As mid-luxury retail brands across western European and north American markets grapple with layoffs and store closures, the Gulf is setting new benchmarks—fusing tech, UX and ambition into a retail revolution.
Driving a retail surge with smart technology, bold tourism investments, and immersive experiences the Gulf states’ retail sector is accelerating rapidly, and is expected to top $390 billion by 2028, with Saudi Arabia and the UAE contributing over 75% of retail sales.
In contrast, retail growth is cooling in Europe, with its retail sector expanding less than 5% in 2024 and forecasted to grow at a modest 4.1% CAGR through 2029.
In March 2025, retail trade volume in the EU declined month-on-month, with notable drops in Slovakia, Poland, and Italy, highlighting a broader slowdown in consumer spending across the region.
In the United States, although inflation has cooled to 2.3% from its 2022 peak, consumer prices—especially groceries—remain stubbornly high. As a result, 56% of American consumers now prioritize low prices over brand loyalty.
This price sensitivity, especially for essentials, reflects a fragile consumer mindset. The situation is compounded by rising labour costs, supply chain disruptions, and volatile raw material prices.
Retailers, already squeezed, are struggling to adapt to evolving demands across omnichannels, social commerce, and AI-driven personalization.
Moreover, a global shift in consumer behavior is reshaping the retail landscape. Eight in ten U.S. consumers now prefer experiences over material goods, and trends like smaller basket sizes, more frequent shopping trips, and AI-assisted purchases reflect a more cautious and value-driven consumer.
Many Western retailers are unable to pivot fast enough, resulting in cost-cutting measures that degrade customer experience—messy stores, staff shortages, and bare-bones marketing strategies. These moves create a downward spiral where lower sales lead to even deeper cuts.
In contrast, the GCC retail sector—especially in Saudi Arabia and the UAE—is thriving, powered by forward-looking strategies and bold investments. A key driver is their proactive economic diversification.
Programs like Saudi Arabia’s Vision 2030 are repositioning retail as a core pillar of economic growth, integrated with sectors like logistics, tourism, and tech.
The region boasts a strong GDP per capita and high consumer confidence—60% of UAE residents expect personal financial improvements, far surpassing global averages.
Reform-driven policies are also spurring foreign investment. Saudi Arabia’s 2025 Investment Law overhaul simplifies registration, guarantees investor rights, and aims to triple FDI inflows by 2030.
Similarly, the UAE now allows up to 100% foreign ownership in key sectors, offers tax incentives, and provides legal protections that attract global brands and entrepreneurs.
Demographics also favour the region. With a growing, youthful population projected to reach over 62.5 million by 2028, and a large expatriate base with strong disposable income, the GCC consumer base is affluent and eager for luxury and experiential shopping.
Tourism further accelerates retail growth. From Expo 2020 Dubai to the FIFA World Cup 2022 in Qatar, mega-events have supercharged retail, hospitality, and entertainment sectors. Saudi Arabia’s push to welcome 150 million annual tourists by 2030 underscores this momentum.
High-net-worth travellers, who spend heavily on luxury goods and immersive experiences, find in the GCC world-class malls, flagship brand stores, and high-end hotels.
The GCC’s food retail sector, valued at $127.2 billion in 2023, is projected to reach $162 billion by 2028, growing at a CAGR of 4.9%, driven by population growth, urbanization, and rising demand for organic, health-focused products—especially in Saudi Arabia.
Meanwhile, non-food retail—spanning fashion, electronics, furniture, and luxury—was worth $182.5 billion in 2023 and is expected to climb to $243.6 billion by 2028, with a faster 6.2% CAGR.
This signals a shift toward lifestyle and experience-led spending, fueled by regional affluence, tourism, and a push toward immersive, high-end retail. in Saudi Arabia, over 40% of new mall space is dedicated to non-retail activities, tapping into the desire for experience over product.
Starkly contrasting EU and US markets where basic, value-driven consumption still dominates.
The Gulf region’s embrace of digital transformation is another standout. High internet penetration and a tech-savvy population fuel booming e-commerce and quick commerce sectors.
Fintech integration, seamless payment systems, and phygital strategies ensure that physical and digital retail channels complement rather than compete—unlike many Western markets.
The GCC’s retail success is built around “retailtainment”—transforming malls into vibrant social and cultural hubs. By embracing technology-driven, customer-focused strategies, the GCC redefines shopping as immersive rather than transactional.
