While coronavirus has accelerated e-commerce in the region, it will not replace bricks and mortars stores in Saudi Arabia with the future of retail expected to be a hybrid blend of both.
During the six month period starting March last year, when the pandemic related lockdowns were at their peak, regional e-commerce expanded at a rate roughly equivalent to the total amount of growth that had been record over the last three years, said Panos Linardos, chairman of The Retail Leaders Circle, a community of prominent retail leaders.
“One of the enduring lessons that emerged from the coronavirus crisis is that of the pandemic being a catalyst of change. One clear example of this is the substantial growth of e-commerce during the lockdown period,” said Linardos.
“We witnessed online businesses in the Kingdom reporting substantial growth despite the logistics and delivery challenges that existed early on in some areas,” he added.
As vaccines are rolled out and more shops opens, “e-commerce is retaining the gains it made in the early days of the pandemic” said Linardos explaining that its advantage in its convenience. However, consumers still find entertainment in physical shops and as such Linardos expects the future of retail to be hybrid.
“We have seen consumers experience things in physical stores and then order online for the convenience. People will be looking for convenience but at the same time and more leisure and entertainment activities as opportunities to socialise so physical [retail] will come back and remain strong as well,” Linardos explained.
“Specifically for Saudi Arabia, I would not expect digital shopping to replace bricks and mortar stores even though there has been an increase in online commerce,” he continued.
Saudi Arabia’s giga-projects, the likes of Neom and The Red Sea Project, will have positive implications for the Kingdom’s retail sector.
“With the ambitious positioning of the Kingdom as a touristic destination, Saudi’s giga projects will attract millions of visitors creating a positive impact on the retail industry,” said Linardos.
Panos Linardos, chairman of The Retail Leaders Circle
“At the same time, some of those multipurpose projects would be ideal locations for placing more retail experience in stores,” he added.
Close to 90 percent of businesses in Saudi Arabia are SMEs and both them and the large retails have suffered under the impact of coronavirus, said Linardos.
“If we think about the Kingdom, where SMEs represent 90 percent of the registered businesses, I believe government support for SMEs can prove challenging yet crucial. As such the Public Investment Fund announcement [regarding supporting local businesses] can improve confidence around SMEs and allow them to access funding ensuring they stay an agile and vibrant part of the retail ecosystem,” said Linardos.
Linardos was talking to Arabian Business ahead of the 7th Retail Leaders MENA Summit taking place on 29-31 March.
Taking place virtually this year, the summit will gather industry leaders, innovators and influential decision-makers from Riyadh, Jeddah, Dubai, Abu Dhabi, Doha and Cairo for two days of content-rich and interactive programming. This year’s theme, The Great Retail Reset – Disruption, Resilience, and the Power of Collaboration, will create a dialogue to explore the changing retail and consumer landscape in Saudi Arabia and the broader region.
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