Dubai: Retail analysts are divided over whether Ramadan, a month of giving, will give retailers higher sales compared with the previous months of this year.

One analyst expects the sluggish sales felt by UAE retailers in the last few months to continue into Ramadan because of global economic factors, while the other says sales will be up due to promotions and discounts offered by retailers.

“We will see the same sluggish sales [this year] during Ramadan because all of the macroeconomic factors [that have lowered sales] will remain in place,” Colin Beaton, managing director of retail consultancy Limelight Creative Services, said.

The strong dollar, to which the UAE dirham is pegged, against the weak euro this year has led to reduced spending by visitors from the Eurozone, while lower oil prices have reduced consumer confidence and crimped spending of tourists from Russia and Gulf countries this year, according to Nikola Kosutic, research manager at consultancy Euromonitor International.

“Lower oil prices have led to lower consumer confidence [this year] since a significant proportion of consumers in the region are employed in the oil industry,” he said.

The euro has dropped from 1.36 against the dollar to around 1.13 over the past year, while Brent crude has dropped from a high of $115 (Dh422.3) per barrel in June 2014 to around $64 on Friday.

Discounts, promotions

Ramadan is a period when Muslims abstain from food and water from sunrise to sunset as they pray and reflect. It is also a period when retailers roll out discounts and promotions to sell.

“Food and beverage sales typically see an increase during Ramadan, driven by suhoor and Iftar. Other retail may see a boost closer to Eid, depending on shopping by residents as well as an influx of regional visitors,” said Shamail Seddiqi, principal of the consumer and retail Practice at consultancy A.T. Kearney Middle East.

While Beaton expects weaker UAE retail sales to continue during Ramadan, Kosutic disagrees.

“Retailing sales during 2015 Ramadan are expected to make up for the slower start of the year as sales during Ramadan are seeing steady year-on-year growth due to Ramadan falling earlier in the year when the weather is better, and the number of tourists are higher,” he said.

Also, retailers have been increasingly focusing on Ramadan as a period to boost sales, with many launching Ramadan-related promotions and discounts, he added.

“Every year we are seeing more Ramadan-related promotions and sales events and consumers are timing their purchases, especially of big-ticket items, to coincide with Ramadan.”

Beaton expects retail sales during the month to be similar or lower compared with the same period a year ago due to the currency fluctuations and lower oil prices.

He also said that retailers may not see high profits during Ramadan because of the heavy discounting.

“You could see revenue the same or increasing but profits could decline depending on the depth of discounting,” he said.