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KSA Retail 2020 Update- The road to recovery

Published in Dec, 2020

Executive Summary

2020 roundup of retail sector – online & offline in the KSA

2020 has been a truly unique year for retailers in the region. While offline outlets have faced exceptionally challenging circumstances – online retailers have seen exponential growth in the past year. With consumer preferences changing drastically, certain categories have emerged as more robust and resilient to the challenging business circumstances, growing in the face of adversity.

Impacted by a stringent lockdown, lack of tourist inflows, reduced consumer buying power in the uncertain environment; retail sector has seen a phase shift from survival to resilience tactics to overcome the uncertainty. Certain retailers have boosted their online presence to overcome any negative impacts of the pandemic.

Essential categories (like groceries) saw manifold increases in GMV both online & offline, while certain discretionary categories (like fashion) saw drops in GMV as customers were restrained to home for most part of the year. With the loosening of movement restrictions and the return of sales across the middle east, we are now seeing a resurgence in offline sales while online retail continues to grow during the festive period.

Online penetration of the retail sector increased across all categories faster than normal, and this trend is expected to stay.

Demand view

Along the year, the Customers willingness to purchase offline decreased significantly while that for online increased substantially. Their purchasing habits and tendencies have also seen a switch due to the emergence of new players and business models in the industry. Certain sectors (electronics, groceries, home etc) saw big surges in times of peak lockdown and in periods of sale events. As tourist flows reduced and outbound travels were curtailed, residents stepped up on purchasing in certain sectors like luxury goods, home, etc through the year.

Most categories are seeing demand surges in fourth quarter on the back of festive seasons, attractive discounts/promotions by retailers and due to higher levels of economic certainty compared to second quarter.

Supply view

Retailers had a positive start to the year in first quarter of 2020. Soon after, they were impacted by covid-19 as lockdowns ensued and borders closed. Supply chain disruptions were a big obstacle as demand was reduced due to a diminished consumer buying power & wiliness to purchase. Many retailers changed business models primarily boosting their online presence in the period to capture consumer demand. The second quarter saw previously marginal online players gain marketshare as the online players enhanced business presence across all sectors – product offering, delivery capabilities, payment capabilities, etc.

Third quarter saw a slow recovery for physical retailers as the online retailers were gaining marketshare. Tourists also started returning supporting the retail sector in its recovery.

In the fourth quarter, both online and offline channels have seen massive sales offered to customers – most notably from events such as Single’s Day, White/Yellow Friday, Prime Day, etc. eCommerce players such as Noon, Namshi and Amazon offering huge discounts as is traditional in the period. Offline players matched online deals to attract shoppers which helped their recovery to normal.

This report includes our perspective on retail sales in 2020 covering Market Landscape, Players View, Category View, and Voice of Customer which will bring out the key takeaways from the retail sector this year.

This report will help the reader answer the following questions –

  1. What was the estimated size of the Total retail & E-tail market in 2020 – Pre & Post Covid? 
  2. What doe the online and offline retail recovery curves look – Total & category levels?
  3. What were the drivers affecting online & offline sales?
  4. What is the online penetration of retail by categories?
  5. Which categories have done well this festive season? Where was the consumer excitement for categories?
  6. Which player and player type were the biggest gainers & losers during 2020?
  7. What are the players offerings and web/app traffic currently? How did it change this year?
  8. What are the key changes in consumer preferences that matter to retailers/ industry leaders?
  9. What was the expected and actual consumer spend this festive season?
  • See: Inside the Report

    1. Market Size and Forecast

    1.1 The state of eCommerce markets: Pre vs Post COVID
    1.2 Total Offline Retail Market Size
    1.2.1 Offline Retail Market Size – Pre-Covid & Post Covid
    1.2.2 Current Market Size By Sectors
    1.2.2.1 Electronics
    1.2.2.2 Fashion
    1.2.2.3 Beauty & Personal Care
    1.2.2.4 Grocery
    1.2.2.5 Home
    1.2.2.6 Others
    1.3 Offline Retail Recovery Curves
    1.3.1 2020 Total Offline Retail Monthly Recovery Curve
    1.3.2 2020 Offline Retail Monthly Recovery Curves By Sectors
    1.3.2.1 Electronics
    1.3.2.2 Fashion
    1.3.2.3 Beauty & Personal Care
    1.3.2.4 Grocery
    1.3.2.5 Home
    1.3.2.6 Others

    2. eCommerce Perspectives
    2.1 eComerce Market Size
    2.1.1 Total eCommerce Market Size – Pre Covid & Post Covid
    2.1.2 Current ecommerce Market Size By Sectors:
    2.1.2.1 Electronics
    2.1.2.2 Fashion
    2.1.2.3 Beauty & Personal Care
    2.1.2.4 Grocery
    2.1.2.5 Home
    2.1.2.6 Others
    2.2 eComerce Monthly Recovery Curves
    2.2.1 2020 Total eCommerce Monthly Recovery Curves
    2.2.2 Current ecommerce Monthly Recovery Curves By Sectors:
    2.2.2.1 Electronics
    2.2.2.2 Fashion
    2.2.2.3 Beauty & Personal Care
    2.2.2.4 Grocery
    2.2.2.5 Home
    2.2.2.6 Others

    2.3 eCommerce’s penetration of Total Retail
    2.4 Growth drivers for eCommerce in MENA
    2.5 Restraints for eCommerce in MENA
    2.6 Key business models operating in eCommerce space (own inventory, Fulfilled by platform, Fullfilled by Merchant, dropship, CBT, etc)
    2.7 Emergence of dark stores in eCommerce

    3. Competition View
    3.1 Most active eCommerce companies
    3.2 Market positioning of active eCommerce companies
    3.3 Highlights during Covid
    3.4 Company profiles of Key players

    4. Voice of Customer
    4.1 Key Consumer Trends – Shift in consumer behaviour post COVID
    4.2 Decision making criteria – Pre vs Post COVID
    4.3 Consumer order frequency – Pre vs Post COVID
    4.4 Consumer Loyalty trends – Pre vs Post COVID
    4.5 Consumer Pain Points
    4.6 Excitement for certain times of year

    5. Trends & Opportunities
    5.1 Forward looking views on eCommerce
    5.2 Challenges in the Offline & eCommerce market
    5.3 Industry benchmarking with global best practices
    5.4 Regional dynamics with growth opportunities for new & existing players
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