Consumer spending in the GCC food retail sector is expected to reach $106bn in the next five years, according to a new report.
Food remains the largest segment of consumer expenditure in the region, standing at $83bn at year-end 2012 of the total $300bn, according to AT Kearney, the global management consultancy.
It said food accounts for 28 percent of the total consumers spend in 2012, with Saudi Arabia and the UAE together accounting for around 75 percent of the total food retail market in the GCC.
"While an exciting opportunity of $23bn exists, there are many changing dynamics in the grocery retail sector. Regional retail has experienced Hyper Speed evolution in past years growing very rapidly when compared to retailing in many mature economies such as the US and Europe," said Dr Martin Fabel, partner, AT Kearney.
He said retailers like Panda and Lulu have taken a third of the time to open 100 stores when compared to Western counterparts, such as Morrisons, Waitrose and Sainsburys.
AT Kearney said that while all food retail formats have witnessed solid growth, it is the larger sized stores, such as hypermarkets, which will dominate GCC market share over the next five years.
It said another area representing a large untapped opportunity for GCC retailers is the use of private labels.
Private labels in the GCC account for three percent of total sales compared to mature countries across the world where private labels have become an integral part of retailer's value proposition at 15-20 percent of sales.
Fabel added: "GCC food retailing is set for growth and offers a $23bn opportunity for the regional retail industry to leverage, but it will require players to move first, move fast and make the right move.
"Adopting a clear, differentiated strategy and implementing global best-practices to achieve sustainable competitiveness and growth is critical to overcome impending threats in the market, and capture a share of growth without losing market share and profitability."
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.