Dubai Shopping Festival (DSF) is here a week early, and the retail sector is hoping tourists making a beeline to the UAE for the New Year and beyond will shore up sales in a sluggish market reeling from low oil prices and global economic uncertainty. Though mall operators and retailers expect modest growth, market research firm Euromonitor International believes DSF 2017 will see lower sales as a result of conservative consumer behaviour in the country.
“We expect lower figures for DSF 2017 — a decline in sales by 3-4 per cent is likely, given the lower consumer expenditure and greater orientation towards expenditure on entertainment activities,” says Rabia Yasmeen, Analyst at Euromonitor International.
“The decline in tourists from traditional source markets is also one of the reasons, as numbers from Russia and China dip and those from India and the GCC rise. This will impact the value of retail sales, particularly from tourists from countries with weakened domestic currencies such as the UK.”
Still, the key segment to drive sales is tourists, who might have other things in mind. “New entertainment retreats such as Dubai Parks and Resorts are more likely to attract domestic as well as international tourists, gaining more of tourists’ time.”
However, the heavier-than-usual emphasis on tourists isn’t lost on mall operators and retailers as they try to attract visitors and residents alike — with better discounts, bigger prizes and world-class entertainment — all integral components of DSF.
“Majid Al Futtaim’s malls in Dubai are hosting a full schedule of shopping, winning and entertainment experiences during DSF 2017,” says Fuad Mansoor Sharaf, Senior Director — Property Management at Majid Al Futtaim Properties. “Mall of the Emirates, City Centre Deira and City Centre Mirdif enjoy record performances as the festival grows each year and we expect the same for 2016-17.”
In the current economic climate, however, Sharaf feels players need to be dynamic and innovative and not just stick to the tried-and-tested formula of shop-and-win and discounts. Rather, his company’s emphasis is on creating memorable moments and first-time experiences around winning opportunities with the help of activation elements, games and VR technology, he says.
Consumer electronics distributor and retailer Eros Group, meanwhile, is looking at adding more value for customers by throwing in better freebies. Though consumer confidence is down, Niranjan Gidwani, Deputy CEO of Eros Group, believes they haven’t left the market — they are still buying but are looking for better discounts or moving from high-end products to value brands, which has resulted in either higher cost of sales or lower average selling prices.
“The cost of selling is high, but then a typical DSF sale is worth two regular months, so it does benefit in the end,” says Gidwani. The company hopes to post 10 per cent growth over DSF 2016, which could account for between 20 and 25 per cent of annual revenues. “We had identified the market conditions in 2015 and had planned for the slowness of this year. We do see the climate changing by mid-2017 for the better.”
Nadeem Khanzadah, Head of Omnichannel Retail at IT and consumer electronics retailer Jumbo Group, is also confident about sustaining the company’s month-on-month growth.
“We expect a reasonable growth this DSF compared to the previous edition, [contributing about 18-20 per cent of annual revenues],” says Khanzadah. “Next year looks more exciting as we have aligned our retail calendars to the Dubai tourism calendars, hence we will have more events and opportunities to reach our consumers.”
Khanzadah has up his sleeve a digital lead campaign this DSF that he hopes will bring freshness and engagement at his stores as well as online. He’s counting on aggressive offers on phones, gaming and smartwatches to lift up sales.
Another avenue retailers are tapping into to increase revenue is online, which currently accounts for 1-5 per cent of total sales for most players. With web retail sales estimated to reach Dh4.8 billion in the UAE by the end of this year and pure online retailers emerging as a threat to in-store sales, major players are ramping up their digital offering.
Online sales for major retail player Landmark Group have consistently grown over the past three years, with promotions and discounts encouraging participation. Now the group has set up customised websites for its core brands.
“We as a group believe omnichannel retail is the future,” explains Vipen Sethi, Group Director and Board Member at Landmark Group."We have developed our e-commerce offering to provide customers with a personalised experience while they avail of great offers when shopping online during this season.”
Online has been important channel for Jumbo too, complementing its brick-and-mortar business and engaging customers outside stores. It has seen a 75 per cent increase in its overall performance compared to last year.
Both Jumbo and Eros have special online offers for this DSF.
It’s all about meeting consumers’ rising expectations for multiple channels, believes Majid Al Futtaim.
“With substantial growth in retail sales predicted across the markets in which we operate, we believe there is plenty of room for both new physical offerings that fulfil growing demand for immersive experiences and new online offerings that cater to convenience,” says Sharaf. “We also see space for merged online and offline offerings that seamlessly integrate both worlds.”
THE NEXT BIG THING: CUSTOMER ANALYTICS
As growth of footfall in malls slows down — it increased by only 2 per cent in the UAE between 2014 and 2015, according to Middle East Council of Shopping Centres — retailers would do well to analyse customer data to develop insight into their behaviour and offer “a seamless, omnichannel shopping experience that will, in turn, create new revenue streams beyond the shop floor”, says Next Generation Retailers: Power up your Analytics, a recent Booz Allen Hamilton report.
“By leveraging the value of both internal (customer profiles, footfall, transactions, etc.) and external (customer social profile, traffic, weather, macroeconomic, etc.) data, retailers can tailor their offering to drive sales, while at the same time optimising their return on investment.”
Customers are happy too with retailers offering personalised experiences and incentives and keep coming back for more.
Many leading retailers have realised the potential of customer analytics and have already made it a key enabler of their business, the report says. Majid Al Futtaim, one of the major shopping mall, retail and leisure operators in the Middle East and North Africa, has built a database of more than three million customers across its 13 business units. The data will help the company predict customer behaviour and deliver accordingly.