The sector is broadly divided into two major categories: food retail and non-food retail, each following distinct growth paths and shaped by unique market dynamics.
Food Retail: Sustained and Stable Growth
The food retail segment, valued at $127.2 billion in 2023, represents a significant portion of retail activity across the region. This segment is on track to grow to $162 billion by 2028, driven by a CAGR of 4.9%. The region’s rapidly expanding population, combined with high levels of urbanization, is a primary growth driver.
Saudi Arabia, with its large population and diverse consumer base, is seeing a notable shift toward organic and healthier food alternatives, a trend fueled by increased health consciousness among consumers. This shift is also supported by the rise in wellness trends and an influx of international health food brands responding to regional demand. Additionally, the proliferation of hypermarkets and supermarkets like Carrefour, Lulu, and Al Othaim, combined with online grocery platforms, is reshaping the way GCC consumers shop for food. With the adoption of AI-powered shopping assistants, online food delivery services, and innovations in supply chain logistics, the food retail sector is poised for continuous innovation..
Non-Food Retail: Accelerated Expansion
The non-food retail segment, which includes categories like fashion, electronics, furniture, and luxury goods, accounted for $182.5 billion in 2023. Projections suggest this figure will surge to $243.6 billion by 2028, driven by an impressive CAGR of 6.2%. The rise of affluent consumer classes in the region, coupled with increased access to disposable income, has spurred demand for premium products, especially in the luxury and fashion sectors. According to recent data, approximately 70% of consumers in the GCC have reported an increase in spending on luxury items1, reflecting the growing appetite for high-end brands such as Louis Vuitton, Gucci, and Rolex. 70% Of consumers in the GCC have reported an increase in spending on luxury items.
Additionally, the evolution of e-commerce and omnichannel retailing is reshaping consumer behavior. Retailers are increasingly adopting hybrid models that blend traditional in-store experiences with online shopping options, further enhancing accessibility and convenience. In parallel, the proliferation of organized retail spaces has played a critical role in supporting the sector’s expansion. By 2028, the GCC is expected to add 3.9 million square meters of new organized retail space, bringing the total gross leasable area (GLA) to approximately 24.3 million square meters. This wave of development is a direct response to the demand for modern, immersive shopping environments—further cementing the GCC’s status as a global retail powerhouse.
Moreover, the sector’s trajectory is being reshaped by three pivotal forces: technological innovation, economic diversification, and shifting consumer behaviors. From the adoption of AI and big data in retail operations to government-led reforms encouraging foreign investment and private-sector participation, these trends are setting the stage for a bold new chapter in the GCC’s retail evolution..
- THE DIGITAL SURGE: E-Commerce’s Meteoric Rise
A. Pandemic as a Catalyst
The COVID-19 pandemic marked a turning point for the retail sector in the GCC, acting as a powerful catalyst for digital transformation. With restrictions on physical movement and heightened concerns around health and safety, consumers and retailers were compelled to adapt rapidly to the digital realm. Traditional retailers accelerated the digitization of their operations, launching e-commerce platforms and improving their digital interfaces almost overnight.
Consumers, too, embraced the shift with remarkable speed. Demand surged for contactless payments, seamless delivery services, and the convenience of shopping from home. What began as a health necessity evolved into a preferred mode of consumption—setting a new standard for convenience and efficiency. In the UAE alone, e-commerce sales reached $3.9 billion in 2020, reflecting a dramatic 53% year-over-year increase.
Importantly, this digital acceleration was not limited to younger, tech-savvy consumers. Older demographics globally, including individuals aged 60 and above, began engaging with digital shopping platforms at unprecedented levels. The pandemic effectively broke down long-standing behavioral and generational barriers to e-commerce, contributing to a broader culture of digital inclusivity across the region.
The surge in digital transactions also reshaped consumer expectations around payments. The traditional dominance of cash-on-delivery steadily declined as mobile wallets, contactless cards, and other cashless payment solutions became mainstream. In Saudi Arabia, electronic payments made up 79% of all retail transactions in 2024, up from 70% the previous year—signaling a broader shift toward a cashless economy.
In Saudi Arabia, electronic payments made up 79% of all retail transactions in 2024, up from 70% the previous year—signaling a broader shift toward a cashless economy.
B. The Rise of Digital-First Retailers and Quick Commerce
As traditional retail struggled to maintain foot traffic during the pandemic, digital-first retailers rapidly scaled, proving that e-commerce was not just a passing trend but the future of retail in the region. Noon, a regional e-commerce giant, made a spectacular rise in the GCC market. Founded in 2017, it capitalized on the region’s demand for affordable and fast delivery. In 2020, Noon raised $1 billion in funding and positioned itself as one of the top three e-commerce players in the region. By 2021, Noon had expanded its reach to more than 30 cities in the GCC, dominating categories like electronics, fashion, and home goods.
Amazon.ae’s transformation in the UAE also highlights this shift. Leveraging its global infrastructure, Amazon expanded its offerings, localized its platform, and bolstered its delivery capabilities to compete with homegrown brands like Noon.
Alongside digital-first giants, traditional brick-and-mortar players in the GCC rapidly transformed their business models to meet new consumer expectations. Carrefour leveraged its existing supply chain, integrating e-commerce—mobile app, click-and-collect, same-day delivery, and personalized promotions—with its physical stores to meet the demand for online grocery shopping. Similarly, Lulu Hypermarket launched a revamped online platform offering live inventory, real-time promotions, and personalized shopping experiences for consumers.
Meanwhile, Panda Retail, the supermarket chain, took a strategic leap by partnering with the UK’s Ocado Group to implement artificial intelligence-driven supply chain management and automated fulfillment processes. This collaboration allows Panda to fulfill customer orders more efficiently and scale its online business quickly.
Supporting the retail ecosystem’s transformation are fintech and logistics startups, which play a crucial role in smoothing the transition to e-commerce. Tamara, a Saudi-based fintech company, raised $150 million from Goldman Sachs in 2022 to expand its “buy now, pay later” (BNPL) services, further integrating digital payment solutions into the shopping experience. Similarly, logistics startups like Halan and Fetchr are providing sophisticated last-mile delivery solutions, helping retailers get products to customers faster than ever before.
This is where Quick Commerce (Q-Commerce) becomes a game changer. The rapid delivery model focuses on delivering products—typically groceries, snacks, and household essentials—in under 30 minutes. The GCC’s fast-paced urban environment is the perfect breeding ground for this model, where time is of the essence, and consumers increasingly expect immediate satisfaction. By 2024, the GCC quick commerce market was valued at $2.1 billion, and is set to reach $22.6 billion by 2033, growing at a 30.2% CAGR. This growth is driven by urbanization, an increasingly tech-savvy population, and the convenience factor—quick commerce services cater to consumers who demand instantaneous fulfillment.
This YallaMarket, established in Dubai in 2021, offers ultra-fast delivery services, promising groceries and ready-made food delivered within 15 minutes. Beyond groceries, YallaMarket has diversified its offerings to include other daily essentials and plans to expand into other GCC markets, including Saudi Arabia and Qatar.
Carrefour and Lulu Hypermarket are also venturing into quick commerce, with both brands launching express delivery services to compete with startups. Carrefour’s Carrefour Express service promises 30-minute delivery in select areas.
