JEDDAH, 30 May 2005 — Growing investments in the ever booming real estate sector are also contributing toward establishing shopping malls, especially mega malls and high-end stores, across Saudi Arabia.
Each mega mall is a multimillion-riyal project, explains Anas Saleh Seirafi, who recently opened a mega mall in Jeddah.
Business leaders make no secret of the fact that the repatriation of overseas funds, especially since the 9/11, 2001, event in the United States, has been largely contributing toward increased investments in the private sector, real estate being among the favorites. Funds are being partly diverted toward opening shopping malls.
“You can never say that existing malls are enough. You can have many more malls provided they are of the kind that will meet the requirements of shoppers today and in the future,” he says.
Today, the Kingdom’s three major cities — Riyadh, Jeddah and Dammam — boast many shopping malls, with Riyadh having some of the best high-end stores. Jeddah is trying to keep pace with Riyadh with new malls on Tahlia Road, in downtown Balad and other shopping areas.
After all, the Kingdom continues to be the largest market in the Middle East. The size of its population, high proportion of young people, and high levels of disposable income make the Kingdom the fastest growing market for consumer products in the region. Together with a booming economy, these factors mean that retail sales have increased rapidly.
The ongoing construction and residential building boom, which is the result of increased public and private spending, has been a strong driver for the Saudi economy. This boom has also been reflecting the retail sector with a high demand for furniture, electronics and interior furnishings, aside from textiles and dresses for women and children.
Multinational penetration has been a strong characteristic of the shopping malls that are springing up. Witnessed in the recent period is the influx of many international retailers and companies such as Debenhams, Harvey Nichols, Saks Fifth Avenue and Giordano, to name a few, that are becoming part of any new mega mall.
A continuing trend that is contributing to the success of a shopping mall is the additional presence of a host of other interests. They include a food court, a supermarket or hypermarket, as well as play areas and electronic games for children.
Some of the recently established landmark malls include the Serafi MegaMall in Jeddah, Dhahran Mall in the Eastern Province, and the Kingdom Mall and the Al-Faisalia Mall in Riyadh. In addition, the opening of Gulf Shopping City, the largest shopping and entertainment project ever in the Kingdom’s history is due to open in late 2005 over a space of 800,000 sq m.
In fact, a recent study points out that large retailers whose presence dominates shopping malls have increased retail space by 40 percent at the expense of small stores. Shelfspace competes with mindspace in the evolving retail environment, says the study by ACNielsen, one of the world’s major marketing information providers. Large retailers have increased retail space by 40 percent at the expense of small stores while capturing up to 80 percent of the money spent by shoppers in the large cities of the Kingdom and elsewhere in the region.
Retailers are becoming larger and more sophisticated. They are innovatively managing price perception, ensuring consumer loyalty and varying the means to influence purchasing habits of shoppers, according to ACNielsen’s study on shopping trends.
The selling area of small groceries in Saudi Arabia declined 18 percent over the last five years, says ACNielsen Gulf Managing Director Piyush Mathur in the comparative study that covers the Gulf states.
The study allows major grocery and supermarket retailers to accurately assess the impact of shopper attitudes in their brand equity, on the loyalty of their shoppers and on actual sales. It sheds light on issues like store loyalty, brand and store equity management and store relationship with customers. These are some of the factors that contribute to the success of a mall.
There is no doubt that expansion of shopping malls and centers is taking the Kingdom by storm.
