PUNJAB BOARD OF INVESTMENT AND TRADE
Project & Policy Research Wing
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OVERVIEW OF PAKISTAN’S ECONOMY Importance of Retail in Pakistan PAKISTAN’S RETAIL INDUSTRY- AN OVERVIEW Retail Formats in Pakistan i. Small Retailers ii. Supermarkets and Wholesale Centers Demand Drivers Important Sectors i. Food & Beverages ii. Apparel iii. Footwear iv. Health & Beauty v. Electronics vi. Home Furnishings
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15 Retail Formats by Regional Concentration 16 Commercial Real Estate vis-à-vis Retail sector in Pakistan
17 PUNJAB’S POTENTIAL 18 Lahore’s Real Estate and Retail Potential 19 Changing Face of Lahore 20 Map of Commercial Activity in Lahore 21 RETAIL OWNERSHIP FORMATS IN PAKISTAN 22 Independent Retailer 23 Franchising 24 Joint Ventures 25 Strategic Licensing Agreements 26 FUTURE OUTLOOK 27 PBIT SERVICES 1 2 3 4 5 6 7 8 9 10 11
Despite internal and external factors like political volatility, energy shortages and climatic disasters threatening its economic stability, Pakistan has emerged with encouraging positive real GDP growth rates throughout the previous decade. Even after the global recession hit in 2008, it managed a positive growth rate in all the years thereafter. Many global analysts remain positive of Pakistan’s exponential growth potential in coming years. Goldman Sachs’ Jim O’Neill, for instance, counts Pakistan among his ‘next eleven’ economies which he believes will be the drivers of global growth in future times. Indeed, with the 6th most populous country in the world recording growth in real per capita income (2.9% in FY2010), real private consumption (7%) and global imports (14.7%), it is likely that the global market for goods and services will draw signiﬁcant contributions from it.
A particularly encouraging aspect about Pakistan’s growth is the heavy contribution of the services sector during recent years. Currently contributing 53.30% to real GDP, the services sector has maintained a majority’s average since at least a decade. The continuous growth in Pakistan’s services sector since 2004-05 is indicative of many positive changes in the economy. It signiﬁes overall economic growth and hints at the presence of an increasing consumer base with expanding incomes or purchasing power to enjoy a larger share of services in their consumption bundles. Real GDP (at constant factor cost) (PRK billion)
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 3,992 4,216 4,593 4,860 5,192 5,383 5,476 5,682 5,817
The following table displays a continuously growing trend in the employment-to-population ratio for ages 15 years and above in the past decade.
Employment to Population Ratio by Sex and Age (%)
Other demographic factors leading to increased consumerism and growth of services include a rise in both total and urban population. The increase in the proportion of urban population in the country indicates that a greater number of people now have access to the wide range of goods and services available in urban centers. Total Population (millions) Urban as % of Total Population
Pakistan is among the next eleven economies driving global growth’ – Goldman Sachs’ Jim O’Neill • Pakistan is a resilient economy, its real GDP, showing positive growth in recent years despite signiﬁcant challenges like the global recession • The services sector contributes %53 to the total economy • The share of wholesale and retail in services is around %33, and in overall GDP, around %18 • Retail is the 3rd largest sector in Pakistan after agriculture and manufacturing and the second largest employer, employing %16 of the total labor force • Pakistan’s retail market is estimated at USD 42 billion with expected annual sales in excess of USD 105 million by 2012 end • Important contributing factors include a young...