BCG warns GCC malls face a data shift as AI becomes part of shopping journeys

The GCC retail real estate boom is running into a wall, and it is not made of concrete. A new Boston Consulting Group (BCG) report, Imagining the Future of Retail: Beyond Space, argues that AI, e-commerce, and shifting consumer behavior are reshaping what malls and retail developers should optimize for. The headline risk is simple: pouring more money into physical space may not translate into the same kind of returns, because the “value engine” is moving toward data and digital capabilities.

BCG highlights the clearest signal of that shift: more than half of consumers under 34 already use AI tools as part of their shopping journeys. If you are building or leasing a mall today, that changes the front end of the customer journey. It alters how people discover products, how they interact with brands, and how purchasing decisions get made. The report also raises a bigger, somewhat uncomfortable possibility for operators and landlords: AI agents could become primary decision-makers in consumer journeys, which could reduce the influence of traditional retailer and brand relationships.

Zoom out to the physical reality. BCG says the region’s retail real estate sector is experiencing its most ambitious physical expansion in generations. Millions of square metres of gross leasable area (GLA) are currently under development across major projects in Riyadh, Jeddah, Dubai, and Doha. That matters because mall economics have historically been anchored to occupancy and leasing. But BCG points out that luxury retail space expansion in several GCC markets has already outpaced growth in addressable consumer spending. When demand growth does not keep up with supply growth, sales per square metre gets pressured. That pressure ripples back into leasing negotiations and can force development teams to rethink what they are building and why.

Competition is also increasing as new retail supply continues to enter the market. In a crowded retail environment, simply having more storefronts is not the differentiator it used to be. BCG notes that future success will depend less on physical space and more on “data, digital capabilities, customer experiences and new revenue streams.” The report’s logic is that customer attention and conversion are becoming more technology-mediated, not purely foot-traffic-driven.

This is where the report’s financial warning gets very concrete. BCG says up to 25 per cent of revenue at leading retail assets already comes from non-GLA sources. Translation: even at strong properties, a meaningful chunk of revenue is coming from outside traditional leasing. That is a strong hint that “space” is increasingly just one component of a broader business model. If non-GLA revenue can be a quarter of total revenue at leading assets, then boards and investors should expect more ambitious targets over time, especially as AI and digital tools reshape consumer journeys.

BCG also warns that retail assets lacking strong digital and data capabilities may struggle to remain relevant as customer journeys evolve. This is not only about having an app. It is about the organizational muscle to design customer experiences, collect and interpret data, and make faster decisions as behavior changes. Many organizations, BCG says, remain tied to traditional leasing models, siloed functions, and occupancy-led performance metrics. Those internal structures were built for an era when the main lever was space delivery. In the AI era, the lever is shifting toward capability-led operations.

BCG is not content with a single gloomy prediction. It outlines three scenarios that retail real estate leaders should actively consider. One scenario, according to the report, would fundamentally challenge the economics of traditional mall development, similar to what BCG describes in some advanced markets. In that scenario, value would increasingly flow to operators capable of capturing and monetising customer intelligence. Separately, BCG says accelerating adoption of generative AI and agentic tools could reshape relationships between consumers, brands, and retailers. In other words, the “partner ecosystem” inside a mall could be less about footfall cooperation and more about digital orchestration.

BCG identifies three archetypes emerging within GCC retail real estate, and it frames the decision as urgent. Andrea Pierobon, Partner at BCG Middle East, said retail operators face a rapidly changing environment and that “traditional space-centric models are no longer sufficient for what lies ahead.” Pierobon adds that the opportunity is to rethink what retail real estate delivers, moving from space-centric models to capability-led approaches. Andy Veitch, Managing Director and Partner and Head of Consumer Practice, BCG Middle East, also stresses an immediate opportunity to redefine the category for the next generation. He says there is an opportunity to shape the next chapter by choosing a clear archetype, investing selectively in enabling capabilities, and shifting from space delivery to business model innovation.

So what should executives take from this, beyond the obvious “be more digital”? The strategic stake is that GCC malls are being expanded at scale while consumer decision-making is already partially AI-mediated, and revenue models that do not rely on GLA are already meaningful. If boards keep measuring performance primarily through occupancy while consumer journeys shift toward AI-driven discovery and decision-making, they may discover too late that capex in space is not the same as value creation. The winners, BCG implies, will be the operators who treat malls as data-driven experience platforms, not just leasing platforms.