Department Stores in Saudi Arabia

2021 DEVELOPMENTS

Life goes back to the pre-covid normal

Having plunged by a third during 2020, the retail constant value sales (2021 prices) of department stores recovered only party in 2021, as COVID-19 restrictions were significantly eased. Value-oriented department stores, such as Centrepoint and RedTag, performed better than their premium counterparts during 2020, as the economic shock of the pandemic made many local consumers more price sensitive.

Competitive pricing helps leader Centrepoint consolidate its leadership position in a difficult economic environment

Al Bandar Trading Co, which operates department stores under the Centrepoint banner, has significantly strengthened its leadership position in department stores since the onset of the pandemic, accounting for almost half of their retail value sales in 2021. The brand has a strong presence across the Kingdom, as its stores are not limited to shopping centres or large cities.

Key players focus on enhancing the shopping experience for consumers

With competition, particularly from internet retailers like Amazon and Noon, intensifying, the leading department store chains are increasingly focused on providing consumers with an enhanced shopping experience, both online and in-store. There is a noticeable focus on developing services like buy now pay later, loyalty programmes and providing such services as stylists, in addition to faster deliveries and more flexible returns and refunds.

PROSPECTS AND OPPORTUNITIES

Strong competition from e-commerce will keep the constant value sales of department stores below their pre-pandemic level

The retail constant value sales (2021 prices) of department stores will expand over the course of the forecast period, but they will remain below their pre-pandemic level even at the end of it. The growing popularity of e-commerce will be a major factor in this, with local consumers set to increasingly purchase everything from apparel and footwear to consumer electronics online during the forecast period.

Value-oriented department stores will continue to outperform their luxury counterparts

With an elevated rate of inflation set to persist at least during the early part of the forecast period, value-oriented department stores like Centrepoint and RedTag are likely to remain the top performers among department stores. Luxury department stores will continue to invest in upgrading the in-store experience by modernising and enhancing interiors, utilising interactive screes and putting more emphasis on employee training.

Live shopping and augmented reality can help to make department stores relevant to younger consumers

Department stores will increasingly utilise such technologies as ‘live commerce’ (live streaming via social media) and augmented reality (AR), as they seek to keep younger consumers engaged. Live commerce combines the option of instantly purchasing of a featured product with audience participation via a chat function or reaction buttons.