Jarir Marketing, a leading Saudi office supplies and electronics retailer, expects higher sales of tablet PCs and smartphones to drive growth in 2011, its chairman said.

Muhammad Al Agil also told Reuters that the Saudi king's massive handouts, which include wage hikes, would provide a boon for retail sales.

"We expect good growth mainly driven by (sales of) tablets and we also expect strong growth in smart phones," he said. "We also plan to open four stores, three in Saudi and one in Kuwait, today we have 28 stores."

Jarir said in 2009 it planned to expand the number of its stores to between 40-45 stores by the end of 2013 with a goal of increasing sales to close to a billion riyals in 2012.

Al Agil projected Jarir would see gross margins -- which have been declining due to weak profitability on smartphones -- at 19 per cent by the end of the year from 17 per cent in 2010.

"We expect to get back. Last year, we had low market share and to have a good market share we had to dump our prices. Now we see that our margin is going to improve this year," Al Agil said, adding Jarir sold 158,000 smartphone sets and 19,000 tablet PCs in 2010.

"Now we have 10 per cent market share ... This will allow our gross margins to improve, may be 150 basis point. We expect to go back to a gross margin of 19 per cent from 17 per cent in 2010."

Jarir's 2010 annual profit rose 7.2 per cent to 401 million Saudi riyals ($106.9 million). Al Agil said the retail sector will benefit from Saudi King Abdullah's $93 billion in handouts, including wage increases, which will boost consumer spending.

"I think the king's statement means that this year will be a robust one in terms of consumer spending and economic activity," he said.

Asked whether he had any concerns that inflation may limit consumer spending on luxury goods, Agil said the young population would continue to drive growth.

"People treat their smartphones as a necessity, they are ready to pay around 1000 riyals for mobile charges, while they pay no more than 800 riyals for water and electricity and other stuff," he said.

People under the age of 30 make up two-thirds of the indigenous population of more than 18 million Saudis.

Shares in Jarir closed up 1.28 per cent on Monday. – Reuters