E-commerce will grow by 20 percent per year until 2022, six percent faster than was forecast prior to the global pandemic.

Consultants Kearney Middle East forecasts that the sector will be worth $50 billion by 2025 and will have a compound annual growth rate (CAGR) of 20 percent from 2020 to 2022, an upgrade from the 14 percent forecast which was made prior to the pandemic.

There will be a gradual growth rate of 14 percent until 2025, which has been revised from 10 percent prior to COVID-19.

Kearney’s report, “GCC e-commerce unleashed: a path to retail revival or a fleeting mirage?” forecasts that e-commerce will be retail’s main source of growth post COVID-19.

The consultant forecasted a CAGR of 35 percent in 2017, which meant a four-fold jump in value for the sector between 2015 and 2020.

“However, COVID-19 caused an unforeseen push and gave a new, accelerated lease of life to the sector, in line with what we have seen in global markets,” said Kearney partner, Adel Belcaid.

“This is due to a rapid change in consumer behaviour, with unprecedented adoption of e-commerce by all population segments, spurred to a large extent by the new normal of social distancing, lock-downs and reduced capacity in physical stores.”

Declining physical store sales pose a threat to commercial real estate, Kearney said. Small and medium enterprises (SMEs) may also experience challenges as only 36 percent have made the investment in an online sales presence, according to an earlier survey.

Debashish Mukherjee, partner at Kearney Middle East, said: “The projected growth in GCC e-commerce rests on crucial factors like the logistics infrastructure, flexible manpower models and centrally governed policies. All stakeholders should take note and revisit their strategies, operating models and policies to adapt and make the best of this e-commerce driven new normal.

“Those who have already made the investment have weathered the storm and are well positioned to lead in the post-COVID retail revival. More than ever, those who fail to make the required changes and investments will be sidelined and put their very survival in question,” concluded Kearney partner Debashish Mukherjee.

(Writing by Imogen Lillywhite imogen.lillywhite@refinitiv.com; editing by Daniel Luiz)

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