Department Stores in Saudi Arabia

PROSPECTS

Department stores’ performance set to improve over forecast period

While the department stores channel saw continued negative growth in 2019, its performance nonetheless represented a considerable improvement on that of the previous year. Value-oriented department stores such as Centerpoint and RedTag performed well due to an increase in strategic store locations, as well as promotional intensity.

Upmarket department stores invest in facilities, e-commerce remains undeveloped

Luxury department stores are seen to be investing in upgrading the in-store experience by modernising and enhancing their interiors. They are also utilising interactive screen technology and working to improve customer service by educating employees, in order to better serve consumers and stimulate sales.

Kiosks a popular format to overcome property costs, franchisers benefit from department store footfall

As real estate costs are high in Saudi Arabia, and overall dynamics remain relatively uncertain, many international brands prefer to utilise kiosks in well-known department stores rather than invest in standalone outlets. Many players also follow the retail strategy set in accordance with local franchisers, which launch brands through existing department stores to feature the brand’s entry into the country.

COMPETITIVE LANDSCAPE

Centrepoint and RedTag make notable share gains as consumers trade down

Al Bandar Trading Co consolidated its leading position in the department stores channel in 2019, with a considerable value share gain. Its position is thanks to the leading brand, Centrepoint.

Robinsons and Rubaiyat open new outlets

Robinsons opened its first department store in Saudi Arabia at the end of the review period, located at the Kingdom Mall in Riyadh. Al-Futtaim brought the leading fashion department store Robinsons to the Middle East through a joint venture agreement with luxury powerhouse, Chalhoub Group.

Local players benefit from consumer awareness, Morjan to invest in new outlets

Local department stores such as Al Haram Plaza and Shobra Center continue to gain popularity due to their longstanding presence, wide product variety, ranging from apparel and footwear to bedding and homeware, and economic pricing. These factors make them particularly popular among lower- and middle-income groups.

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