Global gloom

Newspaper headlines throughout the world tell a very sorry story when it comes to the upcoming festive season. Consumers everywhere are feeling the pinch as the credit crunch threatens to take the cheer out of holiday buying.

Retailers in the UK have already been told Christmas spending this year will drop by seven per cent and that December will one of the toughest in decades when it comes to sales figures. Stores throughout Britain are bracing themselves for much lower spending when it comes to both food and presents with big ticket items such as electronics and luxury goods expected to suffer the steepest falls.

Now it seems that Dubai, once thought to be immune to the economic woes the rest of the world is suffering, may also be facing a mild downturn as customers here decide not to splash their cash ahead of Eid and Christmas season.

Property prices are starting to dip, redundancies are being announced and the stock market has been hit by losses, this attitude is now being felt at the tills.

One prominent retailer, who deals mainly in designer clothing, believes that the slump may continue well into 2009. "Already we have seen a 20 to 25 per cent fall in sales. A month ago there was not a hint that there was any change and we were expecting a normal busy Christmas season," she says.

Mohidin Bin Hendi, president of Bin Hendi Enterprises agrees that takings are down but believes the situation could be far worse.

Bin Hendi is a retail-based conglomerate operating in India and throughout the region and has introduced more than 75 world renowned brands to the UAE in sectors such as fashion, watches and jewellery.

Bin Hendi says sales presently are 15 to 20 per cent down but he believes that this is normal given the world economic climate.

He said that one only has to look to places such as New York where shops at this time of year are usually teeming. But now there are only window shoppers on the outside looking in.

"We are in a far better market. Our restaurants are doing well and also our more expensive products. To achieve anything less than a 20 per cent drop in sales makes me very happy and, in light of the present financial conditions throughout the world, we are really optimistic." he added

This upbeat attitude is reflected in the findings of the recent Nielsen Consumer Confidence Index which saw the UAE ranked as the third most optimistic nation rising from fourth position six months ago. India and Denmark topped the survey, carried out at the height of the global financial meltdown in September and recorded the responses of more than 26,000 online consumers.

Piyush Mathur, regional managing director, Middle East, North Africa and Pakistan, the Nielsen Company, says that despite being affected by current global conditions, consumers in the UAE and other developing countries were aware that their medium to long term prospects remained strong.

Mathur says: "Consumer confidence in the UAE remains quite stable as the economy is driven by strong domestic growth, particularly in the FMCG (fast moving consumer goods) and retail sector.

"While 63 per cent of consumers felt that their country was currently in recession, in contrast and a further demonstration to its confidence, 60 per cent of UAE on line consumers said that they were not in recession."

Among the 40 per cent of UAE consumers who believed that they were in recession, 23 per cent believed it would be over within 12 months.

Mathur concludes: "However, for now UAE consumers are keeping a careful eye on the economic situation and we are seeing that consumers are making some changes to their spending patterns and shopping behaviour."

Himanshu Vashishtha - Managing Director of Neilsen in the UAE sees a change in spending patterns this holiday season.

"The world markets are going through a turmoil... All consumers know and have read about it and many are also affected by it in some way or manner. In times like this rationalisation of spends by consumers will happen," he says.

"Some of these categories specified by the consumers are clothing, out-of-home entertainment, telephone expenses travel as pointed out in the Nielsen Consumer Confidence survey released last month... when consumers cut on big ticket spending they overindulge on some low ticket expenditures to compensate the feeling of well being. So overall I foresee no decrease in foot fall and only a marginal decrease in spending this festive season, if any."

This feeling is echoed by another market research company, Gfk-MEMRB Marketing Services, which predicted that the Middle East consumer spending for consumer electronic and technology products would grow to $39-$40 billion (Dh143 billion to Dh147 billion) in 2009.

Franck Thureau, Gfk-MEMRB's general manager, told the recent Consumer Technology Middle East Conference in Dubai : "Whatever the effect of the global slowdown, we are anticipating continued regional growth in this sector for the full year of 2008 at 9.6 per cent compare with last year.''

- The author is a freelance writer based in Dubai.