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Booming growth in Pakistan’s retail sector

With the induction of global brands and outlets, Pakistan’s retail sector at present witnessing a booming and impressive growth. The local retailers are expanding their boundaries to compete with their larger foreign competitors. In 2013, seven Pakistani brands were nominated for the first time for the World Retail Awards held in Paris, in which three brands were shortlisted. Many local brands have expanded and gone global by adopting fast-changing trends. With an estimated size of the retail market at around $50 billion, the country’s retail sector is growing faster than its economy. But still there is long way to go and some key initiatives by the government and entrepreneurs need to be taken to meet the future challenges confronting retailing industry in Pakistan.

Today, we find in our cities big shopping malls and hypermarkets and small and medium scale outlets providing which various different categories of products under one roof. The phenomenal growth in retail sector bodes well for the country’s economic health, as the sector can create enormous job opportunities and attract foreign investment into the country by alluring global brands to the local market.

Trends in the country’s retail industry are quite encouraging, as far as the development of new retail formats and the establishment of a large number of global chains’ retail outlets all across the country is concerned. The country has witnessed the mushroom growth of more and more malls, restaurants, sport complexes, multiplex cinemas, and a large number of shops in big cities. Household size and income have a decisive influence over shopping decisions. Research studies show that in Pakistan’s mega cities a majority of households with larger family sizes shop at general stores, while those with smaller family sizes shop at large supermarkets. Quality shopping has led consumers towards modern retail shopping options. A majority of consumers seek quality products in adequate quantities under one roof. The retail stores and shopping malls have become very attractive to the consumers in Pakistan. For many Pakistanis, a visit to modern retail, hyperstar market and wholesale centres has become a pleasant family outing.

Last year, nine Pakistani companies participated in the Southern African International Trade Exhibition for Retail Products and Africa Big Seven. This was the move to encourage demand for Pakistani products under the auspices of the Trade Development Authority of Pakistan (TDAP). More than 1,100 exhibitors from 43 countries participated in these exhibitions in Sub-Saharan Africa. The target of the exhibitions was the retail sector with focus on importers, agents, distributors and wholesalers. The Pakistani companies that took part in the exhibitions included Mehran Food, Niraav Foods, Dawood Textiles, Softwood Textiles, Golden Pearl Cosmetics, Crosswear, Unique Trader and Best Clean Textiles.

 

Important destination for Pakistan

Africa ranks highly in terms of international business interest as research proves that seven out of top 10 fastest growing economies of the world are in Africa. South Africa, a gateway to Africa, is the largest trading partner of Pakistan in the African continent of 54 countries. It is the biggest economy in Africa with a gross domestic product of $390 billion and total trade of $190 billion. Pakistani exports to African countries have witnessed a steady growth over the years. Last year, South Africa imported goods worth $290 million from Pakistan while its total imports were $85 billion.

In future, Kiryana stores in Pakistan is likely to exist but their growth will retard because of their unorganized retail format. Kiryana stores channel is likely to adopt some of basic techniques of organized retail format. The retailing in Pakistan is going to be shaped in coming years on global retail format. The competition between global retail outlets and local department stores will intensify in future. The existing chain of local and national retail outlets will continue to expand their network in other urban centers across the country. New global chains of grocery and life style stores are likely to enter in the country’s market in future. With the entry of giant global retailer, the process of retail modernization may accelerate in the country.

The key decision by Pakistani entrepreneurs and professional working for national and multinational companies operating in the country will decide direction of the future growth of retailing industry.

Pakistan has an unorganized retail sector. There are inherent limitations which include lack of economies due to small scale operations, lower level of functional expertise and lack of financial strength. Such limitations negatively impact the ability of unorganized sector to display its products. Great attention should be paid on the format of retailing in Pakistan. according to one estimate, the organized retail penetration is around 5% in the country.

What are the constraints that hamper the country to keep up the momentum of its growing retail market? Pakistan still lacks a skilled labor, trained, qualified and experienced manpower in its retail market. The sector is not patronized by the government it should be. The country still lacks in both upper management and lower management positions. A retail body should be established to promote the sector and the government should facilitate its growth by taking initiative to streamline the retail sector. The retail body must conduct the training of man power and help clearing supply chain issues and other related problems. The retail body must ask quality institutions to arrange local training workshops on retail sector.

Local retailers need grooming and training to represent Pakistan at global platforms. The local chains or brands should arrange trainings of the work force on regular basis. A major challenge is the counter sale outlet phenomenon to trade marketers who find it extremely difficult to implement various sales promotion tools like shoppers’ messaging and category management.

Local retailers must develop a vision and do their business with a vision. The lack of concrete and reliable data does not allow foreign companies in Pakistan, to formulate ‘fact-based’ plans for product availability and to roll out trade incentives. The government should collect proper data of total number of retail outlets in the country, as retailers avoid disclosing about their sales due to taxation issues. This is also necessary to broaden tax net and document the national economy.

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