Arab News: The evolution of neighborhood grocery stores and delivery services in Riyadh and other Saudi cities dates back decades, when groceries first introduced order delivery through motorcycle couriers. With recent technological changes, delivery has shifted into a standalone sector known today as “order delivery.”
Traditional grocery stores, which pioneered delivery long before digital platforms existed, now face increasing pressure from a fast-growing wave of electronic grocery platforms. Their expansion raises the question of whether traditional shops can continue to endure, as they previously did against mini-markets, supermarkets, and hypermarkets.
Saudi Arabia’s electronic grocery market is entering a new phase of expansion, driven by the rise of domestic brands such as Nana and Ninja, as well as international competitors including Amazon and the Chinese platform Kita.
Traditional grocery stores face a rapidly evolving challenge to keep pace with digital transformation and retain market share as consumers increasingly migrate toward faster, more advanced delivery platforms.
Data from the Ministry of Commerce, obtained by Al-Eqtisadiah, show that commercial registrations for grocery activities declined by 4 percent in the third quarter of 2025. By contrast, registrations for delivery services through digital platforms increased by 13 percent year on year.
The drop to 3,168 grocery registrations reflects rising pressure on small and medium-sized stores as they compete with major retailers and online platforms, while also managing higher operating costs and shifting consumer behavior toward digital shopping.
Meanwhile, registrations for electronic delivery services reached 953 by the end of the third quarter, reflecting the rapid expansion of the digital economy and logistics services driven by specialized apps and growing demand for speed and convenience.
Competition in the sector has broadened significantly. Specialized grocery apps such as Nana were followed by restaurant-delivery platforms like HungerStation and Jahez entering the grocery segment, alongside ultra-fast delivery models supported by neighborhood micro-warehouses.
Abdullah Al-Salama, chairman of the Restaurants and Cafes Owners Association in Jeddah, said that digital transformation and delivery apps have reshaped the retail landscape in Saudi Arabia. He stated: “Competition no longer depends on location or the size of the store, but on digital presence and the customer experience.”
He added that ratings, delivery speed, and service quality have become critical factors for a retailer’s survival, noting that smaller stores can compete with larger brands if they excel in digital marketing.
He said this shift makes success dependent on understanding new market rules. Al-Salama added: “The apps did not stop at displaying products but have begun studying consumer behavior through the use of data to improve the experience, provide personalized offers, and content that matches their preferences and consumption pattern, and thanks to this personalization, a relationship of trust was built with the platforms and not only with the brands.”
Consumer behavior has also changed, with online shopping becoming a primary choice rather than an optional alternative. Delivery speed, service quality, ease of app use, promotions, and pricing now determine whether customers remain with a platform or switch to competitors.
International reports estimate the size of the online grocery market in Saudi Arabia at between SR5.8 billion ($1.5 billion) and SR6.2 billion in 2024, with annual growth expected to exceed 15 percent over the next decade, according to the Saudi Arabia Online Grocery Market Report 2024 by IMARC Group.
Majed Al-Tahan, CEO of International Applications Co. under BinDawood Holding, said: “The market is witnessing rapid growth with increasing demand from consumers, and the entry of new competitors enhances innovation and pushes traditional stores to develop their digital services.”
He expected accelerated growth, stating: “The size of the market will double within five years with increased competition over service quality.”
Al-Tahan added that his company’s strategy is based on “The hybrid model, by supporting the apps and preserving the value of the branches.”
The future of neighborhood groceries remains under discussion as long-trusted local shops may struggle if they fail to adopt digital tools and new customer expectations.
Obaid Al-Anzi, CEO of the Mr. Mandoob application, said: “In light of the launch of Mr Market: the consumer in groceries does not look for a specific brand as in restaurants, but wants speed and proximity, and the cloud electronic groceries will not eliminate the traditional stores, but they will reshape the scene and impose adaptation on everyone.”
He added that digital platforms are contributing to building a strong digital economy and strengthening their role as a logistics arm that supports the competitiveness of the local market, in line with Saudi Arabia’s Vision 2030 digital transformation goals and efforts to improve the quality of life.
https://www.arabnews.com/node/2624019/business-economy
