Abu Dhabi, Dubai: With the UAE’s retail sector expected to grow this year more than 33 per cent, according to a report by Ventures Middle East, many retailers are looking at 2015 with expectations of double-digit growth.
Retailers also expect to benefit from the impact of the growing tourism sector, which is set to bring in more visitors to the country.
Vipen Sethi, CEO of Landmark Group, a retail and hospitality firm, told Gulf News he expected the upward trend from 2014 to continue into 2015, especially with the CNN website naming Abu Dhabi among its top 10 destinations for next year.
“We expect to register growth of more than 10 per cent in like-for-like sales in the coming year in the UAE. We also aim to add 25 new stores in 2015 across our retail and hospitality segment,” Sethi said.
He added, “We expect a sizeable increase in footfall across our stores in 2015. The UAE has carved a niche on the world map as a shopping, entertainment, and leisure destination. As a positive spillover, the retail and hospitality segment in the region will see a growth, bringing both visitor and resident traffic into the outlets.”
Similarly, Lulu Group said there was a renewed interest in Abu Dhabi’s retail sector, fuelled by the opening of new malls.
A Lulu spokesperson told Gulf News the group is looking into opening four stores in Abu Dhabi and nearby regions in 2015.
“If you look at 2013 and 2014, we saw an increase of about 12-13 per cent in footfall in the existing stores. We expect this trend to continue, and when you add new stores, we’re definitely looking at an increase of about 17-18 per cent,” the spokesperson said.
Looking past retailers, analysts expected the industry to witness a boom in online shopping.
Nikola Kosutic, research manager at Euromonitor, said internet retailing is anticipated to be the fastest growing category, with a 40 per cent value growth in 2015. He attributed the increase to a high penetration of internet-enabled devices, a young and tech-savvy population, and retailers’ investments in opening online stores.
Kosutic expected retail in the UAE to grow by six per cent in constant value terms in 2015 compared with 2014 — slightly lower than the eight per cent growth recorded in 2014 over 2013, owing to declining oil prices.
Consolidation
Meanwhile, others looked to 2015 as a year of consolidation where the retail sector may slow down ahead of 2016 when more retail space is expected to come into the market.
“Prestigious projects like Nakheel Mall [and] Deira Islands are works in progress, and optimism in their success bodes well for the economy.
Retailers will have to use this period (2015) to synergize their operations, review their strategies, and prepare for a future that looks bright but brings in some unique challenges,” said Niranjan Gidwani, Deputy CEO at Eros Group, the Dubai-based electronics retailer.
He added that retailers should ensure that expansion was in line with the tourism and population growth of the UAE, and now outgrow them as that could eventually put businesses under pressure.
Challenges
Despite a relatively bullish outlook, the retail sector is expected to face some challenges, analysts said.
“The greatest challenge will lie with secondary shopping and community centres that will need to rejuvenate in order to lessen the gap between new product coming online and older retail centres.
With the market developing at a fast rate, non-primary centers will need to readdress their tenant mix and strategies to capture their audience in an increasingly competitive sector,” said Stuart Gissing, regional director at Colliers International, a real estate consultancy.
Milestones
The opening of Yas Mall in Abu Dhabi, combined with the new developments in Dubai, has proved success in expanding the UAE’s retail sector, which is expected to be valued at Dh121 billion in 2014, according to data by research firm, Euromonitor International.
Yas Mall, Abu Dhabi’s latest retail destination, opened its doors to visitors on November 19, with 370 stores, many of which marked their first outlet in the emirate.
According to its developer, Aldar Properties, the mall is expected to welcome 20 million visitors in its first year of operations.
“I think Abu Dhabi might grow a bit more next year than it did this year because of the opening of Yas Mall, which is a big new destination, so it will pull in a lot of business, and attract some people who would otherwise have come to Dubai,” said Ajai Dayal, chief executive officer at Tridayle Consulting, a retail consultancy.
In Dubai, analysts said the biggest milestone was the shift in terms of the nature of developments coming into the market.
Colliers’ Gissing said Dubai was witnessing increasing focus on lifestyle-oriented products, citing The Beach on Jumeirah Beach Residences as an example.
Also in the Dubai retail market, Mall of the Emirates saw the completion of the first phase of the Evolution 2015 project featuring a Dh100 million fashion district that includes 30 stores.
