Study Predicts UAE Grocery Retail Sector To Top $40 Billion In 2024
The UAE grocery retail sector will exceed US$40 billion for the current year, according to the latest 24SEVEN report. This announcement comes amidst the heightened attention on grocery retail, particularly with the Spinneys IPO capturing headlines. The study encompassing over 5,000 grocery outlets across the UAE, sheds light on the pivotal role of small grocery stores, or 'baqalas', in the nation's economy.
Significantly, the report outlined that 81% of the UAE's grocery retailers are baqalas, each with a footprint of 50 square metres or less. Despite their modest size compared to the larger supermarket chains, these small outlets are a frequent choice for 60% of UAE residents, who visit them weekly. This detail underscores the importance of these establishments in meeting daily consumer needs.
One of the report's critical observations is the potential uplift in revenue for grocery retailers through the adoption of embedded financial services. Currently, less than 1% of small grocery stores utilise advanced financial technologies, and about 70% lack a connected point-of-sale (POS) and checkout system. This technological gap hinders their ability to compete effectively with larger counterparts.
The report titled 'Inside the Baqala’ includes comprehensive research data and a public survey on consumer preferences. It revealed that 59% of consumers frequent baqalas due to their convenient location, followed by access to specific products (31%), extended opening hours (27%), friendly staff (20%), and a preference for shopping locally (20%). These insights not only highlight the critical role of baqalas in the UAE's retail landscape but also point towards significant growth opportunities through technological adoption.
Jarrar Shah, CEO and Co-Founder of 24SEVEN, emphasized the untapped potential within the sector. "There is a huge opportunity for grocery retailers to offer a greater range of services and boost the UAE economy. Embedded financial technology can uplift revenues for stores through services like remittance and bill payments. However, currently around 70% of stores do not have the right technology to compete," Shah stated.
Moreover, the research highlighted the significant potential of 'buy now, pay later' (BNPL) services in baqalas, estimating they could facilitate up to US$338 million in transactions annually. With BNPL and similar in-store credit options currently representing a mere 4% of transactions, there's a projected increase to 26% or more, driven by consumer preference.
24SEVEN's commitment to enhancing the capabilities of small grocery stores aligns with the UAE's digital transformation goals. By integrating embedded fintech services into daily operations, the company's efforts could see a typical baqala increase its revenue by 8 to 12% monthly.
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