SECTOR ANALYSIS

Date: 15-08-2012
Saudi Arabia: Retail Sector
Sector: Furniture, Clothing & Design
By the Royal Danish Embassy, Riyadh

Keywords: Mellemøsten, the Middle East, Den Arabiske Halvø, the

Arabian Peninsula, GCC-lande, GCC countries, Saudi Arabien, Saudi
Arabia, Kuwait, Bahrain, Oman, Riyadh, Jeddah, Ambassaden
Riyadh, Royal Danish Embassy Riyadh, forbrugsgoder, consumer
goods, møbler, tekstiler, design, furniture, textiles, clothing, tøj,
kosmetik, cosmetics.

Abstract: This report provides an insight into the reatil sector of Saudi Arabia
mainly focusing on furniture, jewelry, clothing and design including an analysis of
market indicators, market trends and finally an evaluation of the industries. The
sector is charactized by a young and fashion-conscious consumer based area.
The cosmetics sector is characterized by a female consumer base, which is very
beauty- conscious. The furniture industry is characterized by increasing housing
formation. All three sectors are expected to grow in the nearest future supported by
a growing and wealthier consumer base.
Introduction to the furniture, clothing and
cosmetics industries in Saudi Arabia
Saudi Arabia's retail market is the largest among the Gulf States and is the 2nd
largest in the MENA region. The young and growing population is showing an
increasing demand, especially for more high-end brands, when it comes to
furniture, jewelry, textiles and cosmetics. The majority of textiles, furniture and
cosmetics are imported.
This report provides an insight into the Saudi market for furniture, jewelry, textiles
and cosmetics by looking at the following:

 Market Size Indicators

 Market Trends
 Market Evaluation

Market size Indicators

Saudi Arabia has several underlying factors that support the continued growth of
the detail market.
Demographically, the country is favored by a very young and growing population.
The population is expected to grow from 28 million in 2011 to app. 36 million in
2025. In 2011 the median age was 26 years and app. 30 percent of the population
was 14 years of age or below, compared to 34 years and 18 percent in Denmark.
The young and growing population will support an expanding consumer base
going forward.
A rising oil price and a steady production of app. 9 – 10 million barrels per day
have supported growth given that the oil revenue constitutes 80 – 90 percent of
fiscal earnings. Fixed investments and government expenditure is presumed to
continue raising per capita income, which will support discretionary income per
capita going forward.
Compared to other GCC countries, Saudi Arabian discretionary income per capita
is low, but with GDP growing faster than the population it is expected to grow in
the medium term.
The retail sector is also supported by the tourism sector. Saudi Arabia wants to
make tourism an important part of its growing non-oil sector. In 2009, the tourism
authority announced that Saudi Arabia aims to attract 88mn tourists and generate
more than USD 30bn by 2020. Religious tourism at Mekkah and Medinah is an

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essential part of the tourism sector in Saudi Arabia, generating app. USD 7bn and
more than 12mn visitors in 2009.

Market trends
The Saudi consumers generally have a high brand-consciousness, which supports
the market for more high-end brands in clothing & footwear and cosmetics &
toiletries. The fact that a large part of the population is under the age of 15, only
strengthens this brand consciousness going forward.
A survey from the real estate firm CB Richard Ellis in 2011, Saudi Arabia attracted
more than 40 percent of all the 326 top retailers that were surveyed.
The main place for Saudis to do shopping is malls. Malls are not only viewed as a
place for shopping, but also a place for leisure and socializing as well as
entertainment centers, which have cafés, playgrounds, restaurants, fitness centers
and so forth. There are app. 30 malls in Riyadh and 26 malls in Jeddah. In the
Eastern Province Khobar and Dammam have app. 10 malls in total.
Online-retailing has a lot of potential in Saudi Arabia and in 2010, Saudis spent
app. USD 3bn via e-commerce of which electronics is the most popular category.
Low credit-card usage is current constraint, which is expected to diminish as
broadband access is spread throughout the Kingdom. A young population
indicates that potential lies within the mobile commerce as 3.5G and 4G network is
expanded and its speed improved.
Furniture
The furniture sector is positively influenced by the continuously development of
new housing units, which partially has to do by the young and growing population.
It is estimated that 1.65mn homes needs to be built over the next five years. The
Government has met this challenge partially by allocating USD 66.7bn for the
construction of 500,000 housing units.
Recently the Government passed a new mortgage law that will strengthen Saudi
citizens' capability to buy houses and real estate properties. The law seeks to turn
Saudis from home renters to home owners, and to help spur housing formation in
Saudi Arabia.
Growing population, increased urbanization, strong demand for housing and rising
income supports the market for sales of residential furniture, which is estimated to
be USD 1.7bn in 2011 and expected to rise 10 percent annually until 2015.
Commercial furniture sales were estimated to be USD 216mn last year.
App. 70 percent of Saudi furniture sold are imported partially due to the gap
between the rising demand and lack of local production.

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Clothing
Clothing & footwear is the biggest non-food retail sales industry and was worth
app. USD 9,7bn in 2011. Going forward the market is expected to rise 6 percent
annually in 2012 – 2016.
According to sources, women’s clothing accounts for app. 45 percent of the
market. Although women have to wear the abaya1 in public, clothes are bought for
wearing in private or in environments solely for women. A market for designed
and styled abayas is also emerging.
Women in Saudi Arabia also tend to focus more on buying clothing and footwear
that is special, customized or personal. In general, Saudi women have enough
money to buy expensive dresses by Chanel or D&G. So in order to express their
wealth, they differentiate themselves from their female friends by purchasing high-
end cloth and footwear.
The leading clothes retailer is Fawaz al-Hokair, which has more than 50 franchises
of international brands and operates 750 fashion stores.
Cosmetics
The market for skin care products is estimated to grow app. 9 – 10 percent
annually and is expected to reach USD 480mn by 2014. Skin whitening products
and anti-ageing creams as well as lotions are traditionally high selling items. Last
year Saudi women spent app. USD 2.4mn on cosmetics, and it is projected that the
market will grow by 11 percent this year.
Saudi women are viewed as being one of the most beauty-conscious in the Middle
East region. It is estimated that Saudi women spend more money in cosmetics and
hair products per capita than no other women in the world. Beauty products
focused on men have traditionally been deodorants, shaving creams and hair gels,
but a new trend suggests that a more beauty conscious man might be emerging,
requiring a new and broader spectrum of beauty products.
The market is dominated by high-end brands such as Chanel and Christian Dior as
well as Proctor & Gamble and Unilever. Anwal United Trading is a leading retailer
of cosmetics with 125 stores.
The market for hygiene products, such as soap and cleaners, is estimated at USD
4.2bn and is expected to grow by more than 8 percent annually until 2016. This
sector is also represented by multinational corporations such as Proctor & Gamble
and Unilever.
Jewelry
The Saudi Arabia jewelry market is characterized by two sales segments. One
segment is the international retailers that have franchises and shops in malls. The

1An outer garment worn by women. It is long-sleeved, floor-length, and is worn from either the shoulder
or the top of the head.
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other segment is the local goldsmiths that craft jewelry. In the first quarter of 2012,
Saudi Arabia consumed app. 10 tons of jewelry, which ranks it among the top 10
consumers of jewelry in the world. This should be compared to the US and UAE,
which consumed respectively 17.6 tons and 15.9 tons of jewelry in the same period.

Market evaluation
All four areas of furniture, jewelry, clothing and cosmetics are expected to show
strong growth going forward. The possibilities for Danish companies lie in the
high-end brands, because the low-end market is primarily fulfilled and dominated
by products from East Asia or local production.

Focus should in general be on unique, diversified and customized products, since

Saudis in general can afford more dear products. The way the Saudis show their
wealth is through buying products that has been personalized or originate from
smaller unknown producers of good exclusive quality products.

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The Trade Council
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The Trade Council is a part of the Ministry of Foreign Affairs and is the official export and investment
promotion agency of Denmark. The Trade Council benefits from around ninety Danish Embassies,
Consulates General and Trade Commissions abroad. The Trade Council advises and assists Danish
companies in their export activities and internationalisation process according to the vision: Creating
Value All the Way.

The work in the Trade Council follows specific procedures and quality guidelines. In this way our
customers are secured the best possible quality under the varying working and market conditions at any
given point of time.

Ministry of Foreign Affairs of Denmark

Eksportrådet, Danmarks Ambassade i Riyadh

The Trade Council
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E-mail: ruhamb@um.dk
www.saudiarabien.um.dk

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The Trade Council
Tel.: + 966 1 488 0101
Fax: + 966 1 488 1366
E-mail: ruhamb@um.dk