The UAE’s shopping formats and product offerings have improved considerably compared to a few years ago when it lacked innovation and dynamism in comparison with other emerging markets. In spite of its status as a leading economic sector, it was controlled by a few large retailers, leaving consumers with little choice.
However, a prolonged recession and intense competition has resulted in trends that have given unlimited choice and more value for money to UAE shoppers. Most malls have focused on enhancing overall customer experience by providing non-retail events.
Fashion shows, painting workshops and small-scale drama productions are now common. Free sound, light and water shows attract tourists and residents alike. Research suggests that live entertainment and in-mall promotions led to a 10 per cent increase in retail sales and a 10 per cent increase in malls’ footfall during DSS 2012.
Events are becoming a crucial part, especially at older and smaller malls to sustain rental rents.
Virtual shopping centres
Earlier considered unreliable, online shopping has been adopted enthusiastically by UAE consumers. Offering everything from gadgets to grocery, these virtual shopping centres attracted the attention of consumers due to convenience of shopping from home or office. Almost 90 per cent of UAE residents have made online purchases, according to an Internet shopping survey.
Mostly, these websites can offer goods at discounted prices as they can eliminate rental expenses from their business model. It is estimated that online shoppers in the UAE, Saudi Arabia and Egypt spent over $1 billion through e-portals.
Cashing in on the trend, many traditional retailers like Carrefour and Lulu have also enhanced their online presence. Daily deal websites have also joined the bandwagon by offering discounted product mailers in addition to traditional service-focussed deals.
Another key trend has been the emergence of specialty malls. For instance, Times Square located on the Shaikh Zayed Road has distinguished itself with an array of stores selling adventure sports products. It also has a dedicated area for indoor adventure activities.
This also works well for shoppers who are not willing to waste time in parking and searching for stores in city’s mega malls. This trend could pick up in the future as competition intensifies and mall developers realise the potential for super-specialty malls.
Another key trend has been expansion of the private label portfolio by large supermarkets. Currently, sales from private labels account for around 10 per cent of overall retail sales compared to just 3 per cent three years ago. Private labelling allows retailers to increase gross margins without increasing prices, since margins do not have to be shared with manufacturers. This trend is expected to continue in future with new sourcing markets like Turkey looking to expand trade relations with the UAE.
Consumer protection in the UAE has achieved significant progress. A well-enforced consumer protection system encourages retail growth by providing legal protection to consumer.
According to the Department of Economic Development, its consumer protection division received 8,700 complaints in 2012 compared to 6,939 complaints in 2011. To enhance awareness, the department has mandated all retail outlets to display a yellow poster on consumer rights. Enforcement still remains an issue as there is limited statistics on resolved cases.
Retailers’ unwillingness to provide warranty documentation makes it difficult for consumers to file complaints. However, officials are working on creating all inclusive regulations; a new law has been drafted to cover all types of commercial fraud, such as the sale, display or possession of counterfeit goods.
Recent trends have changed the retailing landscape considerably by offering better value for entertainment avenues and legal protection for UAE consumers. With more malls constructed and retailers opening stores, consumers can look forward to an extravaganza of more discounts, deals and entertainment.
— The writer is the heading of valuations and research at Chesterton International.