The grocery retail markets in the UAE and Saudi Arabia are poised for significant expansion, with a new study by global consultancy Oliver Wyman highlighting changing consumer behavior and intensifying competition.
The UAE’s grocery sector, valued at $40 billion, is projected to grow at a compound annual growth rate (CAGR) of 6.5% over the next five years. Saudi Arabia’s market, currently worth $62 billion, is expected to grow at a CAGR of 4.2% during the same period.
Oliver Wyman’s Customer Perception Map (CPM) survey, which for the first time included the UAE and Saudi Arabia, revealed consumer priorities shaping the sector. In both countries, value emerged as the most critical factor influencing shopping decisions, cited by 53% of UAE respondents and 51% in Saudi Arabia. Quality ranked higher in the UAE (20%) compared to Saudi Arabia (18%), while product range was more important for Saudi consumers (20%) than their UAE counterparts (18%).
The survey also found high interest in discount models, with 70% of Saudi and 60% of UAE respondents expressing willingness to shop at such outlets. Familiarity with global discount brands like Aldi and Lidl further underscored this trend, with over 90% of Saudi and 75% of UAE respondents indicating they would patronize these stores if available locally.
“Discount and value-focused models have reshaped Western grocery markets, and regional retailers must prepare for similar disruptions,” said Alexander Poehl, retail and consumer partner at Oliver Wyman.
Intensifying Competition in the UAE and Saudi Arabia
The report highlighted the UAE’s advanced retail landscape, where competition is driving differentiation. Examples include Viva’s focus on discount models and Spinneys’ emphasis on premium products and fresh categories. In contrast, Saudi Arabia’s retailers still have significant room for expansion, though the report urges them to adopt differentiation strategies to future-proof their operations.
Joe Abi Akl, head of Oliver Wyman’s retail and consumer practice for the Middle East, emphasized the need for forward-thinking strategies. “Retailers must adapt to shifting consumer preferences, rising competition, and emerging technologies to secure long-term success,” he said.
Opportunities in Local Products and Technology
The report identified high interest in local produce, with over 90% of respondents in both markets deliberately seeking local fruits and vegetables. Additionally, tech-savvy populations in the UAE and Saudi Arabia present opportunities for personalized promotions, AI-driven solutions, and innovative store concepts.
The survey, conducted in early 2024, included over 20 UAE grocery retailers and 15 from Saudi Arabia, with responses from 1,000 UAE residents and 1,200 Saudis. The findings underline the urgency for retailers to evolve and differentiate in increasingly saturated and competitive markets.
