Saudi Arabia's Retail Renaissance: Digital Innovation and Reforms Propel it to the Top

10x Industry

Mokshita P.
10x Industry
Published:

Saudi Arabia's Retail Renaissance: Digital Innovation and Reforms Propel it to the Top

Kearney's Global Retail Development Index highlights Saudi Arabia's reforms, digital innovation, and economic growth, positioning the MENA region at the forefront of global retail development.

In the recently released Global Retail Development Index by Kearney, the MENA region takes centre stage as a retail powerhouse. The bi-yearly survey, which evaluates the most promising retail markets globally, highlights the ascent of Saudi Arabia, securing the third rank in the latest rankings, climbing nine points.

The Kingdom's surge in the GRDI rankings is attributed to a confluence of factors contributing to its upward trajectory in global retail development. Chief among these are the country's youthful demographic, rapidly advancing technological landscape, and ambitious governmental plans. This positive shift underscores Saudi Arabia's pivot away from oil dependency, constituting around 40 percent of its GDP, and the establishment of a favourable business climate conducive to retail innovation and growth.

Several key factors underscore Saudi Arabia's impressive rise in the GRDI rankings:

  • Employment Growth: The country has achieved substantial growth in employing Saudi nationals in high-skilled jobs, surpassing targets outlined in Vision 2030. Additionally, there has been a doubling of female workforce participation, further contributing to economic development.

  • Digital Transformation: A notable increase in non-cash retail transactions from 16 percent in 2016 to 62 percent in 2022, with a target set at 70 percent by 2030, reflects the nation's rapid digital transformation. The adoption of Buy Now Pay Later services, led by domestic providers Tamara and Tabby, has also gained significant traction.

  • Robust Economic Climate: Saudi Arabia has witnessed a surge in investment deals (95 percent) and licenses (267 percent) in 2022, signaling a strong economic climate and attracting both domestic and international investors.

  • Technological Integration: The integration of digital and AI technologies within the consumer market, exemplified by the rapid adoption of mobile commerce and AI-enabled experiential retail, contributes to Saudi Arabia's dynamic retail environment.

  • Global Brands and Lifestyle Expansion: The entry of international brands into the market and the expansion of entertainment and lifestyle sectors further indicate a thriving retail environment.

Debashish Mukherjee, Partner at Kearney Middle East & Africa - Consumer & Retail Practice Lead, emphasises the significance of the MENA region, particularly Saudi Arabia, in leading the next wave of retail growth. The 2023 GRDI highlights the region's redefined retail ecosystem, led by digital adoption and consumer-centric approaches. Saudi Arabia's impressive rise serves as a clear indicator of its commitment to boosting a competitive and diverse economic landscape, making it a compelling destination for retailers looking to capitalise on emerging market opportunities.