It’s not just shopping. Retail is driving reform in Saudi Arabia

It’s not just shopping. Retail is driving reform in Saudi Arabia

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This is a time of great change for Saudi Arabia. The nation is transforming socially and economically as its Vision 2030 plan unlocks remarkable potential across many emerging economic sectors, driving investment opportunities and creating jobs.

New tourist visas have opened the country to the world — and the world’s shoppers. It is also much easier and quicker to open a business and invest in the Kingdom.

The World Bank recently ranked Saudi Arabia as the fastest-reforming country in the world, and the Kingdom has already implemented more than half of 400 key reforms, including allowing 100 percent foreign ownership across several emerging sectors, including retail. As a nation, we have come far in just five years, and we should be proud of our progress.

One of the most obvious changes in Saudi society is the transformation in the way people shop and spend their leisure time.

The retail sector is changing, and not only in the Kingdom. We are seeing dramatic transformations in the sector globally, and Saudi Arabia is an ideal example of how these developments apply at a national level.

The Kingdom has a growing population of 34 million, and is strategically located at the convergence of Europe, Asia and the Middle East, resulting in a robust and expanding consumer landscape. Euromonitor has forecast that the Saudi retail sector will grow almost 5 percent this year and will see compound growth of more than 5 percent a year from 2018 to 2023. The domestic retail industry is set to be worth $119 billion by 2023, presenting fantastic opportunity for growth and investment.

This predicted increase can be put down to a number of factors.

First, the Kingdom’s location between important trading routes makes it a center for trade. To build on this natural advantage, the 2018 budget boosted infrastructure and transport spending from $7.7 billion to $14.4 billion. Expansion in transport and logistics infrastructure will allow the Kingdom to import and export — and shop for — a greater range of products from around the world.

Second, the Kingdom’s consumer landscape is diversifying alongside the growth of the Saudi workforce. More women are now entering employment, and the resulting increase in disposable income will bring growing demand for goods. The retail sector is also a key priority sector for job creation under Vision 2030.

One of the most obvious changes in Saudi society is the transformation in the way people shop and spend their leisure time.

Ibrahim Al-Omar

Third, reforms such as extending business hours will make the economy open and competitive for retailers. The retail sector will benefit, with longer opening hours helping to drive a significant increase in footfall.

The combination of these trends will drive rapid growth in Saudi retail opportunities. With economic reforms making it easier than ever to access that growth, it is unsurprising that investors are showing growing interest.

A few months ago, Al-Akaria Saudi Real Estate Company and Arabian Dream KSA, which is principally owned by Triple Five Worldwide, owner and developer of the three biggest retail and entertainment centers in North America, announced a $5 billion project to create the world’s largest mixed-use entertainment and shopping center development of its kind in Riyadh.

Majid Al-Futtaim recently signed a $5.3 billion deal to create Mall of Saudi, a mixed-use shopping and entertainment destination that will create 12,000 jobs and feature the region’s largest indoor ski slope and snow park.

In 2019, the Kingdom’s General Investment Authority issued more than 100 foreign investment licenses to firms in the retail sector — 50 percent more than the year before.

Meanwhile, as testament to the growth of its domestic retail industry, the Kingdom will host 1,500 business leaders in Riyadh on Feb. 10-11 for the Retail Leaders Circle MENA summit, the first edition of the event to be held in Saudi Arabia.

Hosting this event delivers a message that the Kingdom is open for business. As Saudi society changes, global retailers, brand owners and suppliers will find that it offers the intellectual, financial and social capital they need to succeed.

• Ibrahim Al-Omar is governor of the Saudi Arabian General Investment Authority (SAGIA).

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view