Infrastructure, Digital Trends Drive Evolution of Saudi Retail Market

Asharq Al-Awsat

06-02-2025

Saudi Arabia is emerging as one of the region's most attractive investment markets, with significant growth potential in the retail sector projected through 2035. The Kingdom is undergoing major transformations in infrastructure and digital consumer behavior, driving economic expansion and reshaping market dynamics, according to Abdellah Iftahy, senior partner at McKinsey & Company in the Middle East region.
In an interview with Asharq Al-Awsat about the sector's future, Iftahy asserted that growth in Saudi Arabia's retail market is inevitable, primarily driven by the country's youth and expanding middle class. These demographics form the backbone of consumer spending, possess strong digital skills, and are increasingly seeking omnichannel shopping experiences.
Speaking on the sidelines of the Global Retail Leaders Forum 2025 in Riyadh, Iftahy emphasized the need for retailers to adopt a strategic approach to digital channels. He highlighted the rapid expansion of e-commerce and social commerce, both of which are playing a crucial role in the evolution of the local market.
Additionally, Iftahy pointed to a noticeable resurgence in cross-border trade, driven by rising consumer demand for global products and services. As these channels continue to expand, he stressed the importance of retailers establishing a strong presence in these emerging areas and adapting to evolving consumer trends.
'Consumption growth in Saudi Arabia is closely tied to population dynamics—whether among citizens, expatriates, or tourists,' Iftahy stated. He noted that the Kingdom's substantial investments in attracting visitors and residents are further boosting economic activity and stimulating the retail sector.
Despite the sector's promising outlook, Iftahy acknowledged global structural challenges, including inflation, supply chain disruptions, and geopolitical tensions. While these factors pose risks, they also create opportunities for companies that can navigate the shifting landscape and enhance efficiency in their core markets.
He also underscored the growing role of digitalization, stating that Saudi consumers are increasingly proficient in digital technologies.
'This presents a key opportunity for retailers to leverage big data and artificial intelligence to enhance customer experiences, personalize offerings, and create added value for long-term, sustainable growth,' he remarked.