Dubai: UAE consumers are now becoming more prudent with their finances, opting to spend less at shopping malls or restaurants, a trend that could put further pressure on business bottom lines.
Instead, they’re looking for ways to save money.
Market research firm Nielsen polled UAE residents to find out what their spending intentions are. About half (45 per cent) of the respondents said that in the last quarter, they were putting their spare cash in savings rather than frivolously spending it.
In order to save on household expenses, more than half (51 per cent) said they intend to spend less on new clothes, while 38 per cent said they will cut down on take-away meals.
Cutting down expenses on holidays or short breaks, gas and electricity and out-of-home entertainment are the priority for nearly four in ten people (35 per cent).
The findings indicate that people are starting to feel concerned about where the economy is heading. During times of uncertainty consumers tend to hold on to their wallets.
The country's retail sector, particularly the luxury segment, has already been put under pressure by low influx of high-spending shoppers, particularly Russians, whose buying power has been dampened by the rising US dollar and falling oil prices.
"During the uncertain times we have observed across the board, consumers become more prudent with their money and reduce expenditure on auxiliary buckets, such as holidays, out-of-home entertainment,” Ashraf told Gulf News.
Pallavi Bhatia, business head at Label 24, a multi-designer boutique, said she has definitely noticed a change in the buying patterns of consumers recently. "They've become smart shoppers, rather than buying impulsively as seen in the past," Bhatia told Gulf News.
"They look at long-term view while shopping. They want to buy things they can use for a long time and multiple times, that they can wear for different occasions, mix with different styles, etc."
However, Bhatia doesn't completely agree with the observation that consumers are indeed cutting down their spending. "The first quarter is always slow in terms of sale. By the second quater, the momentum picks up. For example, the last quarter for us was the best in terms of sales," Bhatia said.
Nielsen's findings could also be an indication that household budgets are simply failing to cope with the cost of living.
When asked if they had some extra cash to dip into after taking care of their basic needs, nearly two in ten (16 per cent) said they didn’t have any. The number is up by three percentage points from the previous survey.
Across the region, nearly one-quarter (23 per cent) said they had no spare cash, the highest level regionally, followed by 18 per cent in Europe, 17 per cent in Latin America, 11 per cent in North America and 5 per cent in Asia Pacific.
Mohsin Khan, digital marketing manager at Fast Rent a Car, said that while consumers are becoming extra careful with their money, they are still willing to open their wallets. "While we have not seen a steep decline in sales, the consumers' expectations have soared. They are careful with their spending and measure the value for money constantly."
"The positive sign is that the UAE has successfully attracted global tourists constantly and continues to do so, with various events happening in Dubai and Abu Dhabi. We are positive that we will see an upward trend in sales in the near future," Khan added.
Gulf News earlier reported that recessionary sentiment in the UAE is on the rise, with 53 per cent of residents saying they believed they’re in recession. The number of respondents feeling pessimistic represents 4.9 million of the country’s close to 10 million population.
But what do people in the UAE feel most concerned about? According to Nielsen’s findings, job security is the biggest concern, voted by 26 per cent of the respondents, followed by the economy (9 per cent).
