BrazilEmerging trends in the GCC’s fast-growing retail sector
The Gulf Cooperation Council (GCC) is witnessing a retail renaissance, with the sector growing at a CAGR of nearly 5% to reach over $390 billion by 2028. Seifallah Rabie, partner at LOGIC Consulting, shares the key drivers of the market’s growth and six trends that will shape its future trajectory.
In the period up to 2028, the GCC retail sector is expected to grow at a compound annual growth rate (CAGR) of 4.6%, then reaching over $390 billion. Among the region’s markets, Saudi Arabia and the United Arab Emirates remain dominant, together accounting for 75% of total retail sales in 2023. Their combined market share is projected to expand to 78% by 2028.
The retail sector is broadly divided into two major categories: food retail and non-food retail, each following distinct growth paths and shaped by unique market dynamics.
Food retail segment
The food retail segment, valued at $127.2 billion in 2023, represents a significant portion of retail activity across the region. This segment is on track to grow to $162 billion by 2028, driven by a CAGR of 4.9%. The region's rapidly expanding population, combined with high levels of urbanization, is a primary growth driver.
Saudi Arabia, with its large population and diverse consumer base, is seeing a notable shift toward organic and healthier food alternatives, a trend fueled by increased health consciousness among consumers. This shift is also supported by the rise in wellness trends and an influx of international health food brands responding to regional demand.
Additionally, the proliferation of hypermarkets and supermarkets like Carrefour, Lulu, and Al Othaim, combined with online grocery platforms, is reshaping the way GCC consumers shop for food. With the adoption of Al-powered shopping assistants, online food delivery services, and innovations in supply chain logistics, the food retail sector is poised for continuous innovation.
Non-food retail segment
The non-food retail segment, which includes categories like fashion, electronics, furniture, and luxury goods, accounted for $182.5 billion in 2023. Projections suggest this figure will surge to $243.6 billion by 2028, driven by an impressive CAGR of 6.2%.
The rise of affluent consumer classes in the region, coupled with increased access to disposable income, has spurred demand for premium products, especially in the luxury and fashion sectors. According to recent data, approximately 70% of consumers in the GCC have reported an increase in spending on luxury items, reflecting the growing appetite for high-end brands such as Louis Vuitton, Gucci, and Rolex.
Emerging retail trends in the GCC
The evolution of the retail sector in the GCC is driven by the rapid emergence of new trends and the region’s shifting consumer behaviors. Six trends stand out:
Quick Commerce
Primarily driving food retail growth. Quick commerce meets the demand for fast, convenient access to groceries, meals, and essentials, driven by urbanization and the fast-paced lifestyles of GCC residents (especially in metropolitan areas like Dubai and Riyadh).
E-Commerce & E-Payments
Driving growth in both food and non-food sectors. In the food retail sector, online grocery shopping has surged as consumers prioritize convenience, while in non-food retail, categories like electronics, fashion, and beauty products have seen significant growth due to enhanced digital experiences. The seamless integration of digital payment systems like Apple Pay and STC Pay has also accelerated consumer confidence in e-commerce.
Phygital Experiences
Driving growth in non-food sectors like fashion, beauty, and electronics. This trend is particularly impactful in non-food sectors, where the demand for experiential and personalized shopping has grown, with younger consumers seeking interactive, tech-driven retail environments.
Value-Driven Retail
Driving growth in the food retail sector. The rise of private-label products and discount formats has intensified competition, particularly in regions where price sensitivity is a major factor. This trend is gradually emerging, with private labels gaining traction in categories like beauty, apparel, and home goods. This trend is likely to accelerate as consumers increasingly demand affordable yet premium options in various non-food categories.
Sustainability
Driving growth in both food and non-food sectors. In food retail, the sustainability trend is driving increased demand for organic produce and environmentally friendly materials – compelling retailers to reconfigure sourcing strategies to include health-conscious and sustainable alternatives.
Non-food retail is witnessing accelerated growth in categories such as clean beauty and sustainable fashion, as consumers seek out brands that align with their environmental and social ethics.
Luxury & Immersive Shopping
Driving growth in non-food retail, especially in apparel, beauty, and luxury markets. The GCC region has seen an influx of global luxury brands setting up flagship stores and creating highly curated in-store experiences. Moreover, consumers are gravitating toward experiential shopping environments, where the focus extends beyond just purchasing goods to enjoying a memorable journey.
