VW takes new €2.5 billion hit for modifying diesel vehicles in US
Updated 29 September 2017
Reuters
BERLIN: Volkswagen will take a hit of around €2.5 billion (SR11 billion) to its third-quarter results because a program to buy back or retrofit diesel engine cars in North America is proving more complex and time-consuming than expected, it said on Friday.
Its shares dropped after the statement and were down 2.8 percent at 0724 GMT.
Volkswagen said it will publish third-quarter results on October 27.
Saudi Arabia’s retail market driven by youth, digital growth: experts say
Updated 13 sec ago
Nadin Hassan
RIYADH: Saudi Arabia’s retail sector is undergoing a significant transformation, driven by a digitally savvy young population, increasing consumer confidence, and shifting spending habits, according to a senior executive.
In an interview with Arab News at Retail Leaders Circle in Riyadh, Abdellah Iftahy, senior partner at McKinsey and Co., said that 75 percent of retail spending will come from Saudi youth by 2035.
“The consumer of tomorrow is not the one that we see today, and that will actually quite dramatically shape and shake the retail industry,” Iftahy said.
He continued: “Brands not relevant to today’s youth may struggle to compete. A key consumer trend is the rising importance of value for money, driven by a growing middle class in Saudi Arabia. This will shape the retail industry with a focus on mass-market, value-for-money offerings.”
Iftahy noted that Saudi Arabia’s e-commerce market is expected to grow significantly, with one in four retail transactions happening online by 2035.
This growth will be driven by increasing digital adoption, rising disposable income, and evolving consumer preferences within the Kingdom.
“Consumers are digitally savvy, and the young population actually transacts much more, both in terms of brand discovery but also in terms of clothing, if you will, to purchase online. E-commerce will continue to become a fast-growing channel going forward,” Iftahy said.
He mentioned that food service would be another growing channel, with significant investments expected in entertainment, hotels, hospitality, and restaurants. This, he added, would ultimately boost the food service sector for distributors supplying these outlets.
Echoing these sentiments, Karl Nader, partner and managing director at AlixPartners, pointed out that while consumer sentiment in the US and Europe is expected to decline in 2025, the Kingdom remains an exception.
“This is coming from a few areas. We’re increasing spend in grocery. But actually, within grocery, we expect Saudi consumers, what the data is telling us, is that there is a shift toward more value-added products, value-driven products, more discounters, private labels, and so on,” Nader said.
As a result, consumers are adjusting their financial habits to rebalance their budgets.
Karl Nader, partner and managing director at AlixPartners. AN photo by Loai El-Kellawy
Nader also stated that the increase in Saudi consumer spending on dining out and entertainment reflects strong consumer confidence, or short-term factors like post-pandemic recovery and government stimulus.
One reason for this increased spending is the greater availability of entertainment options, driven by government and Public Investment Fund-backed projects that are expanding the sector.
Luxury and e-commerce
While budget-conscious spending is increasing, the luxury retail sector is also set for expansion, with international brands looking to establish a stronger presence in Saudi Arabia.
“Fundamentally, retail is about demand, and if demand grows with population and expats coming, we see all of the subsectors benefiting from that,” Iftahy said.
He added: “I think some of the subsectors that may grow faster would be luxury, because what we see today is there is a lot of spend from Saudis outside of Saudi. So, if supply comes in, we expect this to grow at a higher rate than the rest of the industry.”
Iftahy went on to say that everything related to entertainment and hospitality is growing because people have been spending more time outside of their homes, and that trend is expected to continue.
The evolution of Saudi Arabia’s retail industry is also changing the role of traditional retail spaces.
Challenges vs. opportunities
Despite the opportunities, retailers in Saudi Arabia face key challenges, including rising operational costs, workforce productivity gaps, and the need for digital transformation.
“The productivity levels in Saudi retail are lower than global standards,” Iftahy noted. “Retailers must improve efficiency, leverage consumer data, and explore adjacent market opportunities.”
Additionally, the changing role of women in the workforce is influencing consumer behavior. “With more Saudi women working and managing careers, retailers need to rethink their engagement strategies,” Nader said.
Sustainability and ethical consumerism are also gaining traction among younger Saudi shoppers. “Brands that demonstrate a commitment to sustainability — through eco-friendly packaging, ethical sourcing, and corporate responsibility — will have an edge in building long-term customer loyalty,” Iftahy added.
Retail growth
Despite economic uncertainties in global markets, both Nader and Iftahy agree that Saudi Arabia’s retail sector is poised for continued growth.
“I think the Saudi market across the different sectors is still growing, and there are a lot of opportunities for growth that can be captured by local or international players,” said Iftahy.
“I would say the international players that have a value proposition and products that are differentiated and bring additional value to consumers have higher chances of winning.”
He highlighted that Saudi Arabia offered growth opportunities across consumer and retail segments, with the greatest potential for international brands offering unique products or value propositions.
As Vision 2030 continues to drive economic transformation, experts believe that businesses that embrace e-commerce, data-driven strategies, and experiential retail will thrive, while those that fail to adapt will struggle in an increasingly competitive market.
Saudi retailer Panda plans over 20 store openings in 2025, says COO
Updated 43 min 30 sec ago
Nadin Hassan Reem Walid
RIYADH: Saudi Arabia’s Panda Retail Co. is set to open more than 20 new stores in 2025, maintaining its pace of expansion from the previous year, according to the company’s chief operating officer.
Speaking to Arab News at the Retail Leaders Circle Global Forum 2025 in Riyadh, Abdullah Al-Sabban said the company’s focus this year will be on expanding within Saudi Arabia, particularly in Riyadh and remote areas.
Panda’s expansion supports its goal of sustainable retail growth through innovation while highlighting the resilience of Saudi Arabia’s retail sector, which recorded SR37.4 billion ($9.97 billion) in sales in the third quarter of 2024 despite global economic challenges.
Retail sales in the Kingdom are forecast to reach $161.4 billion by 2028, while the e-commerce sector is projected to exceed $13.2 billion by 2025, according to data platform Statista.
“Our theme for this year is ‘expanovation.’ Expanding the sites, stores, and locations is very important. But we’re more focused on Saudi Arabia right now, more focused on Riyadh, and more focused on remote areas. We want to make sure that everybody deserves to have a Panda experience across the Kingdom,” Al-Sabban said.
Self-funded growth
Al-Sabban clarified that the company does not require external funding for its current expansion plans.
“When you’re talking about 20 stores a year, that’s not an area where you need to go and find funding and support,” he said.
“We want to ensure sustainable growth. We want to make sure we have the right number and continue growing at the same trend that we’ve been growing over the last year or two.”
He noted that securing funding would only be necessary if the company aimed to double in size.
“Today, we’re running at 200 plus stores. If you told me I want to grow to 400 in a year, then yes, we need to get a huge amount of money. But I think it has to be organic growth. You can’t just go and expand because if we expand all our stores, we also need to expand our supply chain, logistics, commercial operations, and trucks,” he said.
“We need to make sure that we don’t face failure as we expand in a very dramatic way. So, for now, we are going to keep it smooth and steady to ensure the right sustainability going forward,” he added.
Regarding a potential initial public offering, Al-Sabban said Panda is still assessing the right time and approach for such a move.
“IPO is a very critical situation, and it’s not easy to answer that, especially since we’re part of a bigger group in Savola. There are some thoughts, but we’re still discussing, negotiating, and understanding what would be the right time and approach for something like that,” Al-Sabban said.
He said that going public is challenging and timing is key, emphasizing the need to ensure that an IPO is the right move for the organization.
Market positioning
In addition to opening new locations, Panda is investing in upgrading its existing stores through its customer experience and innovation program called CXR.
He added: “We are running both projects simultaneously, ensuring we improve our existing stores while opening new ones. Hopefully, by the end of the year, we will have opened more than 20 stores in new locations.”
Addressing competition in the Saudi retail sector, Al-Sabban emphasized Panda’s long-standing presence in the market.
“We’ve been one of the oldest retailers in Saudi Arabia. We’ve introduced the hypermarket model in Saudi Arabia. So, we’ve been leading the market. We know our customers,” Al-Sabban said. “I think this is the challenge that people coming from outside will face — understanding the customer behavior and mindset.”
He noted that while international retailers entering Saudi Arabia are targeting specific segments, Panda serves a broad customer base.
“Each outside supermarket coming in is focusing on a certain segment of customers. We are focusing on everybody in Saudi Arabia, from premium all the way to different levels,” Al-Sabban said.
He noted that while building brand trust is a challenge for international players, Panda has already earned consumer confidence, with its loyalty program, boasting over 10 million users, reflecting a strong customer base.
Al-Sabban said Panda remains committed to maintaining competitive pricing. “On the other hand, we’re working with our suppliers to ensure we have the best prices for our customers. Make sure that we maintain that perception of the lowest price and best quality,” Al-Sabban concluded.
“We want to make sure that we’re always known for the best prices, the best quality, and the freshness of our products for our customers.”
Chalhoub Group expands Saudi operations with new fulfillment hub and store
Updated 44 min 40 sec ago
Reina Takla Nour El-Shaeri
RIYADH: Chalhoub Group is strengthening its presence in Saudi Arabia by launching a regional fulfillment hub in Riyadh and inaugurating a new luxury store in Solitaire Mall.
The company’s latest investments underscore its commitment to the Kingdom’s evolving retail landscape, in line with its long-term expansion strategy.
The new fulfillment center, located in the Riyadh free zone near King Khalid International Airport, is designed to boost the company’s e-commerce and distribution operations, serving Saudi Arabia and the broader region.
In an interview with Arab News during the Retail Leaders Circle Global Forum 2025 in Riyadh, Patrick Chalhoub, executive chairman at Chalhoub Group, highlighted the facility’s strategic role.
“It’s a fulfillment center, which is aiming to really service both our digital and e-commerce drive, our distribution in Saudi Arabia but also beyond Saudi Arabia from Riyadh, gradually, to be really a hub of distribution,” he said.
The hub is expected to process up to 100 million luxury products at full capacity, leveraging advanced technology to optimize logistics and improve delivery speed.
“The aim, like in e-commerce, is to be able to fulfill in Riyadh within two hours, in Saudi Arabia within 24 hours, outside Saudi Arabia in less than three days,” Chalhoub stated.
“This will be and is the heart of the market, so it’s better to be based in the heart of the market and not be based outside and servicing the market,” he remarked, referring to the Kingdom as the center of luxury retail.
Chalhoub Group has been present in the Saudi market since 1959 and has witnessed significant policy and economic shifts over the decades, the executive chairman highlighted.
The company now employs approximately 5,000 people in the Kingdom, with 78 percent of its workforce being Saudi nationals and 74 percent women.
As part of its retail expansion, Chalhoub Group is also set to open a new store in Solitaire Mall in Riyadh on Feb. 12.
The store is designed to deliver an enhanced shopping experience, reflecting the company’s focus on innovation in retail.
Chalhoub highlighted that consumer behavior in the Middle East differs significantly from other regions, driven by cultural and social dynamics.
Unlike Western markets, where individual preferences often dictate shopping trends, the Middle East places a strong emphasis on family-oriented experiences.
Human connection is central in shaping commerce, with relationships and social interactions deeply influencing purchasing decisions.
He underlined that while some of these characteristics can also be found in regions like Latin America and parts of Asia, they are far less prevalent in Western markets.
Additionally, the retail landscape within Saudi Arabia itself is highly diverse, varying by region. Consumer preferences in the western, central, and eastern parts of the Kingdom are distinct, reflecting localized tastes and traditions.
Chalhoub pointed out that Saudi Arabia’s rapidly growing young population is another key driver of change.
With high birth rates and large families, the country’s demographics present significant opportunities for brands. Increasing education levels and digital connectivity are also shaping a new generation of more knowledgeable, globally aware, and tech-savvy consumers.
He emphasized that this evolving demographic is one of the most valuable assets for the Kingdom and the broader Gulf region.
Chalhoub provided insights into the global luxury market, emphasizing the Middle East’s growing but relatively small share.
The worldwide luxury market — including beauty, fashion, jewelry, watches, and gift items — is valued at approximately $380 billion, with the Middle East accounting for $12.5 billion, or around 3 percent to 4 percent of the total.
However, for successful brands, the region can represent between 5 percent and 7 percent of their global sales, highlighting its potential for further growth.
Saudi Arabia’s luxury market is currently valued at nearly $3.5 billion, making up less than 1 percent of the global luxury sector.
In comparison, the UAE, driven by tourism and local demand, boasts a luxury market exceeding $7 billion to $8 billion.
Chalhoub also noted that despite their smaller populations, countries like Qatar and Kuwait have well-established luxury fashion markets, in some cases surpassing the Kingdom’s in terms of spending per capita.
Given Saudi Arabia’s population of over 33 million, compared to Qatar’s 2 million and Kuwait’s 5 million, he suggested there is room for significant market expansion in the Kingdom.
Closing Bell: Saudi main index closes in red at 12,414
Updated 05 February 2025
Miguel Hadchity
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Wednesday, losing 19.53 points, or 0.16 percent, to close at 12,414.40.
The total trading turnover of the benchmark index was SR7.01 billion ($1.87 billion), as 102 stocks advanced, while 122 retreated.
The MSCI Tadawul Index decreased by 4.85 points, or 0.31 percent, to close at 1,543.76.
The Kingdom’s parallel market, Nomu, rose 0.17 percent gaining 54.22 points to close at 31,250.59. This comes as 33 stocks advanced, while 47 retreated.
The best-performing stock was Ash-Sharqiyah Development Co. with its share price surging by 6.74 percent to SR22.82.
Other top performers included the Zamil Industrial Investment Co., which saw its share price rise by 4.61 percent to SR35.20, and Americana Restaurants International PLC - Foreign Co., which saw a 4.44 percent increase to SR2.59.
The worst performer of the day was Kingdom Holding Co., whose share price fell by 2.97 percent to SR10.46.
The Co. for Cooperative Insurance and SABIC Agri-Nutrients Co. also saw declines, with their shares dropping by 2.3 percent and 2.27 percent to SR153.20 and SR112, respectively.
On the announcements front, Arab National Bank announced its annual financial results for 2024 with net profits before zakat and income tax reaching SR5.7 billion up by 21.1 percent compared to the previous year.
In a statement on Tadawul, the company said the surge was driven by higher net special commission income, fee and commission income, trading gains, and dividend income. It was also supported by lower impairment charges on real estate and reduced allowance charges for expected credit losses and other provisions.
“However, this growth was partially offset by an increase in the costs related to salaries and employee related expenses, depreciation and amortization, other general and administrative expenses and premises related expenses, along with a decline in net gains on non-trading instruments, net other operating income and net exchange income,” the statement added.
ANB’s total comprehensive income amounted to SR4.6 billion in 2024, and total operations profit reached SR9.5 billion.
In today’s trading session, the shares of Arab National Bank traded 0.37 percent lower on the main market to close at SR21.44.
Azad Properties, NHC join hands to develop Souq7 Riyadh
Updated 05 February 2025
Reina Takla MOHAMMED AL-KINANI
RIYADH: Saudi Arabia’s Azad Properties and the NHC have agreed to develop the Souq7 Riyadh project, reflecting a public-private partnership aligned with Vision 2030 goals.
In an interview with Arab News on the sidelines of the 2025 RLC Global Forum, Ayman Al-Burti, CEO of Azad Properties emphasized that partnerships are a key pillar of his company’s expansion strategy.
The agreement comes amid Saudi Arabia’s drive to bolster the private sector and foster sustainable partnerships for development. It also underlines the Kingdom’s rapid real estate advancements, driven by innovative, eco-conscious urban developments and substantial infrastructure investments.
“One of our most exciting recent collaborations is with the NHC, with whom we have signed a MoU to develop Souq7 Riyadh,” Al-Burti said.
He added that the 700,000 sq. meter project will establish a dynamic commercial hub in the Al-Khuzam suburb, showcasing the company’s dedication to creating spaces that drive economic growth.
“This initiative builds on the success of Souq7 Jeddah, a project that transformed traditional retail by integrating innovation and community engagement. With the NHC, we aim to replicate this success in Riyadh, offering new opportunities for both local businesses and global brands,” Al-Burti said.
Ayman Al-Burti, CEO of Azad Properties.
The CEO of the real estate developer highlighted that when Azad Properties was founded in 2017, it had a clear mission of creating spaces deeply rooted in the needs and aspirations of their communities, contributing to their success in the Saudi real estate market.
He added that today, under the umbrella of AWJ Holding, they manage 12 properties across the retail, logistics, and commercial sectors, each designed to reflect both the history and the evolving needs of the surrounding districts.
“Guided by Saudi Vision 2030, we have built destinations that inspire and elevate daily life. This is what differentiates Azad. We are not just building projects; we are contributing to a brighter, more sustainable future for Saudi Arabia,” he said.
Speaking about their plans to list on the Saudi market, he stated that the dates and timelines will be announced in due course.
“While the timeline for the public listing will be announced at a later stage, we are finalizing our plans and focusing on key milestones. These include optimizing our portfolio, enhancing corporate governance, and increasing stakeholder engagement,” he said, adding that their aim is to ensure a smooth and successful initial public offering preparation process that supports our long-term growth and strategic objectives.
He pointed out that they have announced the appointment of PwC, a global leader in IPO advisory services, to support their journey toward going public. “These efforts are in line with our 5-year strategy and efforts to enhancing our organizational, operational, and governance frameworks to meet the highest IPO standards,” he said.
Al-Burti added that their strategy focuses on strengthening their diversified portfolio, which includes lifestyle retail, logistics, and commercial properties.
“Beyond portfolio management, we are also strengthening our digital infrastructure and incorporating sustainability principles across our developments. This positions Azad Properties as a forward-thinking leader in the real estate market,” he said.
The executive also emphasized that competition is something they welcome, as it drives innovation and raises industry standards. He added that Azad Properties sees its role as contributing to the Kingdom’s broader vision of becoming a world-class destination with diverse offerings in the sector.
“Saudi Arabia’s real estate sector is undergoing a transformation in line with Vision 2030. We are proud to play a part in that change by offering developments that add to the richness and variety of destinations across the Kingdom. Together with other players in the market, we are enhancing the appeal of Saudi Arabia as a hub of cultural, commercial, and lifestyle excellence,” he said.
As for Azad Properties’ approach to the environment amid the company’s expansion plans, he stated that sustainability is integrated into every phase of their projects.
He emphasized that the company focuses on creating lasting impact through solutions that preserve resources, enhance energy efficiency, and reduce waste while ensuring their developments remain adaptable to future needs, fully aligning with Saudi Arabia’s Vision 2030 goals.
The CEO highlighted that the recent announcements are just the beginning of what lies ahead.
“One of Azad’s key areas of expansion is in the logistics and commercial sectors, aligning with Saudi Arabia’s major efforts to develop free zones and enhance its logistics infrastructure under Vision 2030.”
He also underlined that these initiatives are designed to diversify the economy, attract foreign investment, and create opportunities for businesses to expand their operations in the Kingdom.
“Our strategy involves expanding our portfolio through targeted projects that support both local and international business needs. With more collaborations on the horizon, we remain focused on delivering developments that align with Vision 2030 and enhance the Kingdom’s position as a leading destination for investment and innovation,” he concluded.
Azad has developed the Souk7 Jeddah project, which spans over 700,000 sq. meters, with a rental area exceeding 400,000 sq. meters. The project includes more than 4,000 stores spread across 114 buildings, with an estimated cost of SR 1.5 billion ($400 million).
It aims to generate annual retail sales exceeding SR2 billion and create more than 24,000 jobs for Saudi youth, contributing to the country’s economic growth and aligning with the Kingdom’s promising vision.
