Today's Edition
KHALED AL KHAWALDEH (ABU DHABI)
The UAE's retail market is forecast to reach $162 billion by 2028, growing at an average annual rate of over 5% from $127.2 billion in 2023, according to a new report by Logic Consulting.
According to the Middle East-based group, the UAE leads the region in innovation, digitalisation, and sophisticated e-commerce offerings, despite having a smaller market than neighbouring Saudi Arabia.
Titled "Revolutionising Retail: Unveiling GCC's Five-Year Transformation", the study positions the UAE as the most digitally advanced retail market in the GCC.
E-commerce sales, which reached $3.9 billion in 2020, growing more than 50% year on year, are expected to become increasingly dominant. According to Logic, this is reflected in consumer preference, with 69% of UAE shoppers saying their loyalty increased for brands that allowed them to shop online and return-in-store.
"As GCC nations continue to transition away from oil dependency, retail has become a key enabler for fostering domestic consumption, attracting private investment, and catalysing the development of adjacent industries, including logistics, real estate, technology, and tourism," the report said.
The report outlines how major UAE-based retailers are leading the charge, using big data and AI to forecast demand, reduce waste, and personalise consumer journeys. Innovations such as click-and-collect, virtual fitting rooms, and loyalty-integrated apps are becoming the norm.
This includes success stories from the likes of Amazon.ae, Majid Al Futtaim, Lulu Hypermarkets, and Noon – with many offering expanded services, same-day delivery, and increasingly competitive ways to shop, and receive items on demand.
Moreover, the report details the rising appetite for luxury items and notes the UAE's leading role as a luxury hub in the region. According to Logic, approximately 70% of consumers in the GCC report increased spending on luxury items.
"The UAE hosts a substantial number of high-net-worth individuals and millennials who drive the demand for luxury goods and immersive shopping experiences. This cohort values exclusivity, personalised services, and innovative retail environments," the report said.
"'Phygital' experiences cater to their desire for interactive and seamless shopping journeys. For instance, luxury brands in the region are adopting augmented reality (AR) and virtual reality (VR) to enhance customer engagement and provide unique in-store experiences."
Despite rapid changes in the retail landscape, traditional neighbourhood shops – namely the 10,000 or so Baqalas on street corners – remain dominant in the UAE's grocery retail sector. A Kantar Worldpanel study cited by Logic shows that these stores continue to make up 60% of shopper traffic.
