With the induction of global brands and outlets, Pakistan’s retail sector is presently witnessing a booming and impressive growth. The local retailers are expanding their boundaries to compete with their larger foreign competitors. 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 like Karachi and Lahore big shopping malls and hypermarkets and small and medium scale outlets providing 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. 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.
Influx of foreign retail brands
Despite security concerns, the country has witnessed an influx of foreign retail brands. It is a fact that international brands are making entry into the country’s lucrative market by opening their franchises in mega cities and towns. Certainly, the growing number of international entrants in the local market establishes this fact. The entry of foreign retail franchises into Pakistan is testament to the enhanced demand of foreign brands among local consumers. The local market already has the presence of leading international fast food franchises and consumer brands, which are successfully doing their business in the country.
Foreign brands also give Pakistan a soft image. It is just because of the fast food franchises that we have the presence of auxiliary industries like the home-delivery service and suppliers of quality poultry, meat etc, according to modern quality standards.
Presence of international franchises not only retains foreign exchange but also generates jobs and world class professional knowhow. These international franchises provide the rich and affluent, who used to shop abroad, an opportunity to shop and spend money within the country.
The trend of foreign retail outlets continues to expand into other products, services, and brands in the country. This year, Clarks, the international shoe manufacturer and retailer, arrived in Pakistan by launching its first ever store in Karachi. The store was inaugurated by the acting Deputy High Commissioner of the British High Commission Gillian Atkinson.
The stores are also being opened up in Lahore and Islamabad. The brand has a unique heritage of almost 200 years in remarkable shoe design. It has been successful in becoming the leading shoe company in the UK and a global business in over 100 markets worldwide. With their latest franchise in Pakistan, the brand intends to penetrate the markets and set impeccable shoe-trends. The brand is also well-known for its celebrity clientele and collaborations with high-fashion designers.
There are many luxury and mass retail brands, which have made entry into the local market. Earlier this year, Ralph Lauren and Armani Collezioni entered the Pakistani market by launching retail group Sefam. Armani, which currently stocks for only men, keeps standards and prices abreast with those across the world. Armani’s entry into Pakistan shows they deemed it to be an inarguably viable front for sales. Moreover, the entry of BHS and US Polo in the market is also expected. Other international brands Calvin Klein, OnTop Barcelona and Silvian Heach are all set to arrive in the 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 centers has become a pleasant family outing.
Issues & Challenges
Pakistan, however, faces some challenges in way of introducing new franchises in the market. Presently, there is dearth of malls in major cities, which means there is not enough space for foreign brands for its operations in the local market. New malls with international standards and according to the needs of international brands must be constructed in major cities such as Karachi, Lahore, Rawalpindi and Peshawar.
Lack of good quality retail space is another challenge. All steps must be taken get the local market ready for arrival of foreign brands such as H&M, Forever 21. Similarly, the government must play the role of facilitator in opening the local market to foreign brands.
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.
Law and order is still an important issue in the counties major cities. The government needs to take all steps to improve security situation in the country particularly in Karachi, the country’s commercial capital. More global chains are eying Pakistan but they still wait and hesitate due to security concerns in the country.