A new report by Boston Consulting Group (BCG) has urged retail real estate developers across the Gulf Cooperation Council (GCC) to overhaul traditional operating models, warning that rapid technological disruption and changing consumer behaviour are reshaping the future of the sector.
In its report, Imagining the Future of Retail: Beyond Space, BCG said the GCC is undergoing one of its most significant retail expansion cycles, with major mixed-use and lifestyle developments underway in cities including Riyadh, Jeddah, Dubai and Doha. However, it cautioned that expanding retail space alone is no longer sufficient to ensure long-term success.
The consultancy identified five structural forces transforming the sector: the growth of e-commerce, the rise of omnichannel retail ecosystems, rising demand for immersive consumer experiences, the emergence of retail media as a revenue stream, and the increasing role of artificial intelligence in shaping purchasing decisions.
Andy Veitch
BCG Middle East Partner Andrea Pierobon said the pace of change is accelerating, requiring a shift away from space-led development strategies toward capability-driven models focused on data, customer engagement and innovation.
The report noted that retailers are reducing physical store footprints and testing new formats as online shopping gains share, while malls and retail destinations are increasingly being repositioned as experience-led environments rather than purely transactional spaces.
It also highlighted the growing importance of retail media and data monetisation, alongside AI-driven tools influencing consumer behaviour, particularly among younger shoppers.
BCG outlined three disruption scenarios that could reshape the sector: a future in which more than half of all retail sales take place online; a landscape where customer data becomes more valuable than traditional product margins; and a market increasingly influenced by AI agents that guide consumer purchasing decisions.
The report also identified three emerging models for GCC retail real estate: community-focused centres serving daily needs, experience-driven destinations centred on entertainment and social activity, and ecosystem platforms built around data, partnerships and integrated services.
BCG Middle East Managing Director Andy Veitch said developers have an opportunity to redefine the sector by investing in future-ready capabilities and embracing new business models. He added that firms able to adapt quickly would be best positioned to lead the next phase of retail development in the region.
The report concluded that operators must strengthen capabilities in data analytics, omnichannel integration, customer experience design, sustainability and strategic partnerships. It warned that continued reliance on traditional leasing and occupancy-based performance metrics could undermine competitiveness in an evolving retail landscape.
