In the 4th episode of Retail Power Talks for the Saudi Retail Show, we had the honor of hosting Daniel Sanchez, the founding partner of GCC Capital Partners. Daniel is a visionary leader who has been instrumental in bridging businesses from around the globe with investors and government entities in the GCC region. With a keen focus on the retail sector, Daniel shares his extensive experience and insights on the rapidly evolving investment landscape in Saudi Arabia and the broader Middle East. We hereby delve into the opportunities and transformations that are shaping this dynamic region.

Q: Could you give us a snapshot of what's happening right now in Saudi Arabia and the broader region?

A: We are witnessing rapid growth in the region, not just in Saudi Arabia, but in the four GCC countries. I just came from Kuwait, and it's incredible to see the transformation, especially in construction and digitalization. Saudi Arabia stands out because of the significant international focus and marketing efforts by the government and semi-government entities. The Emirates, as a financial hub, is also attracting diverse investments. Personally, I believe the Middle East is becoming the new Europe. Experiencing this transformation firsthand is truly fascinating.

Q: How do you see foreign companies aligning with Saudi Arabia's Vision 2030, and what opportunities does it present?

A: The opportunities presented by Vision 2030 are vast and span different sectors, including retail. In retail, for example, market growth is projected to reach about $200 billion by 2028. This means that retail will become one of the most important sectors in the Middle East for the next 10, 15, or even 20 years. Each country in the region is aligning with Vision 2030, making it a collective vision rather than just Saudi Arabia's goal. The investment potential in retail and other sectors is enormous, and foreign companies have a unique opportunity to be part of this transformative journey.

Q: How do you see foreign companies aligning with Vision 2030, and what opportunities does it present?

A: The opportunities presented by Vision 2030 span various sectors, including retail. In retail alone, the investment is projected to reach around $200 billion by 2028. This indicates that retail will become one of the most important sectors in the Middle East, not just for the coming years but for the next ten, fifteen, or even twenty years. This sector's investment potential is enormous, and each country in the region, not just Saudi Arabia, is aligning with Vision 2030.

International companies need to understand what Vision 2030 entails. It signifies a blend of technological advancements in AI, digitalization, and e-commerce while respecting the traditions and identities of the Middle East. Often, people associate Vision 2030 with large projects and tourism, but it also emphasizes respecting the region's values. Therefore, international companies must recognize and respect the local values, traditions, and religion to create the best environment for collaboration.

For instance, Saudi Arabia is creating the right path for Vision 2030 through significant investments in government marketing and giga projects like NEOM, Red Sea Global, Trojena, which is a new city for ski resorts, and Oxagon, which focuses on logistics. These efforts demonstrate how Saudi Arabia is evolving with new technology while respecting its heritage. Living in Riyadh, I've experienced this transformation firsthand with projects like King Salman Park and the Northern projects in Qiddiya.

Q: Speaking of technology, AI and technology are reshaping everything. How do you think these advancements are blending with traditional and small retail businesses in the region?

A: AI and digital transformation are vital for the retail sector because it supports societal values. The retail sector often merges with small and medium-sized companies, many of which are family-owned businesses launching their ventures in Saudi Arabia, including food and beverage, cosmetics, and cultural products.

We are actively protecting and supporting these small and medium-sized companies through initiatives like the SME Expo, which showcases Saudi national products in the GCC and internationally. By integrating AI and technology, we are helping new generations receive education with values, preserving the identity and traditions of the region. While giga projects are essential, the true identity of the region lies in its small and medium-sized companies. Supporting them through AI and technology ensures the continuity of these values for future generations.

Q: And if we speak about the obstacles that foreign companies might encounter while entering Saudi Arabia, what do you think are the main challenges they can face?

A: The challenges are primarily cultural. Foreign companies need to understand the region's values and traditions. It's not enough to come and sell; there must be a commitment to being part of the transformation. The Saudi government is reducing taxes to attract foreign direct investment, but there are still some taxes that may be reduced in the future. Companies face a disadvantage of around 20% compared to local companies due to taxes and shipping costs.

Cultural adaptations are also necessary, and understanding the digitalization efforts in Saudi Arabia is crucial. Small and medium companies in retail find it challenging to merge technology with traditional business practices. It's important for international companies to recognize that each country in the Middle East is different and requires a tailored approach. Connecting with the right local partners, lawyers, and financial corporations is essential. It may be a difficult process initially, but with time, international companies can understand and navigate the landscape.

Q: Looking ahead, what are your predictions for the investment climate in Saudi Arabia and the broader Middle East over the next few years?

A: The transformation in the Middle East will continue for the next twenty years. Saudi Arabia is taking on a big challenge by creating new cities and projects that were mere dreams ten years ago. This process requires time and faces criticism from skeptical institutions. However, even if 80% of the vision is achieved, it will significantly change the world.

Transformation involves stepping out of the comfort zone, and Saudi Arabia is receiving criticism for its new development. The world needs countries that take on such challenges. The Middle East is facing a big challenge, but even reaching a percentage of this challenge will change the mentality and perception of the region.

Q: Speaking about events like the Saudi Retail Show, they seem quite pivotal. How do you think they impact the industry, and why are they important?

A: Events like the Saudi Retail Show are very important for both international and local businesses. The Saudi Retail Show will have around 4,000 decision-makers and is expected to have a significant impact on the retail market, which is projected to reach $200 billion by 2028. It's an excellent opportunity for startups focusing on e-commerce and digitalization technology to connect with investors and public and private entities.

The Saudi Retail Show allows companies to connect directly with major retailers. It's a big opportunity to showcase products and understand the GCC market. We hope it turns out to be a great event in October.

Our conversation with Daniel Sanchez was filled with valuable insights into the dynamic realm of retail and investment in the Middle East. His expertise and vision have shed light on the incredible opportunities that lie ahead for businesses and investors in the region.

Make sure to join us for our upcoming episodes, where we'll continue to feature engaging discussions with top experts in the industry. If you have any questions or topics you'd like us to cover, feel free to reach out—we're always excited to hear from you.