Luxury, e-commerce to lead retail sector’s contribution to GCC economy

The evolution of physical stores revolves around the idea that retailers are keen on transforming the consumers’ retail journey and assuring that the in-store visit is a rich experience by showcasing product lines and merging brand activations. (Shutterstock)
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Updated 12 March 2023
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Luxury, e-commerce to lead retail sector’s contribution to GCC economy

  • Malls have stepped away from acting as just retail outlets to become social and entertainment hubs as well

RIYADH: Luxury and e-commerce retail sub sectors are projected to lead the industry’s contribution to the Gulf Cooperation Council’s economy, according to Retail Leaders Circle Chairman Panos Linardos.

“Luxury continues to perform well and favors the in-store model, as consumers investing significantly in a product want to examine it physically before committing to purchase,” Linardos told Arab News.

“E-commerce is growing fast as customers continue their buying habits from the pandemic. Spending power among younger digital buyers, who generally enjoy the convenience of online shopping, will also contribute significantly to the growth of retail in the GCC,” the chairman added.

In addition to luxury and e-commerce, domestic and regional retailers are also contributing to the GCC economy as a hike in prices alongside supply chain disruptions in key European countries are hindering the delivery and cost-competitiveness of their export products.

Moreover, integrating physical and digital retail, conscientious consumerism, and the evolution of physical stores are three key trends in the industry that are helping propel its growth which is estimated to hit SR596 billion ($158.85 billion) by 2024.

Speaking on integrating physical and digital retail, Linardos notes that while several retailers have incorporated digital technologies to their businesses, they are yet to design the entire customer journey around digital integration.

“Artificial intelligence will help to anticipate and respond to shifting consumer demand patterns by streamlining inventory processes, increasing supply chain efficiency and tracking production, and augmented reality will make the online and physical shopping experiences more immersive, while also supporting product customization and enhance brand loyalty,” the chairman explained.

As for conscientious consumerism, this refers to the fact that consumers are becoming more aware of the impact their decisions are having on the environment and on the local communities as well.

“Transparent reporting and independent auditing of sustainability claims are going to become increasingly significant to retailers hoping to protect and grow their market share,” he disclosed.

Luxury continues to perform well and favors the in-store model, as consumers investing significantly in a product want to examine it physically before committing to purchase.

Panos Linardos, Retail Leaders Circle chairman

Meanwhile, the evolution of physical stores revolves around the idea that retailers are keen on transforming the consumers’ retail journey and assuring that the in-store visit is a rich experience by showcasing main product lines and merging brand activations and in-store technologies to substitute the conventional inventory-driven model.

“The ability of retailers to allow customers to order products from the entire product line in-store and have them delivered quickly and seamlessly reduces the need to keep large, comprehensive product inventories on-site and instead they can devote space to more creative product displays and in-store promotion activities,” Linardos emphasized.

With regards to the competitiveness in the Middle East, Linardos goes on to argue that malls in the region have stepped away from being single-minded and acting as just retail outlets to become social and entertainment hubs as well.

This is mainly attributed to the high temperatures associated with Middle Eastern countries, making it hard for consumers to enjoy the traditional “high street” retail model common in more temperate regions.

“Mall investment, especially in Saudi Arabia, continues to expand. To enhance their competitive appeal, new retail spaces should be seeking to integrate more digitally enabled, immersive experiences into their offer to attract consumers and retain loyalty,” he said.

Moving on to ways in which malls in the region can attract new consumers, it is evident that the more customized or immersive the experience is, the more likely that this is going to drive high purchase intention and diminish product returns.

“The question retailers should be asking is not ‘Shall we invest in immersive technology?’ but rather ‘How long will it be before immersive technology is a basic cost of entry?’ according to the chairman.

HIGHLIGHTS

• The end goal of the Retail Leaders Circle Summit is to provide the world’s retailers, brand owners, and suppliers with the intellectual and social capital they need in order to further prosper and succeed.

• The summit is expecting more than 4,000 attendees, 750 retail firms, 500 sector CEOs, and over 75 speakers from all around the world.

• Influential leaders, industry pioneers, innovators, investors, as well as senior policymakers are on track to partake in the event and take stock of an industry in the midst of rapid reinvention.

Retail Leaders Circle is the region’s largest and most significant meeting place for the retail and commerce industries.

The two-day event is set to kick off on Mar. 7 and is being held under the theme “Digital Economy & Purposeful Growth.”

Influential leaders, industry pioneers, innovators, investors, as well as senior policymakers are on track to partake in the event and take stock of an industry in the midst of rapid reinvention.

During the course of the event, all participants will tackle and debate on what the future holds for retail and commerce.

“Digital is making the biggest impact on the modern retail landscape, and it will be a central to the discussions at the Retail Leaders Circle MENA Summit,” Linardos highlighted.

The summit is expecting more than 4,000 attendees, 750 retail firms, 500 sector CEOs, and over 75 speakers from around the world.

The event will host thought-provoking sessions, task-force roundtables, engaging live experiences, in addition to a retail exhibition.

The retail exhibition — which will be presented by the Saudi 100 Brands initiative under the Saudi Fashion Commission — offers a portal for some of the Kingdom’s homegrown brands to showcase their offerings.

The end goal of the Retail Leaders Circle Summit is to provide the world’s retailers, brand owners, and suppliers with the intellectual and social capital they need in order to further prosper and succeed.

“The Retail Leaders Circle is the most important strategic forum for the MENA retail sector, bringing regional and global thought leaders together to examine regionally significant emerging trends and drive positive industry change,” Linardos stressed.


Saudi Arabia launches company to transform Asir into global tourism hub

Updated 14 November 2024
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Saudi Arabia launches company to transform Asir into global tourism hub

RIYADH: Saudi Arabia’s Asir region has launched a new tourism venture through a partnership with the aim of creating a holding company to transform the area into a global tourist destination.

The collaboration between Aseer Investment Co., a subsidiary of the Public Investment Fund, and Rikaz Real Estate, aligns with the goal of transforming Asir into a world-class tourist destination that combines authentic heritage with sustainable development, according to the Saudi Press Agency.

The holding company seeks to contribute to enhancing a tourism environment that enriches guests’ experiences with unique offerings, connecting visitors to local culture and community traditions, SPA reported.

It is also committed to promoting sustainable tourism by protecting the environment, developing local communities, and collaborating with artisans and local businesses to preserve the authenticity of Asir’s heritage.

In October, the Kingdom’s Abha city secured a new investment partnership to boost tourism by developing culturally rich dining and retail experiences. 

PIF firm Aseer Investment Co. signed the deal with Nimr Real Estate and the National Co. for Tourism, or Syahya, to propel the project, the Saudi Press Agency reported. 

This aligns with the objectives of developing Abha, which will offer a range of benefits, including retail stores that reflect the cultural heritage of the Asir region.

The partnership also seeks to be a model for multiple collaborations with private sector investors and create more regional job opportunities.

Investments in the region are expected to create between 14,000 and 18,000 job prospects and contribute to up to 6 percent of the non-oil gross domestic product within 10 years, as outlined by AIC Chief Executive Osama Al-Othman in February.

Saudi Arabia emerged as a leader in tourism growth among G20 nations, experiencing a 73 percent increase in international visitors in the first seven months of 2024 compared to 2019.

According to the UN World Tourism Barometer report in September, the Kingdom welcomed 17.5 million international tourists during this timeframe, showcasing its growing allure as a global travel destination.

This surge is part of the nation’s Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil revenues.

“Saudi Arabia cements its global leadership and takes the first spot among G20 countries in international tourist arrivals growth, with a 73 percent increase in the first seven months of 2024 compared to the same period in 2019,” stated the Saudi Tourism Ministry on X.

Under the National Tourism Strategy, the Kingdom aims to attract 150 million visitors by 2030 and increase the sector’s contribution to the nation’s gross domestic product from 6 percent to 10 percent.

These goals reflect the country’s commitment to strengthening its tourism sector and enhancing its global appeal.


IMF, Saudi Arabia announce new annual conference tackling global economic challenges

Updated 14 November 2024
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IMF, Saudi Arabia announce new annual conference tackling global economic challenges

RIYADH: The International Monetary Fund and Saudi Arabia will jointly organize a high-level annual conference in AlUla to discuss global economic challenges, it has been announced.

The AlUla Conference for Emerging Market Economies will bring together a select group of finance ministers, central bank governors, and policymakers, along with leaders from the public and private sectors, representatives from international institutions, and members of academia.

According to a joint statement by Kristalina Georgieva, managing director of IMF and the Minister of Finance Mohammed Al-Jadaan, the first edition of this series will be held from Feb. 16-17, 2025.

“The world is confronting deeper and more frequent shocks, including from conflicts, geoeconomic fragmentation, pandemics, climate change, food insecurity, and the digital divide,” according to the statement.

They continued: “If not addressed adequately, these shocks put at risk emerging market economies’ hard-won improvements in living standards. Such setbacks would affect large segments of the world population and put at risk global growth and macro-financial stability.”

The gathering will offer a platform to exchange views on domestic, regional, and global economic developments and discuss policies and reforms to spur inclusive prosperity and build resilience supported by international cooperation.

Recent economic issues affecting the global landscape include rising inflation rates, driven by supply chain disruptions and increased demand for goods post-pandemic.

Supply chain delays continue to impact the availability of essential products, causing bottlenecks in manufacturing and increasing costs.

Additionally, geopolitical conflicts, such as the war in Gaza, have disrupted energy supplies and food exports, leading to global food insecurity and fuel price volatility.

Concerns over the using the Red Sea shipping lane increased dramatically at the end of 2023, when Houthi militants stepped up attacks on vessels in the wake of the escalation of the Israel-Hamas conflict.

The effects of these challenges pose significant risks to economic stability, especially for emerging markets that are more vulnerable to such global shocks.

The AlUla conference is the latest example of the growing relationship between Saudi Arabia and the IMF, with the organization in April establishing its first office in the Middle East and North Africa region in Riyadh.

The facility was launched during the Joint Regional Conference on Industrial Policy for Diversification, jointly organized by the IMF and the Ministry of Finance, on April 24.

The new office aims to strengthen capacity building, regional surveillance, and outreach to foster stability, growth, and integration, thereby promoting partnerships in the Middle East and beyond, according to the Saudi Press Agency.

The work hub will promote closer collaboration between the IMF and regional institutions, governments, and other stakeholders, according to the SPA report.

The IMF also expressed its gratitude to the Kingdom for its financial contribution aimed at supporting capacity development in member countries, including fragile states.


Closing Bell: Saudi Arabia’s TASI ends in the red, trading volume hits $2.95bn

Updated 14 November 2024
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Closing Bell: Saudi Arabia’s TASI ends in the red, trading volume hits $2.95bn

RIYADH: The Tadawul All Share Index concluded the last session of the week at 11,791.18 points, down by 139.27 points or 1.17 percent.

The MSCI Tadawul 30 Index also saw a decline, dropping 19.18 points to close at 1,481.36, reflecting a 1.28 percent loss. In contrast, the parallel market Nomu finished Thursday’s trading at 29,467.71 points, up 262.18 points or 0.90 percent.

TASI reported a trading volume of SR11.10 billion ($2.95 billion), with 51 stocks advancing and 182 declining. The top performer of the day was Saudi Cable Co., which saw its share price surge by 5.10 percent to SR92.70.

Other strong performers included Shatirah House Restaurant Co., which gained 3.75 percent to reach SR21, and Arabian Mills for Food Products Co., which rose by 3.08 percent to SR53.60. Naseej International Trading Co. and Saudi Real Estate Co. also posted notable gains.

The worst performer was Saudi Real Estate Co., which dropped 4.94 percent to close at SR10. Alkhaleej Training and Education Co. and Red Sea International Co. also suffered significant losses, with their share prices falling by 4.90 percent to SR29.10 and 4.84 percent to SR68.80, respectively. Astra Industrial Group and Al-Omran Industrial Trading Co. were also among the day’s largest decliners.

On the parallel market, Nomu, Alqemam for Computer Systems Co. was the top gainer, rising by 9.57 percent to SR103. Other gainers included Dar Almarkabah for Renting Cars Co., which climbed 9.10 percent to SR42.55, and Horizon Educational Co., which rose by 7.58 percent to SR79.50. Mulkia Investment Co. and Knowledge Tower Trading Co. also saw significant increases.

On the losing side of Nomu, WSM for Information Technology Co. recorded the largest drop, with its share price falling by 6.18 percent to SR44. Osool and Bakheet Investment Co. and Natural Gas Distribution Co. also experienced notable declines, with their shares dropping by 5.37 percent to SR37.85 and 5 percent to SR57, respectively.

 


Leaders stress urgent need for climate finance at COP29 ministerial dialogue

Updated 14 November 2024
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Leaders stress urgent need for climate finance at COP29 ministerial dialogue

RIYADH: Global climate finance continues to fall short of expectations, as leaders gathered at the COP29 Ministerial Dialogue on Climate Finance to address ongoing challenges and map out next steps.

The meeting, held in Baku, Azerbaijan, underscored the urgent need for increased and more effective funding mechanisms. COP29 President Mukhtar Babayev emphasized that climate finance plays a central role in the broader negotiations.

“The urgency of the situation is evident,” Babayev remarked, pointing to the severe impacts of climate change observed over the past year. “Recently, we witnessed catastrophic flooding in Spain, and in the Pacific region, island communities are faced with the possibility of being wiped out entirely. We must act now; failure to do so will have grave human and economic costs.”

The president stressed the importance of fulfilling the $100 billion-per-year commitment made in Copenhagen and reiterated in Paris, urging leaders to reflect on lessons learned and consider the quality and allocation of financial resources.

Developing countries once again voiced the need for tangible action, with Fiji’s Deputy Prime Minister Biman Prasad highlighting the importance of aligning climate finance with the goals of the Paris Agreement.

“This is a ‘put your money where your mouth is’ moment,” Prasad said. “The 1.5°C temperature goal and the Paris Agreement itself will not be deliverable from both an economic and scientific perspective if we do not invest right. The New Collective Quantified Goal is critical for aligning our priorities and addressing major inconsistencies,” he added.

The EU reaffirmed its commitment to climate finance, noting that the $100 billion goal was first collectively met in 2022, with contributions reaching $115.9 billion.

“The EU and its member states contributed €28.5 billion, or around $30 billion, in climate finance from public sources,” a representative said. “Almost half of the public funding came in the form of grants, with a significant portion provided on concessional terms. We need to make further efforts to facilitate the mobilization of private funding, as it remains a key source of climate finance,” the representative added.

Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, emphasized the critical juncture at which the global community now finds itself.

“The huge opportunities we have and the terrible risks we face are real,” Stiell said. “It’s time to take action to bridge gaps, solve problems, and come together to ensure climate finance and climate action benefit everyone.”

Sweden also announced a significant new contribution, with Ministerial representatives unveiling an $8 billion Swedish krona ($723.6 million) pledge to the second replenishment of the Green Climate Fund.

“This makes Sweden the largest per capita donor to the GCF among the larger donors,” the Swedish representative noted.

As discussions progressed, leaders acknowledged the widening gap between current financial commitments and the funds required to meet the 1.5°C target. There were calls for more robust mobilization of both public and private finance.

The COP29 president concluded: “Delivering the climate fairness that developing countries need is one of the main metrics of shared success. We can learn from past efforts to inform the road ahead, but significant determination and leadership from all parties are required to bridge these critical gaps.”


IsDB, multilateral banks aim for $120bn in annual climate finance by 2030

Updated 14 November 2024
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IsDB, multilateral banks aim for $120bn in annual climate finance by 2030

RIYADH: Multilateral development banks are aiming to mobilize $120 billion annually by 2030 for climate financing in low- and middle-income countries, according to recent projections.

This ambitious funding goal includes $42 billion dedicated to climate adaptation efforts, with an additional $65 billion expected to come from private sector investments.

The target was unveiled in a joint statement issued during COP29 in Baku, Azerbaijan, by several prominent MDBs, including the Islamic Development Bank, African Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Development Bank of the Council of Europe, the European Bank for Reconstruction and Development, and the European Investment Bank. Additionally, the Inter-American Development Bank, the New Development Bank, and the World Bank Group are part of the initiative.

The statement emphasized that setting a strong, collective climate finance target is crucial to meeting the goals of the Paris Agreement.

“A new collective quantitative target on climate finance that is both strong and ambitious is essential to achieving the Paris Agreement’s objectives,” the statement read. “We urge parties to reach a robust conclusion on this target.”

For high-income countries, the MDBs have set a target of $50 billion in annual climate finance, including $7 billion specifically for adaptation, with private sector mobilization expected to generate an additional $65 billion. This new target builds on the success of previous climate finance goals, with MDBs already surpassing their climate financing projections for 2025. Since 2019, the MDBs have increased direct climate finance by 25 percent and doubled climate mobilization efforts over the past year.

In response to the urgent need for enhanced climate action, the MDBs also emphasized the importance of establishing a new collective quantitative target for climate finance at COP29. The institutions highlighted their commitment to ensuring that the finance provided leads to meaningful, measurable impacts on both climate mitigation and adaptation.

To further enhance the effectiveness of climate finance, the MDBs released the “Common Approach to Measuring Climate Outcomes,” a framework that provides standardized indicators for tracking global progress on climate mitigation and adaptation. This framework aims to better align MDB activities with global climate goals and improve transparency in measuring outcomes.

Additionally, the MDBs published their “Country Climate Action Platforms,” reaffirming their commitment to strengthening collaboration between host countries, MDBs, donors, and the private sector. These platforms are designed to ensure that climate finance is targeted effectively and that developing countries have the support they need to implement robust climate policies.

COP29 has emerged as a critical moment in global climate negotiations, especially for the Global South, where developing nations are pushing for significant climate financing, stronger adaptation measures, and equitable policy outcomes. These countries continue to advocate for a climate finance framework based on the principle of common but differentiated responsibilities, recognizing that nations’ contributions should reflect their respective capabilities and historical responsibilities.