Posted on: Friday 27 July, 2012 6:13
|Saudi retail confidence on the rise
Saudi Arabia’s retail sector is heading for a windfall amid strong consumer confidence and a sound economic outlook.
Concerns over rising inflation, particularly during Ramadan, though a concern, may be short-lived.
Recent data from Saudi Arabia’s Central Department of Statistics show that inflation has started to slow, falling to 5.1 percent year-on-year as of May, its lowest level in nine months.
But the tariffs on some staples, especially in areas visited by foreign pilgrims during the holy month, having risen by up to 20 percent as of early July. While these can largely be considered short-term increases, such price hikes will do little to endear the retail sector to the Saudi public or to tourists.
Ramadan is traditionally a growth period for the sector. "Ramadan and the summer time are peak shopping times in the Kingdom, especially in Jeddah," Saud Al Sulaiman, the executive director of IKEA. "The final two weeks of Ramadan are the strongest, after which sales drop off quite sharply as many Saudis and most expats head away for vacation."
A series of surveys in recent months have shown that consumer sentiment in Saudi Arabia has remained strong and is indeed improving.
In May market research firm Nielsen reported that the consumer confidence index in the Kingdom had increased by six points during the first quarter of 2012 to reach 119.
This makes Saudi Arabia the second-most optimistic market in the world, ranking behind only India. Under the Nielsen system, any score over 100 indicates an optimistic outlook, and Saudi Arabia’s continued strong showing put it well ahead of the Middle East average of 97 points.
The latest YouGov-Bayt.com consumer confidence survey, also released in May, echoed Nielsen’s findings. More than one-third of those surveyed said their family’s overall economic situation had improved in the past three months - a regional high - while 58 percent said that their expectations for the future of the economy were the same or better as three months prior. Looking ahead, 56 percent of respondents said their personal financial situation would be better in a year’s time, while 48 percent said the country’s economy would be stronger 12 months down the track. – SG/Agencies