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GCC Grocery Market Shifts Towards Value-Centric Retail Strategies: A New Era of Consumer Priorities

Prime Highlights: 

The GCC grocery market is increasingly focusing on affordability, with consumers prioritizing price and promotions when selecting retailers. 

Over 50% of Saudi households experienced income fluctuations in 2024, with many prioritizing cost-conscious shopping behaviors, such as comparing prices and seeking discounts. 

Key Background: 

The grocery retail sector in the Gulf Cooperation Council (GCC) is undergoing a significant transformation, with value-led retail strategies gaining increasing importance. According to a recent report by US-based consulting firm Oliver Wyman, the rising demand for affordability, paired with shifting consumer priorities, is driving this shift. As competition intensifies in the region, retailers must differentiate themselves through cost-conscious strategies to stand out in an increasingly saturated market. 

Oliver Wyman’s report, “The Affordability Imperative: Capitalizing on Value-Led Grocery Retail in the GCC,” highlights key trends, particularly in Saudi Arabia, the largest market in the GCC. More than half of Saudi households experienced income fluctuations in 2024, with a notable 31 percent reporting a drop in income, and many consumers prioritizing affordability in their shopping decisions. Consequently, Saudi consumers are increasingly seeking value through price comparisons, promotions, and private-label products. Over 80 percent of consumers reported regular purchases of private-label items, and nearly 68 percent showed interest in discount retailers. 

In response to these shifts, retailers are embracing several strategic approaches to thrive in a value-driven market. Key tactics for success include competitive pricing, strong private-label offerings, operational excellence, and a focus on expanding rapidly through low capital expenditure models. The report also identifies four potential models for expanding value-led grocery retail in the GCC, including neighborhood discounts, basic discounts, mature discounts, and full-basket value-led models. 

Additionally, while international discount retailers like Aldi and Lidl have influenced trends, the report emphasizes that GCC grocery markets present unique challenges due to varying demographics, underdeveloped private-label penetration, and operational inefficiencies. Despite these hurdles, adopting global best practices, optimizing supply chains, and understanding regional consumer behavior can provide a pathway for success in the GCC’s evolving grocery retail landscape. Retailers focused on value-led models are well-positioned to capitalize on the growing demand for affordability and operational efficiency, reshaping the future of the region’s grocery retail industry.