Top Trends Shaping The Retail Sector In Saudi Arabia
People love shopping and their love for this fun activity, that also happens to provide for their necessities, is what fuels the retail industry.
The Kingdom of Saudi Arabia is long known for its trading capacities. It’s the most important point of import and export in all of the Gulf Cooperation Council. Home to the Mecca, Islam’s holiest city and Saudi Arabia’s pivotal trade center, the country was well-versed with the know-how of retail business. However, standardization of retail in Saudi Arabia was not done until recent years.
As the country shifts its focus to the thriving retail industry to cut down dependencies on the oil industry, here are the top retail trends that’ll influence the industry’s growth in 2019.
E-Commerce Will Pick Up Pace
“We aim to increase the contribution of modern trade and e-commerce to 80 percent of the retail sector by 2020.”
This statement made in Vision 2030 – Saudi Arabia’s Vision for the future as stated by Mohammad bin Salman, the Crown Prince and Chairman of the Council of Economic and Development Affairs himself gives an assurance of how big the e-commerce market is going to grow.
The success and anticipated pace of growth of the Saudi E-commerce market can be attributed to the fact that 90% of the country’s total population are internet users. Saudi also offers one of the largest ranges of payment gateways in its region.
A survey conducted in 2015 revealed that approximately 8% of the Saudi population regularly bought items online while only 6% used their bank’s online services. However, with more players plunging into the e-commerce business and the growing acquaintance of customers with digital platforms are sure to increase that number manifold.
Brands Ready To Implement Omnichannel Strategies
Besides e-commerce, another marketing strategy that retailers are willing to adopt is omnichannel commerce.
The region’s leading retail and hospitality conglomerate – Landmark Arabia, has already launched e-commerce sites and apps in Saudi Arabia for six of its biggest brands. The retailer launched a special “Click & Collect” feature back in 2017 to offer its customers the complete omnichannel experience. The initiative grew so popular that with 6 months of its launch, it accounted for 30% of total orders for some of the group’s key brands.
Having witnessed such a huge achievement, other brands in the country are willing to adopt an omnichannel approach to take their retail business to new heights and taste similar success themselves. What’ll help them achieve this feat?
- An estimate of the online retail market to swell to $10 billion by 2022
- 30 million active internet users
- 25 million active social media accounts
- 84% city-dwelling Saudi nationals
Adopting AI to Enhance Shopping Experience
The customer-centric retail industry does not sell products anymore, it sells experiences. And in light of this ongoing global trend, 80 percent of UAE CEOs say that they plan to prioritize Artificial Intelligence over the next two years.
Following their lead, Saudi retailers also plan to incorporate AI to make customer interactions smarter in their facility – an innovative step that’ll change the face of retail in the country.
In the retail sector, Artificial Intelligence has the ability to get the groundwork done for an enhanced digital customer experience. The potential of AI in helping retailers to improve customer interactions is huge. AI can power customer experience with customizations and enable retailers to cross-sell in store and online.
Adapting To the Changes Post-VAT
Owing to the persistent oil-price slump, the introduction Value Added Taxes (VAT) and cuts to energy subsidies, consumer spending habits in Saudi have changed considerably.
To accommodate this new spending capacity, retailers are establishing budget stores and benefitting customers with discounts and offers while they themselves upgrade their business management systems and POS software to include tax-relevant data, tax conditions, and rules and perform invoicing, documentation and reporting effectively.
Some rather positive effects of VAT introduction include the reduction in prices on the online shopping sphere. This offers an opportunity for businesses to grow their online presence.
These were the top trends that will impact retailers in Saudi Arabia.
Staying stagnant is not option anymore. Adapt and move forward – that’s the new anthem. The future is bright for retailers who base their processes around the needs of their customers. The merchants who will find success in 2019 and beyond are the ones that can successfully evolve with these trends.