Up to 75% off. Even 80%. This summer of retail, UAE shoppers are being offered some handsome discounts. And they will also benefit from prices dropping organically as inflation eases. Image Credit: Gulf News

Dubai: This summer, UAE shoppers will be getting more than discounts. Retail prices across categories have started to subside brought on by a steady lowering of inflation-related pressures.

This is already being seen in food (especially on staples such as rice and wheat) and grocery purchases. Prices of FMCG (fast moving consumer goods) are still sticking to higher levels – but this will be one category that could see some significant discounts once retail sector promotions such as Dubai Summer Surprises go live. (This year’s DSS launches June 29 and runs all through to September 3.)

Consumer prices are also dropping in fashion, accessories and, most noticeably, on smartphones and other gadgets. “When it comes to smartphones, all of the latest models have seen price declines/cuts in recent weeks, even on flagship models released earlier in the year,” said an electronics retailer in Dubai. “These are straight discounts on offer – not value-added deals such as cashbacks.”

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But the biggest plus for UAE consumers has been on the inflation side, something that had been constantly shadowing shopper decisions through 2022. And which translated into heightened consumer caution when it comes to spending on non-essentials.

Some of that caution is still there, but if inflation recedes further, it will give shoppers just the boost they need.

“Yes, there are signs that inflation is cooling across product categories in the UAE before the Dubai Summer Surprises’ sales,” said Abhishek Rajput, Senior Consultant at RedSeer. “According to the UAE Central Bank, the annualized inflation rate in May 2023 was 3.4 per cent and down from 6.8 per cent in May 2022.

“This cooling trend is being driven by a number of factors, including:

  1. The government has taken steps to control the prices of food, which has helped to keep inflation in check;
  2. The moderation in global commodity prices. The price of crude oil and other commodities have come down from their highs of 2022, which helped to reduce the input costs for local businesses.”

If this trends continues through the next few weeks, expect summer sales to hold up quite well. Gains will also be had from the steady rise in population numbers – and on the premise that new residents setting up homes in the UAE in recent months will stay put for summer rather than head out.

“Together with increased job prospects in the UAE and the change in consumer demographics - with the country being attractive to incoming residents from many European markets – consumer expenditure continue to hold positive prospects,” said Rabia Yasmeen, Senior Consultant at Euromonitor International.

We still see caution regarding spending among UAE consumers. However, much of this behaviour has translated into use of loyalty programs and promotions, where they are more open to use subscriptions to avail discounts, points and free deliveries

- Rabia Yasmeen at Euromonitor International

Flashing discount offers

Ahead of DSS ’23, the major retailers – including online platforms – have been putting up their discount choices, with some websites flashing up to 80 per cent price cuts on popular categories.

This is why some retailers and analysts believe that UAE shoppers find themselves in a win-win situation. Less inflation is showing up in the actual prices shoppers are seeing in shops or ecommerce sites. Add in the discounts, and they are getting a good deal for themselves.

The overlap of the opening of Dubai Summer Surprises weekend with Eid Al Adha celebrations is expected to generate higher demand and significant discounts

- Abhishek Rajput at RedSeer

Travel over shopping?

But some analysts suggest a full freeing up of consumer spending might have to wait until the start of the third quarter – after UAE residents return from vacations and the new school year starts.

For now, residents have a lot to occupy their minds, in particular prepping for their upcoming holidays. “Given school holidays and other summer activities, households’ consumer expenditure is seeing an overall impact,” said Rabia. “As consumers look for leisure and recreation activities as well as domestic and international travel.”

Rather than spend heavily on shopping is the subtext.

Or shop and then head out?

Some retailers suggest it could be the other way round – that prices in major categories have dropped significantly that shoppers will likely buy and then head out for their trips.

“In smartphones, for instance, because prices on the iPhone 14 or the Samsung Galaxy S23 have come down in recent weeks, we expect a strong demand for trade-ins during the coming days,” said the electronics retailer. “Plus, UAE consumers are giving serious thought to buying one of the foldable phones, with the (Huawei) Mate X3 catching the eye.

“In 2022, what we could see was consumers holding on to their phones for longer. This time, they are seeing major price revisions and that will prompt many to upgrade.”

If enough shoppers are convinced this is the best time for a round of buying - and not just a smartphone upgrade - this summer of retail in the UAE will have won a few points.  And then comes the Back to School jamboree...

Capitalize on summer sales: Sharjah Chamber
Retailers in Sharjah have been told to pull out all stops to make full use of the Sharjah Summer Promotions 2023. The event starts July 1.

Shopping centers and shop need to ‘swiftly’ sign up for the event, given that this represents an opportunity for businesses to expand, increase revenues, and ‘showcase their products to local residents and visitors’, said the Sharjah Chamber of Commerce and Industry.