Iraq’s retailing industry faced stiff challenges in 2020 and 2021 as the COVID-19 pandemic discouraged consumers from shopping in crowded stores. With incomes under pressure, many were also reluctant to spend money unless strictly necessary and this also undermined the ability of retailers to generate income.
Iraq’s retailing industry came under immense pressure during 2020 as the adverse economic impact of the COVID-19 pandemic took its toll on consumer spending. The country’s economy is still in the middle of its transition to a fully functioning market economy and this means that the national economy is still quite vulnerable to significant fluctuations in key areas when external factors such as the COVID-19 pandemic create economic pressures.
The past decade has seen slow sales growth and limited development in Iraq’s retailing industry and there is still a long way to go for the industry to overcome the constraints imposed by the challenging political, social and economic situation that the country continues to endure. Currently, northern regions of Iraq present the most attractive scenario for the development of modern retailing and significant numbers of new retail outlets have opened in cities such as Erbil and Mosul.
Iraq’s political and economic system has so far struggled to achieve its aims in terms of distributing wealth and revenues more evenly among the country’s population. This has presented numerous long-term challenges for the development of the retailing industry due to the accumulation of wealth among relatively few middle-income and high-income consumers living in major cities, while much of the remaining population is deprived of income and investment opportunities.
The reconstruction and redevelopment of Iraq’s war-damaged infrastructure slowdown towards the end of the review period due to the impact of the COVID-19 pandemic on reconstruction efforts. For this reason, infrastructure issues have worsened in many parts of the country, especially in Baghdad and southern regions.
Informal retailing has remained a major presence in Iraq since the onset of the COVID-19 pandemic. In addition to ineffective political control and lax enforcement of regulations, the high cost of setting up a store-based retail outlet has pushed many would-be formal retail businesses into the virtual realm, with informal e-commerce having taken off substantially during 2020 and 2021.
A moderate positive performance is expected to be seen in Iraq’s retailing industry throughout the forecast period. The positive performance expected in the retailing industry during the forecast period is set to be due mainly to population growth and improvements in the economic and security situation in most parts of the country.
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Retailing
Sales of new and used goods to the general public for personal or household consumption. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts, fuel. Also excludes foodservice, rental and hire and wholesale industries (Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retailing is the aggregation of Store-based retailing and Non-store retailing. Retailing excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, ie retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer which is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retailing. In relation to click and collect purchases (i.e. where purchases are made over the internet but picked up at store) where the sales data is attributed depends on where the payment is made: If payment is made in store, then the sale is included in store-based sales. If payment is made over the internet, then the sale is included in internet retailing.
See All of Our DefinitionsThis report originates from Passport, our Retailing research and analysis database.
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