Economy, Domestic Economy

Retailing in Iran: Slow Shift to Modernization

Retailing in Iran: Slow Shift to ModernizationRetailing in Iran: Slow Shift to Modernization

Unlike many neighboring countries that have seen rapid modernization in the retailing industry, Iran remained very traditional, with a large number of independent outlets mushrooming across the country.

Data provided by Euromonitor in its 2014 report show Iran ranked first in the world in terms of the number of retail stores.

“Currently, there is one small supermarket for every 35 residents,” university professor and business advisor, Mohammad Aqaei, was quoted by Forsat-e Emrooz daily as saying.

Due to their high number, independent outlets face tough competition as they seek to attract shoppers. A process of upgrading from independent small grocers to independent supermarkets or even larger outlets was apparent in 2014 as a strategy adopted by some outlet operators to attract more consumers.

The entry of multinational retailer Majid Al Futtaim Hypermarkets LLC to the country had a significant impact on modern retailing in the country, especially in the grocery sector. Many consumers discovered the convenience of shopping from modern outlets and became less satisfied with the old, small grocers. As a result, many such grocery outlets converted to supermarkets, although they kept their independent status. Bigger outlets, better product arrangement and better service to consumers marked the grocery trend in 2014.

Iran has a large young population who are educated and looking for improvements in their standard of living. The modern grocery retailers’ channel, which includes hypermarkets, is considered a major step forward amid the increasing trend toward urbanization.

Forecasts show that in the not-too-distant future, following the removal of western sanctions against Iran, retailers’ sales will see exponential growth.

“The emergence of multinational retailers, such as the likes of French retailer Carrefour’s Hyperstar, will further drive growth,” Aqaei said.

Jobs in Iran’s retailing industry have always been highly paid and despite years of sanctions, the industry has not lost its appeal and remains one of the lucrative sectors, he added.

“Estimates show that retailing will reach $108.3 billion in 2016, whereas grocery and non-grocery retailing will constitute $44.1 billion and $64.2 billion respectively. People employed in this sector stood at 3.202 million in 2011, which accounted for 15.7% of all employees in the country,” he concluded.