Pakistan's retail sector set for double digit growth, strong growth online

Pakistan's retail sector will continue to enjoy a steady growth over the next few years, driven by a young and more tech savvy population, the growth of both 3G and 4G networks, and the push towards online retail channels. Experts told Khaleej Times that retail is the third largest sector in Pakistan, after agriculture and manufacturing.

Naveed Godil, chief executive officer of International Packaging Films, said that he expects the country's retail sector to record double digit growth over the next few years given the current economic predictions.

"Over the past two to three years, the biggest factor in contributing to the growth in retail has been the growth in 3G and 4G users in the country," he said. "Statistics show that the number of users have now reached 70-80 million, and that 35 per cent of the population is now using 3G and 4G."

This, he said, is important because having a 3G or 4G device is what gives people access to online retail channels, and networks and retailers have taken note. A lot of the growth, he added, will come from the country's rural areas, where the populace is embracing and enjoying greater connectivity.

In one of its recent reports, Euromonitor has stated that Pakistan is transforming into one of the world's fastest growing retail markets, driven mainly by the country's young population. Roughly, two-thirds of the population is below 30 years of age, amounting to around 135 million people - combine this with rising incomes in the segment, and the country's retail sector has a fertile ground for growth.

According to Euromonitor, the number of retail stores in the country will increase by 50 per cent to hit one million outlets in the five years through 2021. During the same period, the size of the middle class is also expected to surpass that of developed economies like the UK and Italy. Planet Retail revealed that the country's retail market is currently estimated to be around $152 billion with an annual growth rate of eight per cent.

Shabbir Merchant, managing director of Champion Neon, said that he believed that the country's retail sector will also benefit tremendously from the growth in the country's tourism sector.

"Moving onwards, we have the tourism industry improving tremendously," he said. "Tourists have been drawn to Pakistan to experience the country's rugged natural beauty, famed hospitality, and rich culture. Moreover, the real estate market is appreciating, which will help in boosting job opportunities as well as business investment opportunities. It is the right time for an investor or business owner to evaluate and leverage these opportunities, resulting from the new government policies."

Godil added that currently, the Covid-19 pandemic has resulted in a marked shift towards digital marketing. "Many established players have seen the numbers and understood that there are very good returns if they start focusing more on digital marketing and advertising. Before, there was not much of a focus on deliveries as well, but retailers have had to switch to them by default given the lockdown, and this has further allowed the market to mature. Deliveries of jewellery, cosmetics, fashion, and food from restaurants have all seen massive growth. The success of all these models have pushed retailers to reevaluate their plans for the future."