Twenty years back, Pakistan's middle class used to do groceries from the neighbourhood store on udhaar (informal credit), which was used to settle at month end. Today, they go to big supermarkets and swipe credit cards, which is again settled monthly using a chain of financial institutions. Probably after a decade, consumers may prefer clicks on smartphones to shop online, and this may include logistics companies coming into play as well.
Rising middle class along with growing urbanization in today's world of technological advancement and efficient supply chain is not only increasing convenient choices for consumers, but has also opened a channel of entertainment for an entertainment-starved country.
According to Euromonitor International, store-based retailing has increased from Rs2.4 trillion in 2010 to Rs4.8 trillion in 2015, with share of grocery retailing thinned from 73 percent to 60 percent. The mushrooming sector is non-grocery specialist, which primarily includes fashion and electronics. No wonder, branded fashion houses are thriving.
Housewives used to spend hours in shopping centers, now the young working ladies spend the bulk of their earnings and spare time in tens of the countrys top fashion brands. In case of electronics, the boom is widened to lower middle class as well - usage of household electronics and smart phones is on a constant rise. This has led to high growth of non-store based retailing, including online and home shopping, whose quantum is increased from Rs1.7 trillion (2010) to Rs11.5 trillion (2015).
Wholesale and retail trade is around one-fifth of the countrys GDP and is the single biggest sub-sector in the economy. Although its share in GDP is on marginal decline as it fell from 19.1 percent in FY10 to 18.3 percent in FY16, the emergence of new channels in it is phenomenal.
The share of supermarket chains is yet too small, compared to small unbranded stores; but it is picking up. For instance, Karachi's Imtiaz supermarkets share doubled in overall pie from 0.2 percent of total retail market to 0.6 percent, and Lahore's Al-Fatah's share tripled from 0.1 to 0.3 percent in the last three years.
Carrefour's Hyperstar is becoming the salient feature of shopping malls - its share is 0.3 percent of retailing today. The branded supermarkets are still limited to upper middle class in urban centers, as lower middle class either still prefer small stores or utility stores, which are run by government; utility stores share is 2.4 percent of total retail market, while 95 percent market belongs to neighbourhood superstores, including corner stores.
Nonetheless, the trend is changing. For instance, there are around 6,000 utility stores with 2.4 percent of market share, while around 10-12 stores including Imtiaz, Al-Fatah, and Hyperstar have a commutative share of 1.2 percent. Every new store in premium categories is going to grab more and more share of others.
Concurrently, big shopping and entertainment malls are on the rise - after Dolmen in Karachi and Centaurus in Islamabad, Nishat Emporium is opened in Lahore. There are two similar-sized malls under construction - one by Yonous Brothers Group in Karachi and other by Packages group in Lahore.
Every local fashion brand and international food chain ought to open in every new mall, keeping its brand alive, even if rents are too high relative to sales. This generates employment and business opportunities for vendors in the supply chain. These are signs of a booming economy and potentially can attract tourism, given that the security situation remains better.
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