(MENAFN- Muscat Daily) Muscat- While the long-term fundamentals remain strong, the retail market in Oman is presently under pressure due to economic slowdown.
The impact on Oman's retail sector has been higher compared to its GCC counterparts and the country's wholesale and retail trade stood at US$4.9bn in 2016 compared to US$5.1bn in 2012, according to Alpen Capital, an investment banking advisory firm.
Growth decelerated since 2014 and slumped by 18.2 per cent in 2016, Alpen Capital said in its GCC Retail Industry report published on Monday.
'Weak consumer sentiments, on account of subsidy cuts, is the major factor behind the drastic decline in retail sales. Consumers are becoming cautious and focusing on buying essential items. Their spending power may further come under pressure, as the government plans to introduce selective taxes in 2017', it said.
The report said Oman's retail landscape is concentrated in the hands of standalone retail outlets and has only a few regional and international retailers. 'As consumers look for a wholesome shopping experience combined with entertainment, the retail market in the country is transforming to accommodate large leisure shopping complexes. Supply of retail space has gained steam in the last two years which saw addition of large shopping centres'. Increasing population and international tourist arrivals have been the vital driving forces of the retail market in Oman, Alpen Capital said.
'A high composition of young and working class has led to a shift in consumer preferences towards international foods and western products. This is further supported by an increase in household spending power over the years on account of the economic diversification and government-mandated pay hikes for nationals. Such favourable factors have lured several retailers to Oman', the report added.
Sameena Ahmad, managing director at Alpen Capital (ME) Limited, said, 'The GCC retail sector continues to remain an active contributor to the region's economic development. Although the sector is experiencing a slowdown, the long-term fundamentals of the sector remain strong and are expected to grow steadily through 2021. A favourable demography, high per capita income and an active tourism industry have attracted renowned international retail brands to the GCC. Changing consumer preferences and proliferation of digital devices are further reforming the region's retail landscape.'
According to Alpen Capital, the size of the GCC retail sector is forecasted to grow at an average annual growth rate of 4.6 per cent from US$250.5bn in 2016 to US$313.2bn in 2021. After witnessing a drop in 2016, it said retail sales are likely to grow at a slow pace in 2017, in view of the prevailing economic environment.
Mahboob Murshed, managing director at Alpen Capital (ME) Limited, said, 'Though the GCC retail sector has been under pressure for the last couple of years, it is poised to grow at a moderate pace in light of stabilisation of oil prices and economic revival, expanding consumer base, increase in tourist arrivals, mega international events and a growing ecommerce market. We also expect foreign companies to invest in regional retail entities to establish a strong foothold in the region.'
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