Saudi Arabia is becoming a gold mine for retailers
In 2017, the Kingdom of Saudi Arabia approved 100% ownership of retail and wholesale ventures by foreigners. The regional retail industry has since witnessed steady year-over-year growth across multiple metrics – barring the short-lived disruption due to the pandemic. Today, with accelerated post-pandemic reopening and upbeat sentiment among shoppers; retailers in the Kingdom are gearing up for the next growth cycle, by bringing new offerings, discounts, and value propositions, to their customers.
Mushtaque Mohammed, the Brand Head for KSA at Twenty4 – a leading value fashion brand in the Middle East – says the market is currently awash with a new wave of trends, fashion verticals, niche segments, and designers. “The Kingdom is going through a dramatic socio-economic shift, which is having a direct bearing on how customers – both locals and expats – look at fashion,” Mushtaque Jaffar added. “Retailers in this space are witnessing a new dawn, for the KSA clothing and fashion industry”.
How has the Kingdom’s retail industry transformed in recent years?
Any discussion about the transformation of the KSA retail industry must factor in digitization. According to McKinsey, internet penetration in the country is at a whopping 89%. So, shoppers are savvier, better-informed, and more connected than ever. And with more access to information from across the globe, shoppers have naturally become more fashion conscious. Retailers, in turn, have responded to this enthusiastically, tailoring apparel to cater to evolving needs. Additionally, in recent years, buying clothes has defied seasonal factors. Shoppers are now in the market all year round. These transformations spell opportunities for retailers. But heightened customer awareness also means that we must offer superior value and shopping experiences to capitalize on the opportunities.
Has this transformation impacted fashion trends? If so, please explain how.
Trends are very dynamic currently, influenced by wide-ranging factors. Social-media personalities, platforms, and social causes are shaping the fashion narrative, with women increasingly setting the trends. This is particularly true in the KSA, where relaxations in women’s dress code are redefining the boundaries of fashion. At the same time, we are witnessing increasing demand for traditional attire, like shaylas and abayas, or rather their contemporary interpretations. At Twenty4, we have seen substantial demand for local styles from foreign tourists too. But regardless of who the buyers are, everyone seeks value, inclusion, and quality in products. That will remain as the overarching trend.
What prominent changes have you seen in consumer behaviour? How do these changes relate to different age groups and the post-pandemic revival?
Following a period of unprecedented disruption, customers are back in the market. But they are definitely not buying like before; they are more inclined towards value than volume. And the prolonged downturn has led to significant disposable income as well. By one estimate, the real household spending in the KSA is set to grow by 4.6% year-over-year in 2021. That said, retailers must also factor in the demographics and tailor their offerings accordingly. For example, Saudi Arabia is the only GCC country where the majority of the population (72%) is local; not expats. So, as a fashion retailer, catering to the local customer naturally takes precedence. But product personalization doesn’t end there – it must factor in the young demographic, their preferences, and passions, as the median age in the KSA is 31.8 years. So, there are multiple considerations that inform a successful retail strategy.
As a retailer, what is your blueprint for the future of fashion retail in the Kingdom?
Returning shoppers are seeking a sense of novelty. And we have to deliver it through interactive showroom experiences, streamlined shopping flows, music, gifts, etc. Our communications – messaging, content, PR, language – should represent the values that we aim to uphold. We must draw a customer-centric branding strategy, set competitive price points, and strive towards developing long-term relationships rather than one-off sales. At Twenty4, we have also made concrete efforts to align with the Kingdom’s larger vision. The nation is investing heavily in smart city projects and infrastructure developments, aimed at socio-economic growth. Tourism, shopping, and service sectors are key to this vision. And the early success is already making the KSA a gold mine for retailers.
