Shopping for growth

How to build an urban retail destination

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As GCC member states pursue urban transformation and mega projects, they should seize the unrealized opportunity for growth in the retail sectors of their major cities. The region’s annual retail sales are expected to grow to US$300 billion by 2028, a 37 percent increase from 2022. With the right steps, these retail sectors can become global shopping destinations. That would allow retail to make a significant contribution to urban GDP and employment, while improving quality of life for residents and enhancing the offering to tourists.

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The strategy to turn a GCC city into a global shopping destination starts with two elements:

Dedicated governance
Vision

GCC cities should start their global shopping destination strategy by getting governance right. They should establish a governance entity dedicated to coordinating and leading action across the retail sector’s stakeholders, including retailers, brands, associations, and advocacy groups. There are three main governance models: public sector–led, private sector–led, and hybrid. The choice of model depends upon the city’s retail ambitions and level of retail maturity. As the city becomes a global shopping destination, it can change its model; for example, it can move from public sector–led to hybrid, or to private sector–led.

The governance entity defines the city’s vision as a global shopping destination. Each city will have a distinct approach to offering compelling and differentiated retail experiences. In order to articulate the vision, the entity should convene stakeholders to consider the kind of global shopping destination the city wants to become, the proper scale for its retail ambitions, the shoppers it will seek to attract, and the definition of success.

GCC cities can use six initiatives to bring their retail visions to life

Develop and implement a retail master plan

The city’s urban planners and the governance entity should develop and implement a retail master plan to put the vision into action. The retail master plan defines and connects the retail clusters, channels, brands, and products that offer unique experiences to consumers and streamline their shopping journeys. It should consider factors such as resident and tourist flows, urban demographics, target shoppers, cultural and natural assets, and transport connectivity options.
Activate and curate a retail calendar

The governance entity should design an annual calendar of events that promote the destination’s identity through compelling and differentiated retail experiences. Assembling the calendar requires that the governance entity coordinate closely among sector stakeholders. Public and private entities collaborate to organize and host events in established global shopping destinations so there are events for target shoppers year-round. Such coordination ensures that events provide memorable experiences, encourage return visitors, boost sales, and improve the city’s reputation and attractiveness as a global shopping destination.
Deliver retail innovations and tech-enabled shopping experiences

GCC retailers can use digital technologies as frictionless checkout, which involves automatic payment so that customers do not have to wait at a till. Other technologies that enhance the customer experience are augmented reality and virtual reality try-ons, which allow customers to see what goods look and feel like from the comfort of their own home. Dematerialized aisles are similar, allowing customers to engage with a vast range of products through electronic displays.
Support small and medium-sized retailers

GCC governance entities should coordinate support of small and medium-sized retailers (SMRs). Along with their significant contributions to economic activity and employment, SMRs fulfill the retail demand of residents while providing a local aspect to the identity of the global shopping destination. Given the importance of digital channels, cities can also assist SMRs in building their digital capabilities.
Create a deep pool of retail talent

GCC cities can train and acquire high-quality retail talent to support the shopper journeys and experiences worthy of a global shopping destination. The governance entity can start by determining the current baseline for retail talent availability and quality. Next, the governance entity should consult with stakeholders to establish retail talent standards. After that, the governance entity should convene government agencies, universities, and employers to attract, develop, and retain talent that meets the standards.
Simplify regulations and offer targeted incentives

Governments can use sectoral policy, regulations, and incentives to attract brands, retailers, and other investors to build their global shopping destination. The aim should be to reduce the time and cost of setting up a business. Governments can also consider targeted incentives for some investors, such as major brands that would build the character of the global shopping destination. Some incentives, such as tax refunds and duty-free stores, can also encourage shoppers.

GCC cities can enter the ranks of global shopping destinations, rivaling leading centers in Europe and North America. They can provide compelling differentiated retail experiences if they understand where they need to improve and adopt a careful, systematic approach. The growth and quality improvement of retail business in the GCC can become a key element in the region’s economic transformation.