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Gulf retail on the rise
The GCC retail sector is poised for growth, bolstered by young, eager consumers and the influx of foreign brands.
May 11, 2010 8:14 by Katherine Azmeh
New research suggests that the GCC’s retail sector is on its way up, buoyed by a number of trends that promise strong economic growth over the coming two years.
As the GCC countries position themselves away from oil dependency and toward more diversified economies, retail is poised to lead the way. Domestic demographic factors like a young and expanding population, and the emergence of a growing middle class are expected to act as strong drivers of growth. Additionally, burgeoning industries like travel and tourism, along with an enhanced service sector, may spill over to contribute positively to retail sector growth.
New research by Alpen Capital suggests that the “non-discretionary retail segment” will grow steadily throughout 2010, but luxury retail markets will most likely remain ‘subdued’ this year. Overall, retail demand in the GCC is expected to grow at an annualized rate of 9.5 percent in 2010-2012, according to the GCC Retail Industry Report for this year.
Optimism in the retail sector seems justified, as the industry is well poised to benefit from demographic factors, emerging trends in design and service, and buoyancy in other sectors. For example, analysts point to the commercial success of retail centers that pair a modern shopping mall with a state-of-the-art hypermarket. These designs are enjoying success with consumers. Highly developed free trade zones and favorable taxation environments are strong industry drivers as well.
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