Despite being one of the GCC’s smaller retail markets, Oman has seen steady growth in recent years. The sultanate’s shopping industry has gradually shifted from traditional souks and stores to larger shopping malls, driven by the growing urbanisation of the Gulf state.
At $24,804, Oman’s per capita gross domestic product (GDP) is the third lowest in the GCC, but compares favourably to the wider Middle East. Wage increases granted in 2011 for nationals in the private sector are also expected to drive up consumer spending. Wholesale and retail trade contributed 8 per cent of Oman’s GDP in 2011.
The retail sector is set to benefit from Oman’s pledge to fast-track infrastructure plans and bolster social spending, following civil unrest in early 2011. Efforts to increase tourism also bode well for the country’s growing number of shopping malls. Oman was poised to host 1.6 million international tourists in 2012, according to the World Travel & Tourism Council.
The influx of foreign brands into Muscat has been slower than in other GCC cities, but that is changing. Consultancy AT Kearney placed Oman eighth in its 2012 Global Retail Development Index, which ranks emerging nations by their attractiveness to western retailers. The sultanate is, it said, “on the radar” of many global players, in part because its foreign ownership rules compare favourably to those in other GCC states.
|Size of the retail trade|
|Year||Value (OMRm)||Year-on-year growth|
|Source: Ministry of National Economy, Oman|
This trend has been aided by an increase in prime retail space for brands seeking to enter the market. In 2010, Muscat had just 300,000 square metres of leasable mall space, according to Retail International. The soft launch of Muscat Grand Mall in March added 62,000 sq m of retail space to the city. In November, the local Tilal Development Company announced it planned to raise $138m through a corporate Islamic bond sale to add a further 35,000 sq m to the complex.
UAE developer Majid Al-Futtaim (MAF) operates two malls in Oman, the largest of which is Muscat City Centre at 60,484 sq m. The complex has attracted a raft of foreign retailers already active in the GCC, including the UK’s Marks & Spencer and fashion outlets Zara and H&M. MAF reported a 13 per cent rise in tenant sales in Oman during the first half of 2012.
Big-box retail has also made its mark in the grocery sector, where competition is increasing. The arrival of several multinational supermarket chains has accelerated the shift away from neighbourhood stores and towards more modern retail formats.
France’s Carrefour launched its fourth hypermarket in the sultanate in March. Lulu Hypermarket opened its 12th outlet in May, representing a $52m investment, while French hypermarket Geant plans to enter the market as part of a wider Gulf expansion spree. In November, Qatar’s Al-Meera Holding agreed to buy the retail assets of Oman’s Safeer Stores in its first overseas foray.