THE RIAL THING

Oman 2014 | TOURISM | FOCUS: RETAIL

Rising disposable income and burgeoning tourism continue to boost the Sultanate's retail sector, from mall to souk.

Reflecting Oman's economic growth, GDP per capita is forecast to reach $74,000 by 2016 from OMR27,567 in 2011, a key metric when considering the health of the Sultanate's retail sector, and indicative of increased purchasing power. Oman's economic diversification away from hydrocarbons has given rise to vast infrastructure development, including tourism and retail property, all spelling new jobs and, again, disposable rials. Meanwhile, tourism revenue seems set to rise, as Muscat alone hosted over 100,000 visitors during the 2012 Eid holidays. Research by Alpen Capital indicates that retail sales in GCC markets are set to grow at a compound annual growth rate (CAGR) of 7.7% between 2011 and 2016 to $270.3 billion by the end of the forecast period. In the lead is Saudi Arabia on an expected CAGR of 9.5% for the period. All the other GCC members—including Oman—are foreseen posting annual average retail sales growth of roughly 5%-7%.

IN THE RANKINGS

The A.T. Kearney Global Retail Development Index (GRDI), ranking the top 30 developing nations for retail investment, identifies current success stories and also those markets that offer the greatest potential for future development. Oman, having debuted on the GRDI in 2012 in eighth place, has slipped nine places to 17th in the 12th annual GRDI report, as the Sultanate's retail development decelerated relative to other markets.

The report identifies Oman as relatively stable, “with steady economic and retail growth and strong consumer confidence," and describes it as largely untapped. “The top grocery retailers, Lulu, Carrefour, and Al Safeer, represent more than half of the market, and modern retail represents 44% of the market. Outside of the capital, Muscat, modern retail opportunities are limited, and traditional stores and souks remain very popular," the report stated. It also identified momentum in the luxury segment in Oman reflected in high-end residential complexes such as The Wave, Muscat. This project prompted the construction of the Al Marsa Village Retail Centre.

FROM GLEAMING MALL…

The new Muscat Grand Mall (MGM) houses over 120 stores on an area of 60,000 sqm. As well as the obligatory cinema experience, it offers visitors the largest food court in Oman. MGM's second development phase, set for completion in 4Q2015, will raise store numbers to 250 and double parking availability. According to muscatdaily.com, Muscat City Centre (MCC) and Qurum City Centre (QCC), among the leading lifestyle addresses in Oman, have seen a robust footfall, with a combined print of 8.5 million visitors in 2012 alone. For Majid al Futtaim Properties, the MENA region's largest developer, owner, and operator of shopping malls and complementary mixed-use projects, MCC is its first foray beyond the UAE. Its upcoming investment of OMR11.3 million will add a combined 7,400 sqm of retail space and add upscale entertainment including VOX Cinemas.

…TO TEEMING SOUK

Tourists seeking the authentic flavor head for the souk, where popular purchases include ornamental Omani daggers, or khanjars, or else frankincense, jewelry, and rugs. Despite being ubiquitous, Muscat's most popular souk is the Al Dhalam Market in Muttrah, the name meaning “darkness" in description of its crowded streets where the sun cannot enter. Oman's tourism revenue from international visitors for the first time surpassed the $1 billion mark in 2012, rendering the Sultanate one of the Gulf region's top tourism destinations. Oman registered a 2.3% stake in total international tourism receipts in the Middle East in 2012, up $300 million on its 2010 print. The government plans to increase the number of international visitors to 12 million by 2020.

GOING LOCAL

The Omanization rate is a key metric in the Sultanate across all sectors including retailing. Now, the Joint Committee for Omanization in the sales and distribution sector plans to make available 11,000 new jobs in the sector by 2015, raising the number of Omanis to 35,730, thereby boosting the rate from 21.3% in 2012 to 45%.