Business | Retail

UAE sales poised to hit $21.6b

Extended shopping hours in 30 malls help improve business apart from DSS

  • By Derek Baldwin, Business Features Reporter
  • Published: 00:00 July 19, 2011
  • Gulf News

Malls throughout Dubai are enjoying steady consumer spending due to an influx of tourists
  • Image Credit: Megan Hirons Mahon/Gulf News
  • Malls throughout Dubai are enjoying steady consumer spending due to an influx of tourists following a decline in travel in 2008 and 2009.

Dubai: Extended operating hours until midnight for 30 malls combined with the Dubai Summer Surprises (DSS) campaign has helped increase retail sales more than 10 per cent over last year for some store owners, retailers report.

Spending by shoppers attracted by discounts of up to 70 per cent will also help realise predictions that total UAE retail sales will climb to $21.6 billion (Dh79.3 million) by the end of the year.

Eisa Adam Ebrahim, a member of the board of directors of the Dubai Shopping Malls Group, told Gulf News that malls are doing better than last year when retailers were still recovering from the global economic crisis.

While hard numbers are not available, Ebrahim said the malls group "estimates double digit growth this year based on DSS trends."

"Shopping centres are doing comparatively well on a year-to-year basis. The retail spend has been increased and this is evident from the success of Dubai Shopping Malls Group's promotion and the promotions organised by individual malls," Ebrahim said.

"Extended shopping hours until midnight helped improved the business in the night hours whether it is shopping, dining or entertainment," he said.

Tabulating the actual increase down to the penny is difficult, he said, but the malls group is working with its members to share annual sales data to analyse the industry and find ways to enhance sales.

Initiative

"We do not have the data available at this stage. However, DSMG will be putting together an initiative shortly to collate information and establish market size and growth potential for the sector in the immediate term," he said.

All the malls, meanwhile, are enjoying steady consumer spending thanks to an influx of tourists which is also increasing following a global decline in travel in 2008 and 2009 due to world crisis conditions.

Ebrahim said retailers are counting on tourism dollars to boost bottom line reporting as part of the yearly business strategy.

"Being a tourism centric business, retail is supported by the consistency of Dubai's event calendar. The domestic retail spend has been on the rise this year and tourist arrivals have increased both in DSF and the summer season as most of them preferred Dubai as opposed to other cities in the region," he said.

Value conscious

The General Directorate of Residency and Foreigners Affairs has been reporting a spike in visitor numbers in recent weeks.

According to Brigadier Obaid Bin Surour, deputy director, officials have logged a 79 per cent increase in GCC visitors to Dubai from June 15 to July 2 over the same period in 2010.

Actual figures were not released.

Philip. M. Evans, director - group leasing for Al Futtaim Group Real Estate, said Dubai Festival City is seeing solid retail sales and higher footfall slowly returning this year as the retail industry rebounds from the global economic crisis.

"Consumer confidence continues to remain fragile and this has certainly affected shopping malls in the emirate, including Dubai Festival City," Evans told Gulf News.

"Trends witnessed last year when people became value conscious because of the economic downturn are slowly turning around because our figures tell me that Dubai Festival City has seen year-on-year sales demand marginally up. It will, however, take a while for all shopping mall owners and operators to get back into the pre-2009 groove and we hope to tote up positive numbers before the year ends."

Promotional coupons

Bernice Boshoff, general manager of Dubai Festival City, said the use of promotional coupons has increased 100 per cent over last year and attributed the boost to a free children's calendar of events as well as "the rise of inbound tourists."

Boshoff said that DFC is working hand in hand with Dubai Events and Promotions Establishment "by expanding the shopping mall working hours to cater to increased footfall and ensure the positioning of Dubai as a destination for distinctive festivals."

In a statement, Nasser Rafi, chief executive officer of Emaar Malls Group, said that Dubai Summer Surprises 2010 saw a 30 per cent growth in footfall in its member malls such as Dubai Mall.

Rafi said, "We expect the total visitor numbers to be even more significant this year."

The optimism by mall owners is shared by analysts and research firms who are watching the UAE retail industry continue to perform beyond recessionary expectations.

In its second-quarter UAE Retail Report, BMI research firm forecast that the UAE "will grow from an estimated Dh79.3 billion in 2011 to Dh105.4 billion by 2015."

Financial analysts with BMI attributed their rosy outlook to "strong underlying growth, increasing household consumption, growing acceptance of modern retailing concepts and expatriate wealth.

"Tourism is also a massive factor in stimulating retail growth with the UAE expecting the number of tourists to have totalled more than 11 million in 2010," the report stated.

Average household spending power by Emiratis of $23,000 per year and Westerners of $19,500 is a deep pool in which retailers from around the globe are attempting to tap into.

Research firm RNCOS states in its June UAE Retail Industry Analysis report that "retail has been one of the fastest growing industries in the UAE for the past few years."

Industry verticals

"Surging public and private sector consumption along with the contribution of strong industry verticals (tourism, trade, banking) is expected to help the retail industry to grow at a compound annual growth rate (CAGR) of around eight per cent during 2011-2014," RNCOS believes.

One of the biggest factors behind the UAE's retail rise is the country's creation of malls as popular destinations for shoppers looking for sales as well as food and entertainment experiences.

The firm said "rapid development of modern retail infrastructure is luring consumers for convenient shopping experiences and transforming into high retail spending."

The June release of the AT Kearney Global Retail Development Index (GRDI) said the UAE "is recovering quickly from the economic downturn, reflected by the second-highest ranking in market attractiveness of all countries in the GRDI.

Tourism, sizable household consumption and ample retail space are boosting the retail sector. Still, the UAE dropped from seventh to ninth place this year.

One cause is an increasingly saturated market as many foreign entrants have set up operations in the country.

AT Kearney said that the UAE retail market is strong based upon consistent sales logged last year by international retailers.

"Consumer spending grew a healthy 9 per cent last year, a good indicator of consumers' stabilising confidence. Overall, however, consumers remain cautious with discretionary spending and, compared to pre-crisis years, have a greater propensity to save," the index report stated.

  • 26%: expected increase in electronics sales to $3.9b by 2015
  • 34%: expected increase in food sales to $10.3b by 2015
  • 600,672: automotive sales expected by 2015 from 403,296 in 2011

Gulf News
Retail Gold Rate
Business Editor's choice