Saudi Arabia’s retail landscape is rapidly evolving, driven by a young, urban, and tech-savvy population. With high internet and smartphone penetration, the Kingdom has climbed to the third spot in the Global Retail Development Index.
The retail sector, contributing around 23% to Saudi Arabia’s non-oil GDP, is projected to grow to $159 billion this year, fueled by e-commerce expansion and luxury retail demand.
Strategic Development
This growth aligns with Saudi Arabia’s Vision 2030, which promotes economic diversification and retail innovation. Retailers are shifting from traditional models to more agile, customer-focused strategies to meet changing consumer preferences.
Experiential retail is on the rise, with younger, affluent customers seeking unique in-store experiences. Innovations like virtual try-ons and augmented reality apps enhance the shopping experience by blending online and offline elements.
Homegrown brands are gaining traction, supported by initiatives like the ‘Saudi 100 Brands’ program, which boosts local creativity and entrepreneurship on the global stage. Fashion and beauty brands celebrating local craftsmanship are particularly popular among women and Gen Z consumers.
Market Trends
Sustainability is increasingly important to Saudi consumers, with 52% preferring to buy from socially and environmentally responsible companies. Health and wellness trends are also shaping the market, with a significant focus on products and services catering to a health-conscious generation.
Saudi Arabia’s Health & Fitness Service Market, valued at $1.02 billion in 2023, is expected to grow at a CAGR of 8.5% from 2024 to 2030. Specialty retail concepts are emerging, focusing on fitness, wellness, and healthy food options, transforming the F&B sector.
Demographic Dynamics
The young population, with 63% under 30, is driving shifts in consumer behavior. The luxury retail sector is booming, expected to reach $24.61 billion in Q1 2024, supported by increased female empowerment and a growing professional female workforce.
Saudi Arabia’s unique approach to tourism integrates retail components across multiple cities, diverging from the global model where one city typically dominates. Vision 2030 aims to create a diversified economy, promote local brands, and enhance consumer spending, presenting significant growth opportunities for the retail sector.