Boston, MA -- (ReleaseWire) -- 04/10/2014 -- Egypt's huge and expanding population, together with increasing levels of disposable income, should result in a strong rise in household spending over the next few years. Consequently, the Egyptian retail sector is set to continue to grow across all subsectors. We are particularly positive about the future growth prospects for health and transport, with communications also set to grow strongly; however, we expect the highest proportion of the household budget to be spent on food & drink throughout our forecast period, with housing & utilities spending also taking a substantial share.
The new Egypt Retail report provides an extensive and comprehensive forecast of various retail indicators including household spending and headline total spending across each retail subsector, household income and employment forecasts, demographic forecasts and a detailed breakdown of household and per capita spending across a large number of retail areas including food & drink, clothing & footwear, household goods and a number of other subsectors.
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Although the Egyptian retail market remains fragmented, dominated by small, family-run shops in highly populated urban areas, the organised retail market has been developing slowly but steadily in recent years as more consumers are converting to modern retail methods. The market share of small neighbourhood outlets is undoubtedly beginning to decline as the modern retail sector grows. With the arrival of mass grocery retail (MGR) in particular, Egyptian consumers have been exposed to a new shopping experience.
In a country in which almost a third of the population is in the 20-39 years age range, important for household spending on the retail sector, large shopping malls are attracting young consumers who aspire to the international brands that are increasingly becoming available. City Stars, which opened in Cairo in 2005, is the largest shopping mall in the Middle East and North Africa, with tenants including the UK's Marks & Spencer (M&S). Dubai-based mall developer Majid Al Futtaim Properties, meanwhile, began construction of its US$800mn Mall of Egypt project in September 2013.
We see long-term potential in the Egyptian consumer market, particularly for non-essential items and aspirational purchasing by younger consumers whose incomes are rising. We forecast the average net household income will be US$10,120 in 2014, with more than 83% households falling into the bottom wage bracket of US$5,000+, and only just over 30% of households earning US$10,000 or more. However, by 2018, more than 72% of households are expected to be in this middle-income bracket, which represents the key demographic for increased household spending on luxury items beyond necessities such as food, utilities and transport. We expect a corresponding increase in household spending on furnishing & home; communications; personal care; and, to a lesser extent, on clothing & footwear.
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