The retail constant value sales (2021 prices) of traditional grocery retailers were in decline even before the onset of the pandemic due in large part to heightened competition from modern grocery retail outlets, with the number of outlets shrinking, and COVID-19 served to accelerate this trend. Retail constant value sales plunged at an almost double-digit rate during 2020 and rebound only party during 2021.
Not only are the sales of traditional grocery retailers being squeezed by supermarkets, hypermarkets, discounters and convenience stores, but they are also coming under pressure from e-commerce. As many traditional grocery retailers operate on quite an informal basis, it is somewhat difficult for them to utilise third party delivery apps.
As would be expected, the traditional grocery channel is highly fragmented, with even the largest player (Saadeddin Pastry Co) having a value share of less than 2% in 2021. Consumer awareness and the search for differentiated products encourages new entrants, causing further fragmentation.
There will be no more than marginal growth in the retail constant value sales (2021 prices) of traditional grocery retailers during the forecast period, with constant value sales remaining below their pre-pandemic level. The continued growth of e-commerce will be a significant factor in this, with dark stores set to proliferate in the Kingdom.
Most of the baqalas in Saudi Arabia have expatriate workers. A number of Saudi economists predict that if Saudization of jobs is implemented in traditional grocery stores, this will reduce annual expat remittances by up to SER6 billion.
Grocery stores have been given a grace period to comply with new municipal conditions with the aim of organising the channel and raising standards by improving service. This is by specifying the conditions for the unified design, operation and licensing.
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Understand the latest market trends and future growth opportunities for the Traditional Grocery Retailers industry in Saudi Arabia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Traditional grocery retailing is the aggregation of those channels that are invariably non-chained and are, therefore, owned by families and/or run on an individual basis. For Euromonitor traditional grocery retailing is the aggregation of three channels: Independent Small Grocers, Food/Drink/Tobacco Specialists and Other Grocery Retailers. While there can be modern (i.e. chained) food/drink/tobacco specialists or other grocery retailers, due to the store's presence in the channel, these stores are still considered as traditional for Euromonitor International.
See All of Our DefinitionsThis report originates from Passport, our Traditional Grocery Retailers research and analysis database.
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