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Bahrain's retail sales will grow from $4.33 billion in 2008 to $4.80 billion by 2013, predicts Research and Markets, one of the largest resources for market research information in the world.
The key factors behind the forecast growth in Bahrain's retail sales are a favourable long-term economic outlook, growing interest in Western styles of retailing, and a steady rise in disposable income, says the Bahrain Retail Report Q309.
Bahrain's nominal GDP was $21.90 billion in 2008, with a decline of 0.1 per cent now predicted for 2009 as the economy goes into reverse. Average annual GDP growth of 2.7 per cent is now predicted between 2008 and 2013. Although the population is forecast to decline from 1.07 million in 2008 to 1.01 million by 2013, GDP per capita is predicted to rise to $19,997.
Statistics from the Ministry of Culture and Information's tourism affairs division show that tourist arrivals have risen by an average of 10-15 per cent a year over the past three years. In 2007, Bahrain attracted 5.5 million tourists, 4.9 million of them from other Gulf Co-operation Council (GCC) states. Tourism arrivals are projected to rise by an average of 2.5 per cent per annum over the next decade.
Bahrain's retail market will also continue to benefit from events such as the annual Formula One motor race, which has generated hundreds of millions of dollars in revenues since it became a fixture on the racing calendar in 2004.
In 2005, 71.2 per cent of the Bahraini population was described by the UN as economically active, with 40.7 per cent in the critical (for retail sales) 20-44 age range.
By 2010, 72.7 per cent of the population is expected to be economically active, but the proportion of those in the 20-44 age band is forecast to fall to 39.9 per cent.
A very high level of urbanisation is contributing to a vibrant retail sector. In 2005, more than 90 per cent of the population was classified by the UN as urban, and this is forecast to increase to 91 per cent by 2010. About 89 per cent of the population lives in the two principal cities of Manama and Al Muharraq.
Retail sub-sectors that are predicted to show strong growth over the forecast period include over-the-counter (OTC) pharmaceuticals, with sales expected to increase by more than 73 per cent, from $0.004 billion in 2008 to $0.006 billion by 2013.
Automotive sales are forecast to rise by nearly 34 per cent during the period, from $0.84 billion in 2008 to $1.12 billion by 2013, while sales of consumer electronics are predicted to increase from $0.42 billion in 2008 to $0.54 billion by the end of the forecast period, a rise of nearly 29 per cent.
Retail sales for MEA (Middle East and Africa) countries in 2008 amounted to an estimated $384 billion, based on the varying national definitions. Total consumer spending for the region, based on BMI's macroeconomic database, amounts to $1,214 billion.
What about the other countries in and around the region?
In 2008, the UAE, Saudi Arabia, Egypt and South Africa together accounted for an estimated 79.5 per cent of regional retail sales, and their combined share is expected to rise to 81.4 per cent by 2013. For Bahrain, the estimated 2008 market share of 1.1 per cent is expected to fall to 0.8 per cent by 2013.
What is the global situation like for retail business?
According to global management consulting firm A T Kearney's eighth annual Global Retail Development Index (GRDI), which studied the retail investment attractiveness among 30 emerging markets, larger, resilient developing countries sit atop the 2009 GRDI as they are most likely to lead the economic recovery.
For the fourth time in five years, India is the most attractive country for retail investment according to the Index. Russia, China, the UAE, Saudi Arabia, Vietnam, Chile, Brazil, Slovenia and Malaysia round out the GRDI's 2009 top 10 countries.
The UAE made the biggest move in the 2009 GRDI, rising 16 places to fourth position as its oil-driven economy proved more resistant to widespread downturn than other countries. While the UAE's population of five million is relatively small compared to the three countries above it in the GRDI, it has the highest per capita consumer spending of any country in the Index.
In fact, Dubai is on track to have the world's largest amount of shopping space per capita by 2010. Retailers in Dubai are focusing on local customers as tourism drops and that is creating entry opportunities for hypermarkets and discounters.
Yet while Dubai has recently been synonymous with retail expansion, Abu Dhabi is the rising star of the Emirates, according to the study. It has remained well insulated from the global economic crisis because of its oil reserves and sovereign wealth fund.
Several new museums and a Formula One race are planned and will help it attract tourists. Immigration is also expected to pick up as Abu Dhabi becomes a nearby alternative to Dubai.
New city developments will increase real estate supply and strong awareness of global brands among the population will provide opportunities for foreign retailers.
