Dubai: UAE consumers are expected to maintain the same spending habits for the next six months, according to a recent survey from Kearney.
While prices rose across most retail categories, 16 per cent of consumers surveyed in a poll have reported an increase in spending on non-essential commodities compared to 2021. Debashish Mukherjee, Partner, Kearney Middle East explained that this trend would continue into the New Year.
The trends noted for the first quarter of 2023 are similar to UAE customer spending habits from the fourth quarter of last year. According to Majid Al Futtaim’s State of the UAE Retail Economy Report published late last year, consumer spending in the UAE jumped 20 per cent annually in the first nine months of this year despite inflation concerns. Retail spending grew by 15 per cent annually in the nine months while non-retail expenditure rose 29 per cent over the same period, said the report.
At least 88 per cent of those surveyed expressed worry about the global macro-economic environment, and 83 per cent have also noted an increase in the prices of goods purchased over the last three months. And despite these growing concerns, UAE consumers have yet to plan to reduce their spending for at least the next six months, said the study.
“Overall, the country’s strong economic foundation and continued favourable policy changes towards business and individuals have given consumers confidence in their purchasing power, regardless of the macroeconomic environment,” said Mukherjee. Price increases were felt most in the food and beverage sector, with an 85 per cent hike. Transport, including gas prices, saw a 77 per cent rise, and restaurants and hotels saw a 72 per cent rise in prices. Clothing and footwear have risen by 70 per cent, and electronic equipment by 68 per cent.
However, despite noticeable price hikes, more than half (56 per cent) of the surveyed audience plan on making a significant household purchase worth Dh1,000, or more, in the next six months.
Online spending remains strong
Online purchasing remains a popular channel for UAE shoppers, mainly due to the ease of purchase and savings incurred. Moreover, consumers believe they have more variety and ease of delivery while shopping online. When it comes to shopping in brick-and-mortar stores, the importance of the in-store experience and convenience increased by 36 per cent and 26 per cent, respectively, compared to 2021.
“During and post-pandemic, many retailers adopted an Omni channel approach to ensure the business impact was cushioned. With online shopping also on a steady rise, retailers now more than ever need to build stronger brand connections and offer new, more engaging in-store experiences,” added Mohammed Dhedhi, Partner, Kearney Middle East. “By closely monitoring the evolving face of retail and adapting their strategies, key stakeholders in the retail sector can capitalize on this positive, local sentiment.”
“This will ensure that they stay relevant and engaged with consumer needs to remain competitive.”