Jarir needs to be quick to survive.
The Saudi Arabian marketing company is in a growing retail market with good prospects, which should bode well for its bottom line.
But the growth is attracting competition that may unseat this old stalwart.
Saudi Arabia is a marketing sector dream. Worth an estimated US$70 billion last year, its retail market is ranked as the seventh most attractive in the world in terms of offering present investment opportunities and future growth, according to ATKearney's 2011 Global Retail Development Index.
Jarir has benefited from the rise in Saudi retail spending over its 33-year history.
Its net profit was 513 million Saudi riyals last year, an increase of 28 per cent compared to 401m riyals a year earlier. But the pace of change is quickening, and it is by no means clear Jarir has the agility to react and thrive.
Aljazira Capital, which has just initiated analysts' coverage of Jarir at "neutral", said that if the company failed to respond well to the challenge, analysts would view it as a key risk to Jarir's future prospects.
"Saudi Arabia's retail industry growth is in an advanced phase, where the customers' spending power is high, and success relies on unique offerings and a quick response to any major shift.
"Any failure or even late response to adopt new technology could lead to massive dent on Jarir's future growth," Aljazira said in a note.
Price wars are looming. The entry of big retail names into Jarir's markets, especially in PCs and smart-product markets, has the potential to hit the company's profit margins and valuation.
Aljazira believes it will be a vital challenge for Jarir to maintain its conversion rates - the number of sales per person - without compromising much on profit margins to continue its growth in a highly competitive environment.
Any major deviation from current levels could raise alarm on the company's valuation and future growth, Aljazira said.
Jarir now needs to show investors it is ready to face the competition head on.
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