As competition intensifies in the GCC’s retail sector, a new report by Oliver Wyman highlights the growing importance of value-led grocery retailing. 

The report, “The Affordability Imperative: Capitalizing on Value-Led Grocery Retail in the GCC,” argues that shifting consumer priorities and a rising demand for affordability present a key opportunity for retailers to reshape the market.

The report uses Saudi Arabia, the GCC’s largest market, as a prime example of this transformation. An Oliver Wyman survey revealed that over half of Saudi households experienced income fluctuations in 2024, with 31% reporting a decrease and 40% seeing their savings dwindle. 

Nearly half of consumers are comparing prices and actively seeking out lower-priced stores. Value, encompassing price and promotions, is the top priority for 51% of Saudi consumers when choosing a retailer.

The trend extends to private-label products, with 80% of consumers regularly purchasing them. Interest in discount grocery retailers is also high, with 97% of those familiar with international discount brands they would consider shopping at similar stores if they were available locally.

Oliver Wyman highlights key strategies of successful value-led grocers: competitive pricing, strong private labels, streamlined assortments, efficient operations, and low-capex expansion. 

They also typically follow a two-step approach—building value perception first, then enhancing offerings.

While affordability is crucial, successful retailers differentiate themselves through various factors, including pricing models, product assortment, operational efficiency, and customer engagement. International discount chains are influencing GCC trends, with brands like Aldi and Lidl employing “everyday low pricing” and others, like Colruyt, offering lowest-price guarantees.

The GCC market offers unique challenges and opportunities, shaped by the UAE’s expatriate base and Saudi Arabia’s growing middle class.

Traditional “baqalas” compete with modern trade, private-label penetration is low, and regional price variations and service-focused shopping demand tailored strategies.

Oliver Wyman outlines four value-led grocery expansion models in the GCC: neighborhood discount (small, low-cost essentials), basic discount (no-frills, limited range), mature discount (efficiency-focused with private-label and fresh products), and full-basket value-led (bulk shopping for price-sensitive consumers).

While the neighborhood discount model is considered most scalable, the full-basket model offers the highest long-term profitability.