Saudi and UAE lead in Kearney’s emerging markets retail index

03 January 2022 3 min. read

Global management consulting firm Kearney has released the latest edition of its Global Retail Development Index, a bi-annual study into the market attractiveness and maturity of retail markets in emerging economies.

The study, which has been conducted for over a decade, ranks 35 emerging countries based on four key variables – market attractiveness, country risk, market saturation and time pressure – to determine markets that are growing, attractive, and relatively risk free. Using insights from the index, retailers can shape their expansion and investment agenda’s for emerging markets.

Remaining at the top of the table are China and India, the world’s two most populous markets. Malaysia, Indonesia and new joiner Bangladesh round off the top five, with Saudi Arabia (12th), the UAE (14th) and Jordan (17th) the Middle East countries to rank among the top 20 markets.

Top 20 countries in the Global Retail Development Index

Saudi Arabia

Mohammed Dhedhi, a partner at Kearney and the lead author of the Global Retail Development Index, reflects on the developments in Saudi Arabia’s retail market:

“Changes in the Kingdom’s retail regulations have increased transparency and made it easier for new businesses to enter the market. Stronger governance coupled with a commitment to enhanced protection of consumer rights have increased foreign investment. The resulting increase in brick-and-mortar entrants and expansionists have contributed to a growing market.”

“Furthermore, forward looking strategies by Saudi Arabian Monetary Authority (SAMA) which made it mandatory for retailers to accept electronic payments have accelerated the adoption of digital payment systems, reducing the bias towards cash payments. Supported by omnichannel strategies implemented by retailers in response to the Covid-19 pandemic, the e-commerce market is expected to be valued at $21 billion by 2025.”

“With consumers becoming more digital savvy, retailers are adopting innovative digital shopping mediums including testing augmented reality, virtual try-ons, and live streaming. These have been effectively engaging the local consumers and is reflective of the Kingdom’s efforts in develop a flourishing, modern and organised retail sector.”

Further reading: The changing consumer shopping habits in Saudi Arabia.

United Arab Emirates

Dhedhi outlines some of the key developments in the UAE’s retail scene:

“The ease of doing business in the country, in addition to the steady support for start-ups and small businesses, and well-designed stimulus packages have encouraged foreign direct invest and spurred innovation in the sector. Coupled with the high consumer spending levels, we have seen large international retailers and global brands entering the market or expanding their operations over the last decade.”

“The UAE leads the MENA region in terms of household spending on e-commerce, with the average spend per household ($2,554), being twice the global average ($1,156) and four times the MENA average ($629), positioning the country as a high demand market.”

“Furthermore, technology and experiential marketing are driving growth in the UAE’s retail sector as retailers adopt technologies such as artificial intelligence, internet of things and virtual reality to offer a more holistic omnichannel experience.”

“Card payments have been outpacing cash-based transactions and retailers have been rapidly adopting digital payment technologies including mobile wallets and mobile payment apps, such as those from Emirates NBD Banks and mePay, further bolstering the sector’s performance.”

Further reading: Shifts in UAE consumer behaviour are here to stay.

Meanwhile, Arabic-focused countries in North Africa that score highly in the index are Morocco and Egypt, ranked sixth and seventh respectively.