The retail sector in the Kingdom has significant potential for growth and will continue to post solid returns with strong prospects for expansion in the medium-to-longer term although retailers will have to factor in the higher costs as they hire more local staff, according to an international report released here this week.
Oxford Business Group (OBG), a global publishing and consultancy company producing annual investment and economic reports on more than 30 countries, in its report on the retail sector in the Kingdom, a copy of which was made available to the Arab News, however cautioned “last year’s decision by Riyadh to reduce the number of expatriates in the work force under Nitaqat policy is expected to have an ongoing effect on the sector for at least part of this year, with retailers having to recruit Saudi employees to fill the gaps left by expatriate workers the government has said will either be deported or not have their work visas renewed.”
According to the OBG report issued by the management consultancy and research firm A.T. Kearney a month ago said: “The Kingdom’s retail sector had significant potential for growth, thanks to high levels of disposable income, a relatively young and upwardly mobile population and an expanding tourism trade.”
The report asserted, “the sector, which saw sales expand by around 11 percent in 2013, would increasingly be dominated by large-scale developments such as hypermarkets with shopping centers spreading beyond the major cities.”
It said major international retail brands are also moving to step up their presence in the Kingdom, joining established chains such as H&M and Bershka.
It added Burberry, Children’s Place and Tesco have signaled an interest in the market too, or have recently entered. Saudi Arabia requires all foreign retailers to have a local partner with majority ownership.