UAE Grocery Market Set to Surpass $40 Billion, with Small Stores Playing a Key Role

10X Technology

Mita Srinivasan
10X Technology
Published:

UAE Grocery Market Set to Surpass $40 Billion, with Small Stores Playing a Key Role

'Inside the Baqala' report’s findings underscore the significant contribution of baqalas, which make up 81 percent of all grocery retailers in the UAE and attract 60 percent of residents weekly due to their convenience and proximity to residential areas. The study reveals a market ripe for digital transformation.

A recent study by 24SEVEN projects the UAE grocery retail sector to exceed US$40 billion in 2024. This growth is bolstered by small grocery stores, known locally as 'baqalas', which continue to be an integral part of the community despite their modest size.

The report, titled 'Inside the Baqala', was compiled after analysing data from over 5,000 grocery outlets across the UAE. The findings underscore the significant contribution of baqalas, which make up 81 percent of all grocery retailers in the UAE and attract 60 percent of residents weekly due to their convenience and proximity to residential areas.

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The study reveals a market ripe for digital transformation. Currently, less than 1 percent of small grocery outlets use advanced financial technology, and 70 percent operate without a connected point-of-sale system. This gap in tech adoption presents a major opportunity for growth through the integration of embedded financial services such as remittance and bill payments.

Jarrar Shah, CEO and Co-Founder of 24SEVEN, emphasized the potential uplift in revenue through technology. "Embedded fintech can transform daily operations and significantly increase the monthly revenue of UAE baqalas by 8 to 12 percent.”

The timing is pivotal as the UAE grocery sector is already in the spotlight with the recent Spinneys IPO. As the market evolves, small grocery stores are increasingly seen as not just shopping venues but community hubs that offer a range of services, contributing to the UAE’s broader economic growth.

Shah pointed out that by embracing fintech solutions, baqalas can transform into comprehensive hubs of community commerce, offering a wide array of financial services and products. A consumer could conveniently utilize buy now pay later (BNPL), which could potentially handle up to US$338 million in transactions annually if widely adopted.

“BNPL would enable this consumer to defer payment for groceries, ensuring immediate access to essentials while managing their budget effectively,” pointed out Shah in a statement. Fintech, according to him, could easily enable these consumers to top up their mobile phone credits or settle utility payments, all within the same familiar neighbourhood store. Moreover, for migrant workers, baqalas could serve as convenient hubs for remittances, allowing seamless transfer of funds to support loved ones back home, while also offering insurance options for added financial security.

In their journey towards becoming a 'Point-of-Everything', 24SEVEN is aligning with the UAE's vision to integrate more digital services into everyday business operations.