Saudi’s first duty-free company is set to boost the Kingdom’s fast-growing travel retail market. In the first half of 2024, Saudi received 60 million tourists, who spent $39.8 billion (SAR 150), a 10% increase compared to last year. The substantial increase in international travelers has already boosted demand for duty-free items and luxury goods, leading to the resurgence of the travel retail market in Saudi Arabia.
To capitalize on these trends and improve retail offerings, Saudi introduced Al Waha, which is the country’s first homegrown duty-free operator. The strategic initiative, launched by the Public Investment Fund (PIF), will help boost local supply chain operations and manufacturing activities involved in the travel retail market, thus increasing the country’s market share in this competitive industry.
How does Saudi’s First Duty-Free Company Promote Opportunities in Travel Retail Market?
As an operator, Al Waha will be managing an extensive network of duty-free shops with a wide assortment of products, with a focus on local and country-specific items. By doing so, the initiative is bound to create new realities for local retailers.
With the travel industry transforming at a rapid pace in Saudi, local travel retailers will have a bigger opportunity to expand product ranges and incorporate new retail concepts to cater to the discerning preferences of international travelers.
By expanding distribution channels such as inflight shopping for retailers, the strategic initiative will further transform airports and travel hubs in Saudi, into thriving retail centers where national brands get wider global recognition.
These changing market dynamics will further support the production of homegrown items and stimulate local manufacturing, which in turn drives robust overall socio-economic growth. This comes in close alignment with Saudi Arabia’s grand aims to boost local content, a key pillar of Vision 2030.
Additionally, the new venture will unlock significant opportunities for retailers and brands worldwide, giving them the chance to increase their customer base and brand awareness, while taking advantage of Saudi’s growing appeal as a tourism and business hub.
As a result, many will turn their gazes to Saudi as their strategic base for investment as well as business expansion and setup. This transformation will prove to be a magnet for global talents with the necessary expertise for the smooth functioning of travel retail businesses.
Thriving Tourism and Aviation Industries Accelerate Transformation of Travel Retail Market in Saudi
Across the globe, duty-free and travel retail are vital revenue generators in a number of sectors, such as aviation, tourism, and the maritime sectors. As such, travel retail plays a crucial role in not only improving the traveler experience but also supporting local economic development.
Saudi is no exception. The rapid expansion of the travel and tourism sector is one of the key factors driving the growth of the travel retail market in Saudi.
Tourism is fast becoming a cornerstone of the economic landscape and diversification drive, supporting the creation of nearly 960,000 nationwide. According to official data, the incoming tourist count surged by 27% in the first nine months of 2024. This represented a 14% uptick during the same period in 2023.
One of the biggest catalysts for this surge is the growing influx of leisure travelers. The number of visitors arriving in Saudi for entertainment and leisure purposes reached 17.5 million in January and July 2024. These record-breaking figures set the stage for even higher traffic in the years ahead.
To keep pace with rising passenger traffic, Saudi has been focused on modernizing and upgrading its airport infrastructure, driven by a flagship policy to attract $100 billion in investments by 2030.
The objective is to support growing air travel demand and handle an influx of passengers flying into the Kingdom for large-scale events such as Riyadh Expo 2030 and FIFA World Cup 2034.
The surge in air travelers creates a conducive environment for duty-free retailing, contributing to the increase in discretionary spending on travel-exclusive products.
In addition to being a catalyst for a rise in airport commercial activities, Saudi’s first duty-free company will serve as a dominant force that enables the Kingdom to realize its full potential in the already thriving travel retail market.