Oman's wholesale, retail trade reached $6bn in 2017

Business Monday 22/April/2019 17:21 PM
By: Times News Service
Oman's wholesale, retail trade reached $6bn in 2017

Muscat: Total wholesale and retail trade in Oman stood at approximately US$6 billion in 2017 up from US$5.1 billion in 2012, witnessing a rise of 2.3 per cent compound annual growth rate (CAGR) over the five-year period, according to the GCC Retail Industry Report published by Alpen Capital, an investment banking advisory firm.
During 2016, the market in Oman witnessed pressure of economic slowdown and weaker consumer sentiments due to subsidy cuts, resulting in a 4.1 per cent decline in wholesale and retail trade. However, with the stabilisation of oil prices and the subsequent uptick in economic activity, wholesale and retail trade in the Sultanate witnessed a rise of 8 per cent in 2017.
The Sultanate’s steady economic growth has drawn significant investments in the retail sector. Though the current retail landscape in the Sultanate is largely dominated by standalone units, the concept of organised retail in the form of malls and shopping centres are gaining prominence.
This is primarily driven by growing interest of residents in new lifestyle experiences and increasing demand for space from both global and regional brands who look to further establish their presence and broaden their portfolio to gain market advantage. The country’s retail industry is witnessing a change due to increasing demand for international products, rise in population (+4.7 per cent CAGR between 2012 and 2017) and steady influx of tourists (+8.9 per cent CAGR between 2012 and 2017).
Moreover, initiatives undertaken by the government in streamlining the retail infrastructure and strengthening investments towards infrastructure has helped the sector gain further prominence within the GCC markets.
Oman’s retail infrastructure has been expanding at a brisk pace as several small to medium scale retail project developments shape the population’s ever-increasing demand for a holistic experience. Apart from Muscat, many new projects are springing up in other cities such as Sohar and Nizwa supported by the government’s efforts in moving towards expansion of the retail sector.
Alpen Capital’s GCC Retail Industry report presents an overview of the retail landscape in the GCC as well as a synopsis of the demand-supply dynamics of the industry.
“The GCC retail industry has witnessed challenging times in recent years but the long-term fundamentals of the sector remain intact. Alpen Capital anticipates that the GCC retail sector is likely to regain momentum, owing to strong fundamentals that include an expanding population base, high GDP per capita and growing tourism in the region," said Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.
"Economic recovery led by improving oil prices is expected to revive consumer confidence and improve discretionary spending. Initiatives taken by the GCC governments to stimulate retail infrastructure projects and ease business and visa regulations should provide further impetus to the retail sector,” she added.
According to Alpen Capital, the size of the GCC retail sector is projected to grow at a CAGR of 4.0 per cent from US$253.2 billion in 2018 to US$308.0 billion in 2023. Retail sales have been under pressure in the recent years but are estimated to recover and grow through 2023.
“Changing consumer preferences and the rising adoption of e-commerce platforms are transforming the region’s retail landscape. Although challenges remain due to the current economic factors, we anticipate that the sector will see growth over the next five years. Initiatives taken by the GCC governments to stimulate retail infrastructure projects and ease business and visa regulations should provide impetus to the retail sector," said Krishna Dhanak, Executive Director at Alpen Capital.
"We saw several intra-regional and cross border M&A transactions with a significant focus on e-commerce/online retailing space in the last two years. We expect to see continuing activity in the M&A sphere as retail companies look for new opportunities for expanding their market base and size,” he added.
The growth in retail sales is expected to be driven by increase in population, rise in GDP per capita and an evolving tourism landscape. It is expected to be further aided by the recovery in the oil prices improving the macroeconomic stability and targeted government initiatives such as reviving infrastructure projects, allowing 100 per cent foreign ownership in retail sector and ease in visa regulations for tourist arrivals. Additionally, the upcoming mega events in the region will further propel the growth in retail sales.
The retail sector is undergoing significant changes with the emergence of e-commerce across the GCC countries. The rise in the number of millennials, working women and expatriate population is driving demand for consumer goods, especially international branded products and global food concepts. Consequently, the non-food retail sales are anticipated to grow at an annualized average of 4.7 per cent between 2018 and 2023, while food retail sales are expected to increase at a CAGR of 2.8 per cent during the forecast period.