feel something online. The human connection, the physical touch, sets physical retail apart.” 

The future of retail in Saudi Arabia is all about finding balance. The kingdom’s digital payment landscape is already advanced, but there is room to enhance consumer experiences, reduce friction, and build deeper emotional connections. By combining the power of digital payments, flexible financial solutions, and unique in-store experiences, Saudi Arabia is set to continue leading the way in retail innovation.

“The key is to keep evolving—embracing both the digital and physical worlds to meet the modern consumer’s needs. This is the future of retail, and it’s incredibly exciting,” said Dr. Jaffar.