"Ministers’ information" Launches a new publication entitled: Egypt in International Indicators
The Center addresses the Global Retail Development Index and confirms: Egypt has achieved remarkable progress in the index and is considered one of the largest consumer bases in the region
Egypt’s ranking advanced 24 places in 7 years to reach sixth place out of 30 countries in 2023
Within the framework of monitoring and analyzing Egypt’s position in the most important international indicators issued by various international institutions and organizations, the Center issued Information and decision-making support at the Council of Ministers issued a report highlighting the indicators in which Egypt succeeded in making significant progress during the period (2014-2024). The report reviewed Egypt’s position in the Global Retail Development Index, which works to direct investments in the retail sector and the index ranks the best countries. Emerging Retail Investment does not identify markets that are attractive today, but rather those that offer future potential; The decision to enter a new market or expand or cease operations in existing markets is a decision of great importance, and with high business risks, smart retailers need objective data and informed insights. To support market entry, exit or expansion strategies, which is why Kearney established “Kearney” The Global Retail Development Index (GRDI) in 2002.
The Global Retail Development Index (GRDI) of “Kearney” answers several questions: (1- Are retailers thinking about entering new markets?, 2- Should retailers expand into emerging markets despite the possibility of achieving or not achieving returns? 3- What mechanisms are used to evaluate modern retail trade in countries dominated by informal or traditional sellers?).
The center indicated Information and decision-making support throughout the report are based on the Kearney Global Retail Development Index methodology, which classifies about 30 developing countries on a scale ranging from zero to 100 points. The higher the value, the better. Countries are selected from among two hundred countries through three criteria as follows: (1- State risk: The state must obtain a score higher than 35 in the state risk score published in Euromoney magazine. 2- Population size: The state’s population must be five million people or more. 3- Wealth: Per capita GDP GDP exceeds $3,000), and the index is calculated based on 4 sub-indices, each of which has the same relative weight in the index, which is 25%. The sub-indices include: (1- Country Risk, 2- Market Attractiveness, 3- Market Saturation, 4- Time Pressure
The report indicated that Egypt is one of the largest consumer bases in the region with huge long-term growth potential for retailers, and the development of Egypt’s value and ranking in the index was reviewed during (2016 – 2023), as the Egyptian country’s ranking advanced. 24 places in 7 years and ranked sixth out of 30 countries in 2023.
The center also reviewed in its report the most prominent developments in the retail sector in Egypt according to the index. In 2009, the growth rates of retail trade in Egypt reached ( 5-15%) driven primarily by the shift from traditional retail channels to organized retail channels, which makes Egypt an attractive market for long-term investment.
In 2011, the expected growth rate reached The Egyptian retail market over five years increased by 10% since 2011, driven by a large, active and growing population exceeding 80.4 million people who are gaining purchasing power.
As for the year 2016, the volume of sales reached Retail to $133 billion, as the country stabilizes (with some viewing the opening of the new Suez Canal in August 2015 as a positive sign) it offers attractive medium to long-term value for retail investments and total retail sales were expected to double by 2021.
Egypt rejoined the index in 2016 after its exit in 2012 following the January 2011 revolution and ranked thirtieth in 2016 in light of the slowly decreasing risks that the country was facing, with In this period, international retailers have easy access to the rapidly growing middle class.
Continuingly, in 2019, retail sales reached $115.5 billion, with the retail sector witnessing strong growth of 25%. % from 2017 to 2018, and in 2021 the index showed that nearly 90% of consumers have high confidence in digital payments – at more than 690% – for in-store and on-delivery transactions, which partly explains the success of e-commerce markets such as " market. Com, and Jumia,” and a survey conducted in 2020 found a 78% increase in electronic payment users, a 44% increase in QR code users, and a 20% increase in consumers who pay online through cards and electronic wallets.
The year 2023 witnessed a growth rate in the volume of transactions conducted through electronic points of sale by 71% in September 2023 compared to 2021, and the volume of transactions through mobile wallets increased by about 325% in September 2023 compared to 2021. Since 2022, the (BNPL) market has gained momentum due to high inflation and low purchasing power of consumers, and players such as (valu – symmpl) offer (BNPL) options and interest-free payment plans, and despite all the challenges it faces, Egypt continues to attract retailers.
The report indicated the volume of retail sector sales, which in 2016 reached about 133 billion US dollars, before declining to 115.5 billion US dollars in 2019, and then witnessed a significant increase in In 2021, it reached 200 billion US dollars, and in 2023, the sector’s sales volume reached 303 billion US dollars.
The report dealt with the SWOT analysis of the retail market in Egypt, issued by Fitch Agency. Including expectations until 2028, where the strengths were represented in: (1- Financing the “International Monetary Fund” program; With a value of 8 billion US dollars in a way that enhances consumer spending, 2- Strengthening the overall economy in the long term, which will provide greater opportunities for expansion in this market and make it more profitable for international food and beverage companies, 3- Egypt has become more urbanized, which supports the rise of modern forms of retail, 4- Relaxing the shopping center law approved by the Egyptian government in 2018, which requires that all new real estate projects include a commercial area, making it more attractive for retail developers to start their new projects. 5- Egypt’s population has reached more than 106 million people, providing one of the largest consumer bases. In the region with huge long-term growth potential for retailers, 6- Egypt’s large population makes it a prime investment market for many retailers, 7- Egypt’s popularity among tourists provides opportunities for the food service and hospitality sectors in the medium term, 8- Close links with the Kingdom Saudi Arabia and the United Arab Emirates led to the spread of regional brands).
While the most prominent weaknesses, according to the report, were: (1- Low income of Egyptian families, especially in rural areas, 2- – The decrease in female labor force participation limits the growth of household incomes, which reduces the opportunities for retailers to sell non-essential products. 3- The decrease in the number of families whose income exceeds 50 thousand US dollars until 2028 negatively affects consumption. 4- Many Egyptian families depend on… On financial transfers, which makes them vulnerable to external shocks).
As for the opportunities indicated by the Fitch report, they are represented in: (1- The possibility of investment in new shopping centers nationwide forming an opportunity. To expand retail trade and benefit from the growing demand of the large middle class, 2- The possibility of the young population creating opportunities for online retailers in the medium term, especially after the “Covid-19” pandemic. As an increasing number of consumers have embraced e-commerce, 3- The country’s affluent and young population is increasingly adopting modern spending habits which will boost demand for non-essential goods such as household goods, clothing and footwear in the medium to long term. 4- The retail real estate market is set to grow strongly. With supermarkets, hypermarkets, department stores, specialty stores and modern shopping centers becoming retail formats available to local and international retailers, 5- Consumers are expected to benefit from increased access to formal financial services in the medium to long term, 6- Egypt is known for being a manufacturing hub In the Middle East and North Africa region as well as other markets in North Africa which could offer an interesting marketing route for some retailers).
The challenges are: (1- War The cycle in Gaza, which led to a more pronounced slowdown in investment activity and a reduction in travel and tourism, 2- Increased inflationary pressures, which burdens household budgets and reduces the ability to spend non-essentially, 3- As the largest importer of wheat in the world, the increase in food inflation It adds inflationary pressures on Egypt, which burdens the purchasing power of consumers), and all of these challenges are expected to reduce to some extent in 2024, creating growth in 2024 and beyond.
In its report, the Information Center addressed the efforts of the Egyptian government In this regard, which were: (1- The government approved the Shopping Centers Law in 2018, which requires that all new real estate projects include a commercial area, making it more attractive for retail developers to start new projects, 2- The government’s focus on information and communications technology and the development of external transportation services. It launched “Egypt’s Digital Strategy for the Foreign Transport Industry 2022-2026”. In the hope of tripling export revenues generated from foreign transportation services and creating 215,000 job opportunities, 3- Encouraging the Egyptian government to grow retail trade, as shopping centers have become increasingly popular in Egypt, especially in major cities such as Cairo, Alexandria, and Giza, including the following: " In May 2023, GMG announced plans to open more than 100 sporting goods retail stores across Egypt. By 2026, the government is working to ensure that the e-commerce sector in Egypt expands in a safe and trustworthy manner.
At its conclusion, the report referred to the expectations of the retail sector in Egypt, according to Fitch, which were: (1- Growth of the retail sector in Egypt by 11% or more during the next four to five years, 2- Increase in household spending in the medium term (2024-2028). With the increase in economic activity and the easing of inflationary pressures, which supports the purchasing power of consumers, 3- Necessities will constitute about a third of household spending budgets during the period (2024-2028), and basic spending will grow faster than non-essential spending, which indicates a shift in purchasing patterns.
