Saudi Arabia Retail Report Q1 2012

The Q112 BMI Saudi Arabia Retail Report forecasts that the country’s retail sales will grow from an estimated SAR275.19bn (US$73.48bn) in 2011 to SAR422.46bn (US$112.81bn) by 2015. Principal factors behind the forecast growth in Saudi Arabia’s retail sales are: strong underlying economic growth, rising disposable income, increasing acceptance of the concept of modern retailing, a youthful population and an enlarged consumer base created by the improving position of women in society.
Saudi Arabia’s nominal GDP in 2011 is estimated to be US$472.9bn, with growth of 6.3% in real terms expected for the year. Average annual real GDP growth of 4.1% is predicted by BMI between 2011 and 2015. With the population increasing from 28.1mn to 30.5mn by 2015, GDP per capita is predicted to rise to US$20,102 by the end of this forecast period.
The retail sector benefits from the large number of Muslim tourists visiting the country to take part in the hajj and umrah pilgrimages every year. Sales of gifts and souvenirs in 2008 were estimated to have risen by at least SAR4bn (US$1.1bn) due to shopping by hajj pilgrims, according to a Gulf News report. Increasing urbanisation is also driving retail sales. In 2005, nearly 89% of the population was classified by the UN as urban, rising to an estimated 90% by 2010. The UN also described more than 57% of the population as economically active in 2005, with this proportion forecast to exceed 59% in 2010 and 66% by 2015. About 38% of the population was in the 20-44 age range important to retail sales in 2005, and the UN forecasts that this will rise to about 45% by 2015.
Gap is among the latest international retailers to enter the market. It plans to open 44 Gap stores (and variations) and 10 Banana Republic stores in Saudi Arabia by the end of 2012.
Retail sub-sectors that are predicted by BMI to show strong growth over the forecast period include overthe- counter (OTC) pharmaceuticals, with sales expected to increase by more than 44%, from an expected US$0.41bn in 2011 to US$0.59bn by 2015.
With the Saudi consumer electronics market one of the largest in the Gulf, accounting for about 40% of regional spending, sales in this sector are forecast to increase from an estimated US$5.83bn in 2011 to US$7.58bn by 2015, a rise of 30%. Consumer electronics spending will be driven by youthful demographics, a regional economic boom and a buoyant real estate sector.
High business confidence and increased disposable incomes also provide a favourable background for the automotives sector. Vehicle sales are forecast to rise by nearly 39% by the end of the forecast period, from 688,883 units in 2011 to 956,382 in 2015.
Retail sales for our set of Middle East and Africa (MEA) countries in 2012 are predicted to amount to US$287.73bn, based on the varying national definitions. Total consumer spending for the region, based on BMI’s macroeconomic database, is forecast at US$788.24bn. In 2012, BMI predicts that South Africa and Saudi Arabia will together account for an estimated 58.0% of regional retail sales, with Israel accounting for a further 15.1%. By 2015, the combined share of South Africa and Saudi Arabia is expected to reach 58.5%.
We put growth in regional retail sales for the period from 2012 to 2015 at 34.6%, or an average 10.4% per annum.

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Executive Summary 5
SWOT Analysis 7
Saudi Arabia Retail Business Environment SWOT 7
Saudi Arabia Political SWOT 8
Saudi Arabia Economic SWOT 9
Market Overview 10
Current Trends 11
Key Players 13
Industry Forecast Scenario 16
Consumer Outlook 16
Retail Growth Outlook 18
Table: Saudi Arabia Retail, 2008-2016 18
Macroeconomic Outlook 21
Table: Saudi Arabia Economic Activity, 2011-2016 23
Regional Retail Outlook 24
Table: Middle East And Africa Retail Trends, 2008-2015 24
Table: Middle East And Africa Retail Sales By % Share, 2008-2015 25
Current Trends 25
Business Environment Outlook 34
Saudi Arabia’s Retail Rating 36
Limits To Potential Returns 36
Risks To Realisation Of Returns 36
Mass Grocery Retail 37
Saudi Arabia Mass Grocery Retail Industry SWOT 37
Market Overview 38
Table: Structure Of MGR Sector –Sales By Format, 2004-2009 (US$bn) 39
Table: Structure Of MGR Sector –Sales By Format, 2004-2009 (SARbn) 39
Industry Forecast Scenario 40
Table: MGR Sales Indicators, 2008-2015 41
Table: Grocery Retail Sales By Format, 2009 And 2019 41
Industry Developments 42
Consolidation 43
Consumer Electronics 44
Saudi Arabia Consumer Electronics Market SWOT 44
Market Overview 45
Table: Distributors For Leading Brands In Saudi Arabia 48
Computers 49
Table: Computers Sales, 2008-2015 49
Audio/Video 52
Table: AV Sales, 2008-2015 52
Saudi Arabia Retail Report Q1 2012
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Mobile Communications 54
Table: Mobile Communications Demand, 2008-2015 54
Industry Forecast Scenario 58
Table: Consumer Electronics Overview, 2008-2015 (US$mn) 58
Industry Developments 61
Automotives 64
Saudi Arabia Autos SWOT 64
Market Overview 65
Market Trends 65
Dealerships 68
Commercial Vehicles 70
Production 70
Industry Forecast Scenario 74
Table: Auto Sales, 2006-2015 74
Table: Car Ownership, 2007-2015 74
Industry Developments 76
BMI Methodology 78
How We Generate Our Industry Forecasts 78
Sources 79
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