Saudi retail sector to grow - report

Strong earnings growth expected to continue despite Saudization

Saudi Arabia’s retail sector is set to continue growing according to a new report, despite concerns over wage inflation due to Saudization of jobs.

The NCB Captial report says that expansions through the openings of new stores, margin support from economies of scale, and consolidations of fragmented markets are key drivers of profit growth, but that price-led competition remains a key concern.

Head of equity research at NCB Capital, Farouk Miah, also admitted that “the coming twelve months will be difficult due to low organic sales growth, as well as pressure from Saudization.”

Saudization is the drive to encourage employment of Saudi nationals in the private sector, which in recent years has been dominated by expatriate workers. In some cases wages have been inflated to encourage nationals to take up jobs.

Miah went on to explain that consolidation of fragmented sectors dominated by independent stores is a key theme for the retail market, saying: “Extra, Jarir and Al Othaim are well positioned to benefit from this structural trend in their respective sectors, leading to 30-50 percent expansion in their store count over the coming five years.

“Al Hokair has already consolidated the Saudi mid-market fashion segment, with potential growth coming from expansion in the value-segment and opening stores abroad.”

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
Saudis tighten their belts for Eid in age of austerity

Saudis tighten their belts for Eid in age of austerity

Gov't cuts, which began late in 2015, are now rippling through...

New Saudi snow city tests kingdom's capacity for fun

New Saudi snow city tests kingdom's capacity for fun

Mixed-gender attraction is a rare opportunity for Saudis of all...

Retail renaissance in Saudi Arabia

Retail renaissance in Saudi Arabia

The largest economy in the GCC is emerging as a lucrative retail...

Most Discussed