Saudi retail sector 'set for growth'
Riyadh, March 5, 2013
The Saudi retail sector’s strong earnings growth is expected to continue despite some concern over wage inflation due to Saudization of jobs, a report said.
Expansions through opening of new stores, margin support from economies of scale and consolidation of fragmented markets are key drivers of profit growth, said the NCB Capital report.
Price-led competition also remains a key concern, said the report.
Consolidation of fragmented sectors which are dominated by independent stores is a key theme for the Saudi retail market, it said.
“Extra, Jarir and Al Othaim are well positioned to benefit from this structural trend in their respective sectors, leading to 30-50 percent expansion in their store count over the coming five years. Al Hokair has already consolidated the Saudi mid-market fashion segment, with potential growth coming from expansion in the value-segment and opening stores abroad,” the report said.
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