COVID-19

Pandemic boosts GCC e-commerce 50% to reach $50B in 2025 forecasts Kearney

The GCC e-commerce sector is forecasted to reach a value of $50 billion by 2025, according to a new report by Kearney Middle East. The report titled GCC e-commerce unleashed: a path to retail revival or a fleeting mirage?, predicts that e-commerce will become the main source of growth in the retail sector over the next five years. The report forecasts a larger acceleration in e-commerce between 2020 and 2022, at 20% CAGR, and 14% until 2025. Without Covid-19, the same growth was projected at 14 and 10% respectively. This highlights the impact of the pandemic on accelerating the growth of the sector in the region.

While the report highlights the effects of a more definitive shift to online on major retail groups, it also explores the likely implications and imperatives on the two other key actors within the retail ecosystem; real estate and small and medium enterprises.

Key challenges including the rise of pure play e-commerce marketplaces, the large investment in digital by retail giants, and the declining physical store sales pose a threat commercial real estate and the survival of SMEs that have not yet adopted to online sales channels. An earlier survey by Kearney in the UAE indicates that just 36% of SMEs have made the investment so far, while only 4% planning to sell online in the future.

“E-commerce continues its rapid growth in the region. In our last e-commerce outlook for the GCC in 2017, we forecasted growth of 35% CAGR, which was essentially more than a four-fold jump in value for the sector between 2015 and 2020. By the end of 2019, it was worth just short of $18 billion, with signs of maturing growth and intense market competition. However, Covid-19 caused an unforeseen push and gave a new, accelerated lease of life to the sector, in line with what we have seen in global markets. This is due to a rapid change in consumer behaviour, with unprecedented adoption of e-commerce by all population segments, spurred to a large extent by the new normal of social distancing, lock-downs and reduced  capacity in physical stores,” commented Adel Belcaid, Partner, Kearney Middle East.

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