Efforts to empower more Saudi's into the workplace could lead to staff shortages in stores, Jones Lang Lasalle has warned.
Saudi push creates danger of staff shortages
Saudi Arabian retailers are likely to suffer major staff shortages amid government initiatives to empower its citizens, Jones Lang LaSalle has warned.
In a report published yesterday, the global research and property services firm said the Saudisation initiative, with the length of expatriate visas curbed at six years, was "an absolute positive" in encouraging retailers to hire local Saudis. However, it said that investment in training would be the key differentiator in sales performance.
"Unless [training] becomes a serious consideration for major stakeholders, there is a real danger of a shortage of qualified, national candidates suitable for servicing future retail needs," the report said.
Saudi Arabia is the largest retail market in the Middle East, with consumer spending expected to exceed 256 billion Saudi riyals (Dh250.73bn) this year, which compares with less than US$31bn (Dh113.87bn) in the UAE, the second-biggest market in the region.
The retail sector makes up more than 17 per cent of GDP in Saudi Arabia and is expected to grow by 13 per cent next year to $78bn, according to the report.
"Significant growth potential exists for the retail market in [Saudi Arabia], especially in light of its demographic make-up and large base of domestic demand," it said.
Retail space has increased dramatically in Jeddah and Riyadh in the past five years, with more than 60 per cent of the stores in both cities built in that time. Only Abu Dhabi has had a greater proportion of its retail space completed in the period.
But despite this rapid growth in retail space, the sales potential in the sector is being held back by the fact that women, who are not allowed to drive, are unable to spend more autonomously in malls.
"While some Saudi women have convenient access to male drivers, many do not and this limits their ability to visit malls or other retail outlets," the report said. "The consequence is that women must typically plan their journeys in advance instead of shopping at their discretion, which means that retail spending in Saudi Arabia remains below its full potential."
A ban on cinemas in malls is also damaging potential sales growth as malls struggle to position themselves as entertainment destinations rather than just shopping centres.